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Alberta

2022 – the year fossil fuels once again became a preferred source of reliable, affordable energy

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A worker walks past gas pipes at Uniper’s new LNG import terminal in Wilhelmshaven, northern Germany on December 17, 2022. Getty Images photo

From the Canadian Energy Centre Ltd.

By David Yager

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.

The only part of the demise of oil and gas that was successful was reduced supply

It seems like just the other day the wrath of the world was coming down on oil sands and coal.

To protect the atmosphere, Canada has been reducing coal-fired power generation for years. It started in Ontario then moved to Alberta. Saskatchewan is next. New Brunswick is supposed to stop by 2030, but that province claims it can’t be done.

Global coal consumption is rising again because it meets the cost and availability requirement created by energy shortages and rising prices. On December 16, the International Energy Agency reported, “The world’s coal consumption is set to reach a new high in 2022 as the energy crisis shakes markets.”

For energy, the biggest single change in 2022 is the remarkable shift in public attitudes towards fossil fuels.

The global energy complex is under assault by Russia’s invasion of Ukraine, the exposed shortcomings of wind and solar, years of underinvestment in fossil fuels, and rising inflation and interest rates.

But for the past ten years, there has been an all-out crusade against fossil fuels. Oil company CEOs were branded climate criminals. It was morally reprehensible to own fossil fuel company shares or loan money to oil, gas or coal producers. Elections were won in Canada, the US and in Europe on pledges to replace fossil fuels.

No cost was too great, because the cost of doing nothing thus permitting unchecked climate damage was greater.

What happened? How did the channel change to rapidly? Why after years of public and political attacks on the source of over 80 per cent of the world primary energy, has affordable energy on demand now become more important than where it comes from?

Price, the most fundamental driver of economics and human behavior.

The November 2022 global survey from public opinion research firm IPSOS titled “What Worries The World” tells the story.

IPSOS explains, “This 29-country Global Advisor survey was conducted…among 20,466 adults aged 18-74 in Canada, Israel, Malaysia, South Africa, Turkey and the United States, 20-74 in Indonesia and Thailand, and 16-74 in all 21 other countries.”

IPSOS charts the top six issues for the past two years. Poverty, crime, unemployment and corruption have always been important, and consistently ranked among the top five.

But in November 2020, inflation only registered among eight per cent of respondents. Two years later it is 42 per cent. Coronavirus and the unemployment that accompanied the lockdowns were the top two issues. The others remain in a consistent range.

Two years ago was the peak of the “oil is dead” mantra, and when many bright ideas for a fossil fuel free future were concocted. In a post-pandemic world, multiple voices claimed we must Build Back Better, ensure a Resilient Recovery, engineer the Great Reset.

The plan was to use government policy and borrowed money to create jobs through the large-scale replacement of fossil fuels.

Coined the “energy transition,” it was achievable and inevitable thanks to incredible advances in renewable energy cost and supply. Canada – the world’s fifth largest combined oil and gas producer – could lead the charge with minimal disruption thanks to a new federally-funded retraining program for displaced oil workers. This was called a Just Transition.

What happened?

The invisible hand of Adam Smith punched the world in the nose.

The only part of the demise of fossil fuels that was successful was reduced supply. As the economy recovered, consumers learned the hard way that low carbon energy sources were terribly oversold in terms of reliability, and demand for fossil fuels outstripped supply.

Prices for fossil fuels rose at the same time that inflation and interest rates reduced disposal income.

As demand grew, fossil fuel shortages were reflected in the price. When Russia – one of the world’s largest oil, gas and coal suppliers – invaded Ukraine, the gravity of the situation escalated immediately.

What the IPSOS survey dramatically illustrates is the number one concern for the world as 2022 ends is the rising cost of everything.

We’ve been told repeatedly that continued fossil fuel consumption will cause serious climate disruptions. No expense today will exceed the cost of future damages.

However, the more pressing issue today is still being alive in 2050 because of the rising cost of everything, including energy. Worrying about what the temperature, storm intensity or chemical composition of the atmosphere may be in 28 years has become an unaffordable luxury.

So fossil fuels are once again what they have always been – reliable and affordable sources of energy.

Happy New Year.

 

 

Alberta

Free Alberta Strategy trying to force Trudeau to release the pension calculation

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Just over a year ago, Alberta Finance Minister Nate Horner unveiled a report exploring the potential risks and benefits of an Alberta Pension Plan.

The report, prepared by pension analytics firm LifeWorks – formerly known as Morneau Shepell, the same firm once headed by former federal Finance Minister Bill Morneau – used the exit formula outlined in the Canada Pension Plan Act to determine that if the province exits, it would be entitled to a large share of CPP assets.

According to LifeWorks, Alberta’s younger, predominantly working-class population, combined with higher-than-average income levels, has resulted in the province contributing disproportionately to the CPP.

The analysis pegged Alberta’s share of the CPP account at $334 billion – 53% of the CPP’s total asset pool.

We’ve explained a few times how, while that number might initially sound farfetched, once you understand that Alberta has contributed more than it’s taken out, almost every single year CPP has existed, while other provinces have consistently taken out more than they put in and technically *owe* money, it starts to make more sense.

But, predictably, the usual suspects were outraged.

Media commentators and policy analysts across the country were quick to dismiss the possibility that Alberta could claim such a significant portion. To them, the idea that Alberta workers had been subsidizing the CPP for decades seemed unthinkable.

The uproar prompted an emergency meeting of Canada’s Finance Ministers, led by now-former federal Finance Minister Chrystia Freeland. Alberta pressed for clarity, with Horner requesting a definitive number from the federal government.

Freeland agreed to have the federal Chief Actuary provide an official calculation.

If you think Trudeau should release the pension calculation, click here.

Four months later, the Chief Actuary announced the formation of a panel to “interpret” the CPP’s asset transfer formula – a formula that remains contentious and could drastically impact Alberta’s entitlement.

(Readers will remember that how this formula is interpreted has been the matter of much debate, and could have a significant impact on the amount Alberta is entitled to.)

Once the panel completed its work, the Chief Actuary promised to deliver Alberta’s calculated share by the fall. With December 20th marking the last day of fall, Alberta has finally received a response – but not the one it was waiting for:

“We received their interpretation of the legislation, but it did not contain a number or even a formula for calculating a number,” said Justin Brattinga, Horner’s press secretary.

In other words, the Chief Actuary did the complete opposite of what they were supposed to do.

The Chief Actuary’s job is to calculate each province’s entitlement, based on the formula outlined in the CPP Act.

It is not the Chief Actuary’s job to start making up new interpretations of the formula to suit the federal government’s agenda.

In fact, the idea that the Chief Actuary spent all this time working on the issue, and didn’t even calculate a number is preposterous.

There’s just no way that that’s what happened.

Far more likely is that the Chief Actuary did run the numbers, using the formula in the CPP Act, only for them – and the federal government – to realize that Alberta’s LifeWorks calculation is actually about right.

Cue panic, a rushed attempt to “reinterpret” the formula, and a refusal to provide the number they committed to providing.

In short, we simply don’t believe that the Chief Actuary didn’t, you know, “actuarialize” anything.

For decades, Alberta has contributed disproportionately to the CPP, given its higher incomes and younger population.

Despite all the bluster in the media, this is actually common sense.

A calculation reflecting this reality would not sit well with other provinces, which have benefited from these contributions.

By withholding the actual number, Ottawa confirms the validity of Alberta’s position.

The refusal to release the calculation only adds fuel to the financial firestorm already underway in Ottawa.

Albertans deserve to know the truth about their contributions and entitlements.

We want to see that number.

If you agree, and want to see the federal government’s calculation on what Alberta is owed, sign our petition – Tell Trudeau To Release The Pension Calculation:

Once you’ve signed, send this petition to your friends, family, and all Albertans.

Thank you for your support!

Regards,

The Free Alberta Strategy Team

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Alberta

Ford and Trudeau are playing checkers. Trump and Smith are playing chess

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By Dan McTeague

 

Ford’s calls for national unity – “We need to stand united as Canadians!” – in context feels like an endorsement of fellow Electric Vehicle fanatic Trudeau. And you do wonder if that issue has something to do with it. After all, the two have worked together to pump billions in taxpayer dollars into the EV industry.

There’s no doubt about it: Donald Trump’s threat of a blanket 25% tariff on Canadian goods (to be established if the Canadian government fails to take sufficient action to combat drug trafficking and illegal crossings over our southern border) would be catastrophic for our nation’s economy. More than $3 billion in goods move between the U.S. and Canada on a daily basis. If enacted, the Trump tariff would likely result in a full-blown recession.

It falls upon Canada’s leaders to prevent that from happening. That’s why Justin Trudeau flew to Florida two weeks ago to point out to the president-elect that the trade relationship between our countries is mutually beneficial.

This is true, but Trudeau isn’t the best person to make that case to Trump, since he has been trashing the once and future president, and his supporters, both in public and private, for years. He did so again at an appearance just the other day, in which he implied that American voters were sexist for once again failing to elect the nation’s first female president, and said that Trump’s election amounted to an assault on women’s rights.

Consequently, the meeting with Trump didn’t go well.

But Trudeau isn’t Canada’s only politician, and in recent days we’ve seen some contrasting approaches to this serious matter from our provincial leaders.

First up was Doug Ford, who followed up a phone call with Trudeau earlier this week by saying that Canadians have to prepare for a trade war. “Folks, this is coming, it’s not ‘if,’ it is — it’s coming… and we need to be prepared.”

Ford said that he’s working with Liberal Finance Minister Chrystia Freeland to put together a retaliatory tariff list. Spokesmen for his government floated the idea of banning the LCBO from buying American alcohol, and restricting the export of critical minerals needed for electric vehicle batteries (I’m sure Trump is terrified about that last one).

But Ford’s most dramatic threat was his announcement that Ontario is prepared to shut down energy exports to the U.S., specifically to Michigan, New York, Wisconsin, and Minnesota, if Trump follows through with his plan. “We’re sending a message to the U.S. You come and attack Ontario, you attack the livelihoods of Ontario and Canadians, we’re going to use every tool in our toolbox to defend Ontarians and Canadians across the border,” Ford said.

Now, unfortunately, all of this chest-thumping rings hollow. Ontario does almost $500 billion per year in trade with the U.S., and the province’s supply chains are highly integrated with America’s. The idea of just cutting off the power, as if you could just flip a switch, is actually impossible. It’s a bluff, and Trump has already called him on it. When told about Ford’s threat by a reporter this week, Trump replied “That’s okay if he does that. That’s fine.”

And Ford’s calls for national unity – “We need to stand united as Canadians!” – in context feels like an endorsement of fellow Electric Vehicle fanatic Trudeau. And you do wonder if that issue has something to do with it. After all, the two have worked together to pump billions in taxpayer dollars into the EV industry. Just over the past year Ford and Trudeau have been seen side by side announcing their $5 billion commitment to Honda, or their $28.2 billion in subsidies for new Stellantis and Volkswagen electric vehicle battery plants.

Their assumption was that the U.S. would be a major market for Canadian EVs. Remember that “vehicles are the second largest Canadian export by value, at $51 billion in 2023 of which 93% was exported to the U.S.,”according to the Canadian Vehicle Manufacturers Association, and “Auto is Ontario’s top export at 28.9% of all exports (2023).”

But Trump ran on abolishing the Biden administration’s de facto EV mandate. Now that he’s back in the White House, the market for those EVs that Trudeau and Ford invested in so heavily is going to be much softer. Perhaps they’d like to be able to blame Trump’s tariffs for the coming downturn rather than their own misjudgment.

In any event, Ford’s tactic stands in stark contrast to the response from Alberta, Canada’s true energy superpower. Premier Danielle Smith made it clear that her province “will not support cutting off our Alberta energy exports to the U.S., nor will we support a tariff war with our largest trading partner and closest ally.”

Smith spoke about this topic at length at an event announcing a new $29-million border patrol team charged with combatting drug trafficking, at which said that Trudeau’s criticisms of the president-elect were, “not helpful.” Her deputy premier Mike Ellis was quoted as saying, “The concerns that president-elect Trump has expressed regarding fentanyl are, quite frankly, the same concerns that I and the premier have had.” Smith and Ellis also criticized Ottawa’s progressively lenient approach to drug crimes.

(For what it’s worth, a recent Léger poll found that “Just 29 per cent of [Canadians] believe Trump’s concerns about illegal immigration and drug trafficking from Canada to the U.S. are unwarranted.” Perhaps that’s why some recent polls have found that Trudeau is currently less popular in Canada than Trump at the moment.)

Smith said that Trudeau’s criticisms of the president-elect were, “not helpful.” And on X/Twitter she said, “Now is the time to… reach out to our friends and allies in the U.S. to remind them just how much Americans and Canadians mutually benefit from our trade relationship – and what we can do to grow that partnership further,” adding, “Tariffs just hurt Americans and Canadians on both sides of the border. Let’s make sure they don’t happen.”

This is exactly the right approach. Smith knows there is a lot at stake in this fight, and is not willing to step into the ring in a fight that Canada simply can’t win, and will cause a great deal of hardship for all involved along the way.

While Trudeau indulges in virtue signaling and Ford in sabre rattling, Danielle Smith is engaging in true statesmanship. That’s something that is in short supply in our country these days.

As I’ve written before, Trump is playing chess while Justin Trudeau and Doug Ford are playing checkers. They should take note of Smith’s strategy. Honey will attract more than vinegar, and if the long history of our two countries tell us anything, it’s that diplomacy is more effective than idle threats.

Dan McTeague is President of Canadians for Affordable Energy.

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