Alberta
NATO reps say U.S., Canada oil and gas critical for energy security
Outside NATO headquarters ahead of a flag-raising ceremony for Sweden’s accession to NATO, in Brussels on February 27, 2024. Getty Images photo
From the Canadian Energy Centre
‘The traditional energy system will not disappear in a day’
Canada and the United States now produce more oil and gas than anywhere else on Earth, including the Middle East, according to a new report by S&P Global.
This blanket of energy security extends beyond borders and is “a powerful card to play” in increasingly unstable times, researchers wrote.
They found that without oil and gas produced in the U.S. and Canada – which has more than doubled since 2008 – North America, Europe and the rest of the world would have been “notably more vulnerable” following Russia’s invasion of Ukraine in 2022.
The ‘massive social impact’ of energy insecurity
Energy insecurity is all too familiar for Lithuanian Juljius Grubliauskas, who works for the North Atlantic Treaty Alliance (NATO).
Growing up, he was on hand when the Soviet Union weaponized energy in an attempt to topple Lithuania’s fledgling independence.
“I remember clearly from my childhood in 1990 when the Russians cut off energy supplies to try to break the resolve of the Lithuanians, [and] that affected the daily lives of every citizen,” Grubliauskas told a recent webinar hosted by the Toronto-based Institute for Peace and Diplomacy.
“Having a lack of energy has a massive social impact and massive cascading effects like prices immediately jumping, massive inflation and such,” he said.
“Today obviously many things have changed and the energy landscape looks much different, but the principle that energy is closely linked to national security and the independence of nations to make their decisions still remains true.”
North America’s role in NATO energy supply
Formed following the second world war, NATO represents 31 nations in Europe and North America in shared collective defense where an attack on one is seen as an attack on all.
NATO is finalizing a strategic plan for its energy future as the world seeks to reduce emissions, focusing primarily on secure access for military forces, Grubliauskas said.
Oil and gas from North America play a critical role, said Brussels-based NATO energy security policy expert Can Ögütcü.
“We need to be sure that we’re going to have security of supply of production in the U.S. and in Canada,” he said.
“We have last one import supplier, the Russians, [and] we are in the transition to perhaps also lose another big supplier, the Middle East Gulf countries, as maritime routes become more and more insecure.”
Critical North American energy integration
While Canadian oil and gas exports currently go almost exclusively to the U.S., once they enter the integrated pipeline system, they can become so-called “re-exports” from U.S. Gulf Coast to overseas markets.
At the end last year, the U.S. imported more oil from Canada than ever before, according to the U.S. Energy Information.
At the same time, America exported a record 11.5 million barrels per day of oil and petroleum products, and a record 709 billion cubic feet of natural gas.
“North American energy integration, things like the Enbridge Line 3 pipeline and the Keystone pipeline are absolutely crucial pieces of infrastructure, not just for the energy security of North America but also increasingly for the energy security of NATO allies,” said Joseph Calnan, energy security analyst with the Canadian Global Affairs Institute.
“The traditional energy system will not disappear in a day. Climate change of course makes it imperative that we do reduce our emissions globally but the role of Canada in the short term and medium term, I believe, is to firm up this traditional energy system.
“While Canada has a major role to play in future energy technologies, the current energy technologies are in my opinion, the priority.”
Canada can do more
Canada has not done enough to improve world energy security, said Heather Exner-Pirot, a senior fellow with the Macdonald-Laurier Institute.
“In the wake of Russia’s invasion, Canada has not stepped up and there is risk on all sides from depending too much on OPEC, or Qatar or Russia, but also too much on the United States,” she said, referencing the U.S. decision to pause approvals of new liquefied natural gas (LNG) export projects.
“We can do much more shipping on the East Coast. There are projects that were in the pipeline that have been rejected by the federal government and by provincial governments that could be going to Europe. Obviously on the West Coast is more promising.”
Major projects slated to start up soon like the Trans Mountain expansion and LNG Canada terminal will grow global access to Canadian oil and gas, primarily in the Indo Pacific region, Calnan noted.
“I think we’ll see that Canada has a much larger role to play in the total global market, which will have a stepwise influence on the situation in Europe,” he said.
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
Alberta maintains a balanced budget while ensuring pressures from population growth are being addressed.
Alberta faces rising risks, including ongoing resource volatility, geopolitical instability and rising pressures at home. With more than 450,000 people moving to Alberta in the last three years, the province has allocated hundreds of millions of dollars to address these pressures and ensure Albertans continue to be supported. Alberta’s government is determined to make every dollar go further with targeted and responsible spending on the priorities of Albertans.
The province is forecasting a $4.6 billion surplus at the end of 2024-25, up from the $2.9 billion first quarter forecast and $355 million from budget, due mainly to higher revenue from personal income taxes and non-renewable resources.
Given the current significant uncertainty in global geopolitics and energy markets, Alberta’s government must continue to make prudent choices to meet its responsibilities, including ongoing bargaining for thousands of public sector workers, fast-tracking school construction, cutting personal income taxes and ensuring Alberta’s surging population has access to high-quality health care, education and other public services.
“These are challenging times, but I believe Alberta is up to the challenge. By being intentional with every dollar, we can boost our prosperity and quality of life now and in the future.”
Midway through 2024-25, the province has stepped up to boost support to Albertans this fiscal year through key investments, including:
- $716 million to Health for physician compensation incentives and to help Alberta Health Services provide services to a growing and aging population.
- $125 million to address enrollment growth pressures in Alberta schools.
- $847 million for disaster and emergency assistance, including:
- $647 million to fight the Jasper wildfires
- $163 million for the Wildfire Disaster Recovery Program
- $5 million to support the municipality of Jasper (half to help with tourism recovery)
- $12 million to match donations to the Canadian Red Cross
- $20 million for emergency evacuation payments to evacuees in communities impacted by wildfires
- $240 million more for Seniors, Community and Social Services to support social support programs.
Looking forward, the province has adjusted its forecast for the price of oil to US$74 per barrel of West Texas Intermediate. It expects to earn more for its crude oil, with a narrowing of the light-heavy differential around US$14 per barrel, higher demand for heavier crude grades and a growing export capacity through the Trans Mountain pipeline. Despite these changes, Alberta still risks running a deficit in the coming fiscal year should oil prices continue to drop below $70 per barrel.
After a 4.4 per cent surge in the 2024 census year, Alberta’s population growth is expected to slow to 2.5 per cent in 2025, lower than the first quarter forecast of 3.2 per cent growth because of reduced immigration and non-permanent residents targets by the federal government.
Revenue
Revenue for 2024-25 is forecast at $77.9 billion, an increase of $4.4 billion from Budget 2024, including:
- $16.6 billion forecast from personal income taxes, up from $15.6 billion at budget.
- $20.3 billion forecast from non-renewable resource revenue, up from $17.3 billion at budget.
Expense
Expense for 2024-25 is forecast at $73.3 billion, an increase of $143 million from Budget 2024.
Surplus cash
After calculations and adjustments, $2.9 billion in surplus cash is forecast.
- $1.4 billion or half will pay debt coming due.
- The other half, or $1.4 billion, will be put into the Alberta Fund, which can be spent on further debt repayment, deposited into the Alberta Heritage Savings Trust Fund and/or spent on one-time initiatives.
Contingency
Of the $2 billion contingency included in Budget 2024, a preliminary allocation of $1.7 billion is forecast.
Alberta Heritage Savings Trust Fund
The Alberta Heritage Savings Trust Fund grew in the second quarter to a market value of $24.3 billion as of Sept. 30, 2024, up from $23.4 billion at the end of the first quarter.
- The fund earned a 3.7 per cent return from July to September with a net investment income of $616 million, up from the 2.1 per cent return during the first quarter.
Debt
Taxpayer-supported debt is forecast at $84 billion as of March 31, 2025, $3.8 billion less than estimated in the budget because the higher surplus has lowered borrowing requirements.
- Debt servicing costs are forecast at $3.2 billion, down $216 million from budget.
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