Despite United Conservative win in Alberta, uncertainty still haunts the oilpatch

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As expected, the United Conservative Party led by Jason Kenney cruised to victory in Alberta, restoring conservative rule following a stint of NDP government helmed by Rachel Notley.

But unlike her surprise orange wave four years ago that ended nearly half a century of conservative power, pundits had correctly predicted that her days leading the wildrose province were numbered, thanks in part due to economic pain that has gripped the province.

As our guest contributor Jennifer Allford noted, the energy crisis gripping the oilpatch has fueled anger and frustration with Edmonton’s inability to get pipelines built. Kenney, like an oil man tapping into a well of black gold, extracted that anger and turned it into political fortune with a resounding majority. While his victory was almost certain, what’s much less assured is whether he and his government will be able to bring back jobs and investment to the crippled energy sector.

Kenney, a former cabinet minister under Prime Minister Stephen Harper, campaigned hard on pledging to export Alberta oil to foreign markets and stand up to Prime Minister Justin Trudeau’s carbon tax. While this is a surefire way to get votes, it has also pitted him against Ottawa, whose support he needs to build the very pipelines he has promised.

Remember the Trans Mountain Pipeline that was purchased by Ottawa from Kinder Morgan almost a year ago? The Trudeau government could approve the $10 billion project as soon as mid-June, but if Alberta doesn’t get in line with the feds’ environment plan, don’t expect swift action. There’s also the issue with British Columbia’s premier vowing to prevent its construction - a move which saw Kenney threaten to turn off the oil tap to his western neighbour.  

Alberta, which holds the world’s third-largest petroleum resource base, has seen an exodus of capital and jobs since the price of oil took a nosedive several years ago. The province now has one of the highest levels of unemployment in the country, and many downtown offices in Calgary remain vacant. The question many are asking is whether Kenney will be able to lure back investment with his promise to loosen environmental rules and streamline regulations for future projects.

There were likely cheers after Kenney’s victory in the boardrooms of Enbridge and TransCanda, which both have massive pipeline projects that have been sitting in limbo and which Kenney has vowed to push ahead. After all, the oil and gas sector hasn’t been shy about its  support for the incoming conservative government, despite some disagreements over the carbon tax, which CNRL and Suncor support. But even with his win and campaign rhetoric, what really matters here is the federal election in October, which will have significant consequences not just for the newly minted premier, but the province’s entire energy sector.

According to a report by political risk consulting company Eurasia Group, Kenney’s win could actually bring greater uncertainty to the province’s energy sector. The argument is if the Liberals are re-elected, it would set the stage for a long fight between Ottawa and Kenney’s government over climate change policy and pipelines. Ottawa has something of a trump card here: by dragging its heels on project approvals, it could put a lot of heat on Kenney and his team. Kenney, consequently, is sure to blame the energy downturn in his home province on the Liberals in this scenario.

However, if Andrew Scheer and his Conservatives win, Kenney will have a powerful ally who will no doubt give him what he wants. Kenney is surely placing big bets on a conservative win in October. Otherwise, he may find himself in the same situation as his predecessor.

It will be interesting to watch what happens in Alberta’s capital and in Ottawa over the next few months. One thing is for certain: pipeline politics will continue to be front and centre. What remains to be seen is whether the politicians will simply play politics, or commit fully to getting people back to work and our energy industry growing again.