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Alberta Would Make A Good 51st State, Eh?

Alberta landscape with a pumpjack, grain silos and field against a sunset.
photo by Wilson Hui

When most Americans mention a possible 51st state, they are often thinking of Puerto Rico or Washington, D.C., both of which have expressed desire for statehood. But serious disagreements north of the border might suggest a more unusual candidate: the Canadian province of Alberta.

Alberta, part of Western Canada, is home to an array of flora and fauna across four distinct climatic zones. But the province’s wildlife is not the fulcrum for the conflict between Alberta and Canada’s national government. Ottawa is more concerned with a different sort of natural resource: oil. Alberta’s oil sands represent the third-largest oil reserves on the planet, trailing only Venezuela and Saudi Arabia. In addition, 68 percent of the natural gas produced in Canada comes from Alberta.

Yet despite Alberta’s position as an energy powerhouse, and despite booming production, the price of oil in Alberta is far below world averages. As of fall 2018, Canadian crude sold for about $50 less per barrel than West Texas Intermediate oil, the American benchmark; it recently sold for $10 per barrel, 80 percent below the worldwide average at the time. This problem has been a major contributor to ongoing economic struggles in the province.

Albertans have their fellow Canadians to blame, at least in part. Neighboring provinces have repeatedly opposed pipeline construction, a major problem for landlocked Alberta. British Columbia, Alberta’s western neighbor, recently elected a premier who explicitly ran on a platform of opposing pipeline expansion. In December Quebec’s premier, Francois Legault, said there was no “social acceptability” for a pipeline that would carry “dirty energy” through his province.

In an attempt to bolster oil prices, Alberta Premier Rachel Notley imposed production cuts in December. At the same time, Notley announced plans to buy 7,000 rail cars to get Alberta’s oil to the market in the absence of pipelines. Shipping oil by rail is more dangerous and more expensive than using a pipeline, but it is generally safer than transport via truck, Alberta’s only other option in the absence of sufficient pipeline construction and expansion.

The production cuts were designed to clear an existing backlog, as well as to boost prices. The strategy worked, at least in the short term, but came with political costs. Some indigenous First Nations organizations within Alberta claimed that the provincial government had no right to dictate production levels on native-controlled land. And though most oil producers supported the production cuts, some complained that the government action would create winners and losers in a marketplace that has long been deregulated.

The cuts were designed to be a short-term measure, and they were eased – though did not entirely end – in late January, in response to rising oil prices. But the curtailment ultimately is a symptom of a longer-term struggle between Alberta and the rest of Canada, which seems to regard Alberta’s energy output with feelings that can be described as lukewarm at best.

Alberta’s oil producers are concerned about Ottawa’s evident lack of enthusiasm for pipeline construction or other measures to support the industry. Canada’s Parliament is considering legislation, Bill C-69, which would revamp the approval process for energy projects at the national level. Critics say that the changes would make future pipelines more difficult to build. In addition, Prime Minister Justin Trudeau has publicly vacillated on the subject in the past. He committed 4.5 billion Canadian dollars to rescue the Trans Mountain pipeline expansion in May 2018. A little over a year prior, he drew criticism for saying Canada needed to phase out Alberta’s oil sands entirely. Trudeau’s ambivalence seems to mirror that of his party; the Liberal Party supports both Bill C-69 and Bill C-48, which would ban oil tanker traffic on British Columbia’s northern coast, meaning that even getting oil out of Alberta may not end the industry’s supply chain struggle.

In response, Alberta has hosted numerous protests. A truck convoy recently caravanned to Ottawa, stopping along the way to hold a series of rallies to bring attention to the pro-pipeline cause. Protesters also want the government to abandon its recently announced carbon tax and to stop advancing Bill C-69 and Bill C-48.

This brings us back to the idea of Alberta breaking away from Canada altogether. Unlike in the U.S., secession is not always illegal in Canada. A 2000 law, the Clarity Act, set out the steps necessary for a province to legally declare its independence; it was drafted largely in response to the 1995 referendum on independence in Quebec.

Despite this legal exit mechanism and rising social media chatter on the subject, the majority of Albertans are not clamoring to break away from the rest of Canada. A recent survey conducted by Research Co. found that 25 percent of Albertans favor independence, while 58 percent are strongly opposed. In addition, 31 percent consider themselves “Albertans first and Canadians second.” Americans may find the concept of a large, energy-producing region with a significant minority of its population harboring feelings of exceptionalism familiar. While Alberta, unlike Texas, has the legal option to break away, it does not seem significantly more likely to do so, at least for now.

The tensions between Alberta and Ottawa do, however, create the basis for an interesting thought experiment. Alberta would face major challenges as an independent landlocked nation. But if Alberta decided to ditch Canada, would Americans be inclined to welcome it as the 51st state? While statehood has been a difficult privilege to secure in modern times, I suspect many Americans, regardless of their politics, might have sympathy for Albertans who can’t make a living from the natural resources available in their home. Given that Alberta, even with its current struggles, boasts the third-largest provincial gross domestic product in Canada, welcoming Alberta into the fold would have an economic benefit for Americans, too.

An opinion column in The Wall Street Journal recently compared the situation in Canada to a Norwegian TV show, “Okkupert” (“Occupied” in English). That show portrays the geopolitical fallout when a major oil exporting country comes under the control of politicians determined to curtail fossil fuels. “Okkupert” is a fictional drama, but it reflects the very real tensions between those who are determined to put a stop to the flow of oil in the name of protecting the environment and those who recognize the economic reality involved in turning off the tap with no transition period.

While Alberta as a new U.S. state remains purely a thought experiment, Canada’s treatment of the province may eventually have very real consequences for Albertans and other Canadians alike.

Managing Vice President Paul Jacobs, of our Atlanta office, is among the authors of our firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. He wrote Chapter 12, "Retirement Plans"; Chapter 15, "Investment Approaches And Philosophy"; and Chapter 19, "A Second Act: Starting A New Venture." He also contributed to the firm’s book The High Achiever’s Guide To Wealth.

The views expressed in this post are solely those of the author. We welcome additional perspectives in our comments section as long as they are on topic, civil in tone and signed with the writer's full name. All comments will be reviewed by our moderator prior to publication.

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One Response to "Alberta Would Make A Good 51st State, Eh?"

  • Richard Garcia
    March 11, 2019 - 7:27 pm

    I have always looked forward to Alberta and certain other Provinces joining the U.S.. And the hopes seem best when either there is consideration by the Province, including ordinary citizens, economic problems that would be eliminated or significantly reduced if joined the U.S., greater economic benefits if joined, better growth through better infrastructure in vastly isolated, such as Quebec. Also, if the U.S. relations are already or have already been more like as if the Province or any part of Canada were a U.S. State, such as Newfoundland. I wish the U.S. had taken Canada’s offer for annexation of British Columbia to the U.S.. Anyway, so I continue to read any news update, about anymore consideration or motivation of a Province that wants to join the U.S., or anymore significant disputes by any Province against Canada, such as unfair tax payments in Alberta for example. Or over its own problems with the environment and their own inability to afford to overcome those challenges like they could if only they were a U.S. State. Such as infrastructure for towns +100 miles apart or geographically divided by mountain ranges, and for better growth across the Province, such as Quebec. And territories, especially Yukon, have more to gain if joined the U.S.. In the case of Yukon, unlike Nunavut, Yukon shares a border with the U.S.. By just simply moving the Alaska-Yukon border east to the Yukon-Northwest Territories and becoming a part of Alaska instead of a separate State, joining the U.S. would be far easier, quicker and far less costly. Then as a former Territory, they could make a lot of economic progress as a State conjoined with another, and be better prepared to secede back from Alaska and become a separate State. Or they could just remain part of Alaska. Or they could work out a deal with Alaska of Yukon joining Alaska if Alaska renames the whole State- Alaska and Yukon, just like the Province of Newfoundland and Labrador, or like Northwest Territories.