How the oil industry created a ‘deep state’ in Canada

Kevin Taft

Opinion: The former leader of the Alberta Liberal Party warns that democratic institutions in Canada are falling under the sway of the oil industry

October 6, 2017 - You may have heard the term “deep state” in recent months, especially out of the United States. It is a powerful term, but in Canada its meaning is getting stripped. Up here, “deep state” is in danger of becoming just another term for bureaucratic inertia and a resistant civil service. That distorts the concept, so let’s take a look at this term, and an example of a deep state in Canada.

Democracy depends on a wide range of institutions: political parties; courts, police, and media; non-partisan civil servants and arms-length regulators; and universities with experts who pursue truth wherever evidence may lead. A key feature of democracy is that these institutions are genuinely independent. They are not beholden to any private interest, and are instead loyal to the public interest and obedient to the rule of law.

But what happens when public institutions lose their independence? Even more, what happens when a whole series of democratic institutions falls under the sway of one private interest? This would occur, for example, when the governing party, the opposition party, the civil service, universities and regulators all follow the lead of the same private interest.

When several key democratic institutions are captured and held by the same private interest, a “deep state” forms. A deep state is an unofficial system of government that arises separately from, but is closely connected to, the official system. It is a public-private hybrid that operates outside public view. In a modern democracy like Canada, a deep state typically comprises leading owners and executives of major private interests and their allies, together with a selection of politicians and bureaucrats tied to the success of those private interests. A successful deep state captures and harnesses the institutions of democracy for its own use.

Very few private interests have the resources to establish a deep state. In Canada, one that does is the oil industry.

Deep states tend to arise when powerful interests are threatened. What’s the threat to Canada’s oil industry? Global warming. The link between fossil fuels and global warming has been known since the 1980s, and so has the solution to global warming: phasing out fossil fuels. Rather than accepting the science and adapting to other sources of energy, the oil industry has developed an aggressive campaign to obscure the science and advance its own interests.

In the late 1980s and early 1990s, healthy democracies like Canada’s responded as they should to global warming. University and government scientists conducted research; civil servants prepared plans and legislation to reduce emissions; political parties committed to action; and Canada’s Parliament endorsed international climate change agreements.

Then the oil industry went into action, and one by one these democratic institutions succumbed. The Harper Conservatives became clients of the oil industry, withdrawing from the Kyoto accord and silencing federal scientists. The federal Liberals and Alberta NDP committed to expanding pipelines and oil sands production. The National Energy Board was tarred by conflicts of interest and the Alberta Energy Regulator was chaired by a former oil executive, while millions of oil dollars flowed to universities. Enough public institutions were captured by the oil industry that a state within a state was created: a deep state. Meanwhile, the hazards of global warming predicted by science came at us like zombies in a horror movie.

Let’s look at how oil’s deep state is unfolding right now. In July 2017, the Canadian Association of Petroleum Producers (CAPP) published A competitive policy and regulatory framework for Alberta’s upstream oil and natural gas industry. A central recommendation of the strategy needs to be quoted at length:

CAPP recommends that the province [of Alberta] adopt a whole-of-government approach and mandate to strengthen Alberta’s investment attractiveness while achieving government policy objectives. This approach could be supported by a Sustainable Prosperity Steering Committee, comprised of senior representatives from the regulated community [i.e. the oil industry] and the province – notably the Premier’s Office, the ministries of Energy, Economic Development and Trade, and Environment and Parks and the Alberta Energy Regulator. The intent of the committee would be to provide government and industry oversight to steward reform initiatives and drive performance on key files, with a view to minimizing cumulative costs on industry while still achieving government outcomes.

CAPP’s strategy then tied this approach to “political engagement” with the federal government to ensure “streamlined policies” for the industry, specifically naming the National Energy Board and the Canadian Environmental Assessment Agency.

In short, Canada’s staggeringly powerful oil industry wants “oversight” (their word) of political, civil service, and regulatory institutions in both the Alberta and federal governments. Do the words “deep state” start to take on more meaning now?

Oil’s deep state is a triple threat to Canada. First, the environmental devastation brought on by the industry is piling up liabilities that far outweigh the gains to most Canadians. The cost of reclaiming over 300,000 oil and gas wells in Alberta likely exceeds $70 billion, and the cost of cleaning up the toxic tailings ponds and other damage at the oil sands could reach similar levels. There is nothing close to adequate funding in place to pay these costs, much less the forbidding costs of global warming.

The second threat is economic. Alberta’s oil sands royalty system is so tilted toward the industry that the Alberta government now earns more revenue from gaming and liquor than from bitumen royalties. (You read that correctly.) So the public benefits of expanding bitumen production are tenuous. On top of that, the world is working hard to end its dependence on oil, so hitching the country’s economy to an industry that must be phased out is recklessly short-sighted.

Finally, we have the cost to democracy. As the country’s political parties, regulators, civil servants, universities, and other institutions come increasingly under the sway of the oil industry’s “whole-of-government” strategy, democracy itself begins to fail and we increasingly sacrifice the public interest of Canada to the interests of oil corporations.

The interests of Alberta and Canada are not the same as the interests of the oil industry—sometimes they overlap, and sometimes they are in direct conflict. The hard truth is that in coming decades the oil industry must be phased out in Canada and around the world if we are to avoid catastrophe from global warming. A healthy democracy can rise to that challenge; a country run by oil’s deep state cannot.

Kevin Taft is author of Oil’s Deep State (James Lorimer & Company Ltd., 2017) and former leader of the Alberta Liberal Party.

Photo: Oilsands development in Northern Alberta (Shutterstock)


Blasphemy, Alberta style! Former Liberal leader predicts disaster for oil industry,


It was blasphemy, Alberta style!

On September 26 at the Edmonton launch of his new book on the parlous state of Alberta, the province's oil industry and their increasingly problematic future together, former Alberta Liberal leader Kevin Taft said something a serious politician is never supposed to admit in Alberta.

To wit, "The oilsands will need to be phased out over the next couple of decades."

But then, Taft isn't a serious politician anymore, or even a politician at all -- which gives someone in his shoes the luxury of being able to say what he thinks without having to think about re-election. In other words, it may very well be useful, but it's a fairly low-risk proposition.

So, asked former Edmonton Journal managing editor Sheila Pratt, acting on behalf of the sponsoring Parkland Institute as Taft's conversational straight man at the University of Alberta launch of Oil’s Deep State, what happens if we don't phase out the sands?

"We either do that on our terms, or it will be done for us," Taft warned.

Which was near the point in their scripted conversation that Pratt usefully reminded Dr. Taft, PhD, that as leader of the Liberal Opposition in the Alberta Legislature from 2004 to 2008, "you used to think that oilsands and the energy industry were really useful for Alberta."

He admitted: "We’ve done well from the petroleum industry in this province." But there's always a but, even if unspoken. "Now the world is changing and we need to change with it."

This will be annoying to the most fervent supporters of Premier Rachel Notley's NDP government, of course, which unlike Taft's Liberals actually faces the challenge of trying to get re-elected in a province that starts getting antsy the instant a government starts to do anything the oil industry doesn't like.

One doesn't need to wonder how the Conservative Opposition would respond. Does anyone remember the howls emitted by Alberta's conservative politicians when Prime Minister Justin Trudeau said the same thing in much the same words for essentially the same reasons?

Still, it's worth listening to Taft's suggestion that the NDP -- just like the Conservatives before them -- has fallen too quickly under the spell of the fossil fuel industry.

"I am convinced the New Democrats have been captured almost as much as the other political parties," Taft told his audience.

Whether or not he meant to include the Alberta Liberals in that company -- when he led them, or since -- wasn't clear. But, as Taft pointed out, it would be a problem for any political party coming into the job of running a province with a one-note economy and governmental institutions heavily influenced by the industry.

"When the NDP stepped into government, they were surrounded by a captive state already," he said. "Their closest advisors, the most senior civil servants, the regulators and so on, were all, essentially, allies of the industry."

He cited the swiftly concluded royalty review and the Notley Government's "trashing" of the Leap Manifesto during the 2016 national NDP convention as evidence -- an assessment that may not be entirely fair, given the economic and political situation they faced.

Still, Taft differentiated between "a captive state," as in Alberta, and "a petrostate," as in Saudi Arabia, because at least in Alberta -- despite the degree of domination by the industry and its minions -- we still have lingering democratic institutions. "The thing about a captive state is there's a chance we can still set it free… But it's going to be a tough fight," Taft argued.

I counted six times in his formal remarks where Taft made the point that Alberta is going to have to manage the decline of the oilsands, or have it thrust upon us.

So, what's that going to look like?

"Well, one change is that demand for our product’s going to start to soften, I believe. Which means that price will stay low. The provincial books will become harder and harder to balance," Taft said.

"I do not expect the jobs that are being lost in the industry to be regained … you'll see more job loss," he went on. "And that will fuel a political crisis in this province, and I think that crisis is going to land in the lap of the next government."

Taft predicted the industry will face lawsuits -- with potentially "staggering settlements" like those that have bedevilled the asbestos and tobacco industries -- and the ever-rising cost of dealing with abandoned wells.

Alberta once had the opportunity to do things like Norway has, Taft observed. "We had a chance to head in that direction, but that was rearranged." The best hope now, he concluded, "is that the taxpayer doesn’t end up bearing the liability."

"I do not myself believe there are right-wing solutions to the challenges that Alberta faces, so the next hard-right government, if they do win, is going to have a really tough time."

The Calgary launch of Oil's Deep State: How the petroleum industry undermines democracy and stops action on global warming -- in Alberta and Ottawa, published by Lorimer, took place on September 29 at Mount Royal University.

This post also appears on David Climenhaga's blog,