Alberta responses to federal energy stimulus package: A good start!

From the Province of Alberta

Federal energy stimulus package: Premier Kenney

Premier Jason Kenney issued the following statement on the federal government’s energy stimulus package:

“How we come through this economic crisis will depend in large part on the survival and the successful recovery of our country’s largest industry – the energy sector – on which some 800,000 Canadian jobs depend. We thank the federal government for taking this important first step to support the folks who work in our energy sector.

“The $1 billion partnership to address inactive wells aligns with Alberta’s commitment to ensuring our resources are developed in an environmentally sustainable fashion. This funding will immediately save or create thousands of jobs, keeping energy service companies going during these devastating times. It will also help us bring sites back to their original condition, leaving a cleaner environment for future generations. The $200 million loan to the Orphan Well Association will also help these efforts, demonstrating our commitment to producing Canadian energy under the world’s highest environmental standards.

“More support is needed to deal with the crisis in Canada’s energy sector, but this is a great first step. Our energy sector is facing its biggest challenge ever, and we need to be sure that industry can access the capital it needs to survive and thrive in future years. When the auto sector and the banks were threatened during the global financial crisis a decade ago, the economic strength of Alberta, powered by the energy industry, ensured that Canada was able to provide the urgent support they needed. We will continue to work with the federal government to ensure that the energy sector now gets the support it needs as it faces its own threats from both the COVID-19 pandemic and the Saudi-Russia price war.

“This unprecedented disruption in the world energy markets will eventually recede. Better times for the industry are a matter of when – not if – but only if the industry survives the next couple of years. We need to make sure Alberta is prepared and ready for the global recovery when the time comes. Alberta’s energy industry is the lifeblood of our provincial economy – and the largest subsector of Canada’s economy, as well as one of its biggest employers. The energy sector helps some of our country’s most important industries thrive, including health care, manufacturing and transportation.

“We are grateful for this job-creating initiative, and we will continue to work with the federal government until the energy sector has what it needs to survive and thrive for the benefit of all Canadians.”

From the Alberta NDP Caucus

SCHMIDT STATEMENT ON FEDERAL SUPPORT FOR ENERGY INDUSTRY

Marlin Schmidt, NDP Environment Critic, issued the following statement regarding the federal government’s aid package for Alberta’s energy industry:

“Cleaning up oil and gas sites is good news for our energy sector workers, landowners, and our environment. From day one, we have been advocating for support to cleanup orphan wells. It will put thousands of Albertans back to work while supporting responsible resource development.

“The UCP government must use this money in a way that ensures polluters still pay for the cleanup of their sites. They must also set clear targets and timelines for well cleanup now and into the future. I also hope the UCP will ensure landowners and municipalities are compensated for wells on their land.

“While this is good news for our energy sector and landowners, there are still a lot of Albertans and businesses struggling to make ends meet. I wish Premier Kenney and the UCP would step up and provide real leadership to support all Albertans and all sectors of our province instead of constantly relying on the federal government to act first.”

From the Alberta Federation of Labour

Alberta unions applaud federal support for oil and gas workers

“The money for orphan wells and methane reduction, announced by the federal government today, will help the environment and create jobs at a time when they’re desperately needed,” says the president of Alberta’s largest worker advocacy organization.

“This is a classic win-win scenario,” says Gil McGowan, president of the Alberta Federation of Labour. “The $1.7 billion being dedicated to orphan and abandoned wells can be put to use almost immediately. It will help address a problem that has been simmering in Alberta for years and, in the process, it will put literally thousands of people in the oil field service industry back to work. There is no doubt in my mind that this is one of the most constructive things that the federal government can do to help oil and gas workers at this time. It’s greatly appreciated.”

McGowan says he’s also very happy with the work the federal government did to get input from a wide variety of stakeholders.

“Here in Alberta, we’re used to our provincial governments consulting only with industry and then making a policy based on that narrow range of perspectives. But the federal government took a very different approach, consulting with workers, environmental groups, landowners and others, in addition to industry. It’s very refreshing. And, I think it shows that you get better policy outcomes when you take the time to hear from a wider cross-section of people.”

Of the $1.7 billion ear-marked for well remediation, $200 million will go directly to Alberta’s Orphan Well Association and $1 billion will go directly to the Alberta government. Alberta will be required to address concerns about how the whole issue of orphan wells is managed going forward.

“That last point is really important to us,” concluded McGowan. “This money won’t just create jobs; it will also require the Alberta government to clean up its act when it comes to implementing and overseeing rules requiring oil and gas companies to clean up their acts. That’s very good news for our province.”

From the Progressive Contractors Association of Canada

PCA: Federal Aid Package for Oil and Gas Sector a Beginning

The $1.7 billion aid package announced today for the oil and gas sector is a welcome start, according to the Progressive Contractors Association of Canada (PCA) which has seen many of its member company operations in the oil sands sector scaled back, shut down or delayed, resulting in thousands of layoffs.

“It’s a good day when thousands of jobs in Western Canada can be saved,” said Paul de Jong, President of the Progressive Contractors Association of Canada (PCA). “However, with a record number of energy companies folding, it will take far more to stave off a full-scale collapse.”

Prime Minister Trudeau announced $1.7 billion in funding to clean up orphaned oil wells in Alberta, Saskatchewan and British Columbia. The aid is expected to maintain as many as 5,200 jobs in Alberta alone.

“We’re still waiting for a federal aid package that fairly reflects the value and importance of the oil and gas industry,” added de Jong. “Given that this sector accounts for more than a tenth of GDP and employs tens of thousands of workers, the government still has a long way to go in demonstrating a real commitment to its survival.”

Last week, PCA sent Trudeau a letter, urging his government to provide support to the oil and gas sector without further delay.

About the Progressive Contractors Association of Canada (PCA) With offices in BC, Alberta and Ontario, PCA is the voice of progressive unionized employers in Canada’s construction industry. Our member companies are responsible for 40 percent of energy and natural resource construction projects in British Columbia and Alberta and are leaders in infrastructure construction across Canada. PCA member companies employ more than 25,000 skilled construction workers in Canada, represented primarily by CLAC.

From the Canadian Association of Petroleum Producers

CAPP issues statement recognizing the Government of Canada’s support for the oil and natural gas industry

“The Canadian Association of Petroleum Producers (CAPP) recognizes the Government of Canada’s support for the oil and natural gas industry, and appreciates the initiatives announced today which will protect about 10,000 jobs across the country.

The $1.7 billion announced today, for the closure and reclamation of orphan and inactive wells in Saskatchewan, Alberta, and British Columbia, is welcome news. Reducing environmental liabilities is a priority for the oil and natural gas industry and this initiative will allow important work to accelerate, while supporting thousands of jobs.

The government also announced a $750 million emissions reduction fund which will help companies continue their progress to reduce methane emissions. Canada’s oil and natural gas industry has committed to a 45 percent reduction of methane emissions by 2025, and the government is helping ensure that innovation and progress in this key area can continue during the economic crisis.

We are also encouraged by news that the government is working with the Business Development Bank of Canada and Export Development Canada to strengthen support for corporations who are most at risk. Liquidity is a real and immediate challenge for oil and natural gas producers and CAPP has been working with the federal government to identify urgent action needed to address the dire situation. We are awaiting additional details on the expansion of support — a critically important matter as companies try to weather the current crisis.

CAPP will continue to talk with all levels of government to ensure adequate support is in place to help businesses and jobs survive this unprecedented economic crisis. Survival of the energy sector will be crucial to Canada’s economic recovery.”

-Tim McMillan, President and CEO – Canadian Association of Petroleum Producers

From Cenovus, Brett Harris, Manager of Communications

We are appreciative that the federal government recognizes the dire situation the energy industry is in with the decrease in oil demand due to COVID-19 resulting in unprecedented low oil prices. The industry is in survival mode and needs the government to provide support to help companies preserve cash and access additional liquidity so they can still be here to help rebuild the economy once the immediate crisis passes.

We need more details about the federal aid for inactive and abandoned wells and methane emissions reduction. Cenovus has a strong history of addressing these areas of environmental responsibility and we will continue to take proactive actions so the government funding may help us progress these activities. Again, we still need to see the details.

The most important action the federal government can take to ensure the industry remains strong is by providing a temporary safety net in the form of increased access to liquidity. There are many options for this support to be delivered and we are urging the government to take swift action to pursue that.

Trudeau says $1.7B coming for orphaned-well cleanups

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

Published on November 21, 2024

Todayville

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:

Tegan Hill

Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

Published on November 21, 2024

Government of Alberta

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.”

Danielle Smith, Premier

“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.”

Nate Horner, President of Treasury Board and Minister of Finance

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.”

Nathan Neudorf, Minister of Affordability and Utilities

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