Alberta has no one to blame but itself for its current woes

History records very few instances of people getting out of a jam by throwing a temper tantrum.

Yet that has been Alberta’s response in coping with the latest downturn in its fortunes.

And that has to stop. Albertans need to get serious about the province’s real prospects for sustainable prosperity, not the intermittent affluence it has long known.

Albertans should know better.

In the past four decades, Alberta has endured three periods of unnaturally high and prolonged unemployment related to its oil industry, the most recent being the mildest.

In the lost decade of the 1980s, Alberta’s monthly unemployment rate averaged 9.1 per cent for eight years. In the 1990s recession, Alberta unemployment averaged 8.8 per cent per month for five years. During the current misery, dating from the mid-2014 world oil-price collapse, the province has suffered four years of an average monthly jobless rate of 7.3 per cent.

You don’t have to be a forecasting expert to see a debilitating pattern here.

And yet, during the extended 2000s oilpatch boom times of high oil prices, ending abruptly in 2014, Alberta took a pass on the opportunity to diversify its petroleum and agriculture sectors, and also develop world-beating prowess in high tech.

Alberta didn’t even use that lucrative era to bulk up a provincial rainy-day fund that today has a pitiful $17 billion in assets compared with oil-producer Norway’s $1.2 trillion nest egg.

In its petroleum sector, Alberta has been content to mostly ship unprocessed tar-sands oil to U.S. refineries, where the big profits are made by non-Albertans. The prolonged shutdown of many of those refineries for retrofitting contributes to the current deep discount fetched by Alberta heavy oil relative to purer grades, along with the incessantly cited lack of sufficient pipeline capacity.

Failure to diversify has been a surrender of Alberta’s economic sovereignty and cause for repeated punishing hardship.

Alberta has actually gone backward in upgrading its formidable agricultural sector. In the heyday of Burns Foods Ltd. and Gainers Inc., the province was a major exporter of world-class processed food to Central Canadian and world markets. Alberta also has a thriving dairy sector.

But the province’s status as one of the planet’s greatest breadbaskets and maker of the world’s best beef was long ago overshadowed by oil reserves second in size only to those of Saudi Arabia.

The lack of forward planning in Calgary, head office of the Canadian oilpatch, is inexplicable. Over the past decade, Alberta ramped up its heavy oil production on the assumption, ludicrous in hindsight, that matching additional pipeline capacity would materialize as if by magic to get that additional landlocked oil to world markets.

Alberta Premier Rachel Notley is not alone among Albertans in effectively demanding that Ottawa somehow complete an expanded Trans Mountain pipeline before you’ve finished reading this article.

How could Calgary fail to grasp the toxic nature of pipeline politics, and the long time-frames for getting pipelines approved and built? In the 1950s, pipeline politics toppled the federal Liberal government of Louis St. Laurent after it rammed through Parliament the legislation creating the TransCanada natural-gas pipeline that now warms Central Canadian homes with Alberta gas.

Ever since the notorious “Pipeline Debate” of that era, getting a new fossil-fuel pipeline approved in this country has proved more difficult than moving a cemetery.

Given that history, it is astonishing that another Liberal prime minister would commit more than $9 billion of Canadian taxpayer funds to tripling the capacity of the Trans Mountain pipeline to get Athabasca oil to markets in China and India. And to do so over the objections of British Columbia, Indigenous people and environmental activists.

For which, as you’ve noticed, Albertans appear to be monumentally ungrateful. All facts to the contrary, Prime Minister Justin Trudeau, according to much of the Alberta news media, is attempting to destroy Alberta, as they say his father did.

Actually, the entire country is conspiring against Alberta, according to its premier. In a November speech in Toronto, Rachel Notley accused the 33 million Canadians who don’t live in her province of “wilfully hold[ing] Alberta’s economy hostage.”

It is true that there is an understandable wariness, to put it mildly, among Notley’s fellow Canadians about proposed new oil pipelines, given the oil spills from repeated pipeline ruptures across North America. Calgarians might better understand the pipeline resistance if they awakened one day to find a heavy oil pipeline snaking along the park-lined Bow River.

This week, Notley was at it again, not only blaming Trudeau for letting Alberta down, but accusing a succession of federal governments of both parties of kneecapping Alberta.

One day, perhaps, the sun will rise in the west.

And that will be the day Alberta acknowledges that for decades it has failed to build the sophisticated refineries to produce high-value, easily exportable aviation fuels and specialty chemicals. And that Edmonton similarly neglected a formidable agriculture sector that could be, and once was, an exporter of high-margin processed food. And that Alberta allowed a budding provincial high-tech sector to languish rather than blossom, as those of Waterloo, Ont. and Boise, Idaho have done.

For all their ingratitude, though, Albertans will take the $1.6-billion bailout that Trudeau has provided the Alberta oilpatch. And a capital-intensive oilpatch will make liberal use of the $15-billion program of federal tax relief for corporate buyers of modernized equipment that Ottawa created last year, largely in response to oilpatch demands.

A resurgent, witless Alberta separatist moment has yet to grasp that Alberta’s oil would be even more landlocked, if such a thing is possible, after sovereignty. And that Ottawa would have to kill a Trans Mountain pipeline expansion of chief benefit to a jurisdiction no longer Canadian.

A sovereign Alberta would also be stuck with the entire tab for an estimated $260-billion cost to clean up the oilpatch. And the introduction of an Alberta retail sales tax would be an inevitable consequence of Alberta independence.

Time is running out for the Alberta oil resource as a mainstay of the economy, unless the oilpatch is reinvented. McKinsey & Co., the global consulting firm, has estimated that global oil demand could peak as early as 2030.

This month, the International Energy Agency (IEA) forecast plummeting demand for gasoline and diesel fuels by 2040.

Yet during that same period, the IEA forecasts, there will be double-digit annual increases in demand for ethane, naphtha and liquified natural gas (LNG). The IEA also expects surging demand for specialized petrochemicals.

Which means that petroleum is not a “sunset industry,” as so many believe.

Alberta has a golden opportunity to upgrade its rudimentary network of oil refineries and petrochemicals facilities. That network can be expanded and upgraded with 21st-century technology to make Alberta the world’s most efficient producer of aviation fuels and specialty chemicals, rather than its current status as an oil equivalent to a mere drawer of water.

Highly refined product is far more profitable than tar-sands output. And it is easier than raw crude to export to world markets beyond Alberta’s sole export customer, the U.S.

But Alberta clings to its relatively primitive Athabasca oil resource. (It is an open-pit, strip-mining operation, after all). One thinks of Pittsburgh, a former world capital in steel as Calgary is to oil, that resisted the hard work of becoming a now-booming knowledge economy until almost every last steel mill had closed.

Instead of taking control of their destiny through economic diversification, as Peter Lougheed urged fellow Albertans to do when he was premier in the 1970s, many Albertans have opted for pointless anti-Ottawa “yellow jacket” protests. Those have been easily hijacked by an ugly congeries of Alberta separatists, xenophobes, white supremacists, one-world conspiracy theorists and Quebec-haters.

For the rest of the world, the “oil curse” – as old as the industry itself — refers to the abject poverty of people who see not a dime from the black gold under their feet.

But perhaps uniquely in Canada, the oil curse is an outpouring of bile and delusional thinking from Alberta every time the world oil price collapses. And that has been often in our history, given the notorious volatility of oil prices, over which not even the gods exert control.

Along with its abundance of blessings, Alberta has a weakness for blaming others for homegrown problems and missed opportunities. So, sadly, do many other parts of our country.

A long hard look in the mirror is the necessary start to making an end of our grievances.

David Olive is a business columnist based in Toronto. Follow him on Twitter: @TheGrtRecession