Alberta
Cancelling Keystone XL cost thousands of jobs and billions in GDP: U.S. government report
Keystone facility at Hardisty, Alberta. Photo courtesy Getty Images
From the Canadian Energy Centre Ltd.
Politicians, Indigenous leaders, and labour unions criticized the cancellation for the significant consequences it could have for both Canada and the United States
There is no doubt that Keystone XL’s cancellation was a massive gut punch to Canada and its oil and gas industry. Now the analysis is out showing the impact it had on the United States.
Just a sliver over two years ago the U.S. government nixed the pipeline project which would have added an additional 830,000 barrels of oil per day into the U.S.
The pipeline, which was expected to be complete in 2023, would have provided thousands of jobs and billions in economic activity. In December, the U.S. Department of Energy released its congressionally mandated report on the matter, and it’s now known approximately how many jobs and billions of dollars were foregone due to the cancellation.
The highlighted impacts in the report show that about 20,000 potential construction jobs per year over a two-year period were lost.
The nixing of the project also had a direct impact on the U.S. GDP with a loss of $3.4 billion. Wages were also impacted, with an estimated loss of $2.05 billion in potential earnings.
While there have not been any government numbers released for Canadian job losses, TC Energy said at the time of the cancellation that 1,000 workers would be laid off due to the announcement. It was a missed opportunity to lower costs for U.S. consumers, according to the American Petroleum Institute. Indigenous groups were also impacted by the cancellation.
Dale Swampy, president of the National Coalition of Chiefs noted that “It’s quite a blow to the First Nations that are involved right now in working with TC Energy to access employment training and contracting opportunities.”
Natural Law Energy, an Indigenous-owned energy company, had signed an agreement to invest a $1 billion equity stake in the pipeline. This would have had the potential to create jobs and economic opportunity for Indigenous communities, Natural Law Energy said. More than $600 million in supply and employment agreements for Indigenous-owned companies were expected to come from the project’s construction.
While celebrated by many environmental groups, the decision to cancel Keystone XL was controversial on both sides of the border. Politicians, Indigenous leaders, and labour unions criticized the cancellation for the significant consequences it could have for both Canada and the United States.
Teamsters general president Jim Hoffa’s statement strongly encouraged the U.S. government to reconsider the decision. “This executive order doesn’t just affect U.S. Teamsters; it hurts our Canadian brothers and sisters as well who work on this project. It will reduce good-paying union jobs that allow workers to provide a middle-class standard of living to their families.”
Terry O’Sullivan, general president of the Laborers’ International Union of North America said, “By blocking this 100 percent union project, and pandering to environmental extremists, a thousand union jobs will immediately vanish, and 10,000 additional jobs will be foregone.”
The United States is the world’s largest importer of oil, and Canada is its top supplier. America will continue to rely on oil imports, according to the U.S. Energy Information Administration. Absent Keystone XL, imports will come increasingly from other countries that may not have the same environmental and human rights standards as Canada.
From the Fraser Institute
By Tegan Hill
According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.
The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.
For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).
And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.
In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.
This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.
Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.
Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.
Of course, if the government falls back into deficit there are implications for everyday Albertans.
When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.
According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.
Author:
Better, faster, more affordable auto insurance
Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.
After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.
Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.
“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”
“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”
Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.
Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.
Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.
In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.
Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.
By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.
“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”
Quick facts
- Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
- A 2023 report by MNP shows
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