Alberta
RBC boss says the U.S. needs Canada to supply oil and gas to Asia for energy security
From the Canadian Energy Centre
By Deborah JaremkoDave McKay sees the opportunity to ‘lead on both sides’ with conventional energy and cleantech innovation
Despite the rise of “Buy American” policy, the CEO of Canada’s biggest company says there are many opportunities to improve Canada’s sluggish economy by supporting the United States.
Near the top of the list for RBC boss Dave McKay is energy – and not just the multi-billion-dollar trade between Canada and the U.S. The value of Canada’s resources to the U.S. stretches far beyond North America’s borders.
“Canada has to get in sync and create value for our largest trading partner,” McKay told a Canadian Club of Toronto gathering on Sept. 10.
Security, he said, is one of America’s biggest concerns.
“Energy security is a big part of overall security…As we think about these power structures changing, the U.S. needs us to supply Asia with energy. That allows the United States to feed energy to Europe.”
He said that for Canada, that includes oil exports through the new Trans Mountain pipeline expansion and natural gas on LNG carriers.
“Particularly Asia wants our LNG. They need it. It’s cleaner than what they’re using today, the amount of coal being burned…We can’t keep second-guessing ourselves,” McKay said.
Asia’s demand for oil and gas is projected to rise substantially over the coming decades, according to the latest outlook from the U.S. Energy Information Administration (EIA).
The EIA projects that the region’s natural gas use will increase by 55 per cent between 2022 and 2050, while oil demand will increase by 44 per cent.
With completion of the Trans Mountain expansion in May, Canada’s first major oil exports to Asia are now underway. Customers for the 590,000 barrels per day of new export capacity have already come from China, India, Japan and South Korea.
Canada’s long-awaited first LNG exports are also on the horizon, with first shipments from the LNG Canada terminal that could come earlier than expected, before year-end.
According to the Canada Energy Regulator, LNG exports from the coast of British Columbia could rise from virtually nothing today to about six billion cubic feet per day by 2029. That’s nearly as much as natural gas as B.C. currently produces, CER data shows.
But the federal government’s proposed oil and gas emissions cap could threaten this future by reducing production.
Analysis by Deloitte found that meeting the cap obligation in 2030 would result in the loss of about 625,000 barrels of oil per day and 2.2 billion cubic feet of natural gas per day.
This could wipe out significant sales to customers in the United States and Asia, without reducing demand or consumption.
McKay said the “massive complexity” around climate rules around the world and the lack of a cohesive path forward is slowing progress to reduce emissions.
Canada has opportunities to advance, from conventional energy to critical minerals and cleantech innovation, he said.
“We have to continue to leverage our resources…We can lead in clean tech, but in the meantime, there is an opportunity to get more carbon out of the economy sooner,” he said.
“We are in a race. Our planet is heating, and therefore we have to accept there can be transitionary energy sources.”
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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