If Alberta Premier Rachel Notley uses her government’s power to put a cap on oil production Sunday, as she hinted she would do in a newspaper op-ed Friday, how long will it take Opposition leader Jason Kenney to change his tune?
Not long, one imagines.
Of course, if Kenney does turn on the proverbial dime and say the opposite of what he was saying before, it will be a reversion to form. But the logical pretzel he will have to twist himself into either way — whether he changes back to his old course or sticks with a new one — promises some light entertainment in what otherwise is likely to be a grim spectacle.
Kenney has lately been trying to out-Notley Notley by demanding more and deeper production cuts sooner than later. He justifies this change from the uncritical market-fundamentalist boosterism by claiming there has been a “market failure” in Alberta’s oilpatch, as if there was anything unusual about such a phenomenon.
For her part, a case could be made that Notley, a lifelong social democrat, has been trying to out-Kenney Kenney in the way she lectures Ottawa about how the Trans Mountain Pipeline expansion must swiftly be completed.
Still, at least when it comes to using state power to impose production cuts, if that is indeed what has been decided, Notley will be acting consistently with her long-held social democratic beliefs, to wit, that there is an important role for government in directing the economy.
In addition, Notley will be in accord with well-understood economic laws, specifically, the famous one that says when the supply of a commodity declines, its price rises, and when supplies fall, the opposite happens.
As an aside, if only from the perspective of pure propaganda, it seems to me both Notley’s NDP government and Kenney’s United Conservative Party opposition would benefit from ceasing and desisting all talk about how we need to increase the supply of Alberta heavy oil via a pipeline to tidewater so that we can see higher prices, a nonsensical proposition in economic terms. Instead, they would get farther arguing the market is already there and the problem is merely the bottleneck.
In other words, the solution to the Bitumen Bubble, as former Alberta premier Alison Redford called it once upon a time, is to end the Bitumen Bottleneck, a term that Notley has my permission to use Sunday as her own.
Regardless, while the premier is bound to face some criticism for her decision, whatever it turns out with her statement Sunday, at least she won’t have to twist herself into a pretzel to justify it.
For Kenney, this will be harder. He will be required, as the leader of a rather-far-right opposition party, to insist that the market is always right. Except, of course, when it isn’t.
From his perspective in this case, that appears to mean when it isn’t acting in the interests of giant oil companies. Alas for Kenney and his UCP, this situation is complicated in more ways than that because not only are some giant oil companies demanding production cuts immediately to save them from the cruel logic of the almighty market they normally laud, but others are demanding there be no cuts, because they’re making out like bandits the way things are.
The dividing line between these two groups of oil companies is whether or not they have their own in-house refining capacity. If they do, the current situation works for them, because they can buy feedstock cheap, upgrade it and sell it dear. If they don’t, the current situation doesn’t work for them, because their only options are to sell low and pray prices rise soon, or shut down their operations immediately.
In a way, this puts Kenney in a more difficult position than Notley — although, granted, without much responsibility.
There is a sense Kenney may find himself hoisted with his own petard, since it seems likely he demanded a production cut reasonably confident in the belief Notley would not have the intestinal fortitude to actually do it.
If there is one thing to know about Notley, it’s that she’s bold, and actually willing to make a decision, even if that means rolling the dice, metaphorically speaking, on her political future.
People sense this about her, and her toughness as well, which is undoubtedly among the reasons she outpolls Kenney on personal qualities, even as the two politicians’ parties are in the opposite position relative to one another in popularity. In other words, Kenney projects bluster; Notley projects the real thing.
I expect Kenney knows this, which is why I think that if things unfold Sunday as expected, he’ll retreat pretty quickly to his comfort zone, whence he’ll excoriate Notley’s NDP for daring to “pick winners and losers” in the oilpatch and tout the magical benefits of the market.
The fact three of the biggest oil companies in the Alberta oilsands — Husky Energy Inc., Suncor Energy Inc. and Imperial Oil Ltd. — want things to stay the way they are will doubtless speed his return to the neoliberal ideological mothership.
Embarrassing, but I don’t think politicians like Kenney experience embarrassment the way ordinary people do.
Notley took note of Kenney’s support for a production cap in her op-ed in the Calgary Herald on Friday, as she did of Alberta Party Leader Stephen Mandel’s. She also acknowledged the lack of agreement in the oilpatch.
“While a consensus appears to be forming among some political leaders, no such consensus exists within industry,” she wrote. “At this point, no industry consensus is expected. So, Alberta, it comes down to what is best for us, all 4.3 million of us, the owners of our oil resources. As owners, we have an obligation to get the most value possible.”
Notley will set out her plan to journalists at 6 p.m. Fasten your seatbelts. She’s braver than your average politician. She will make history.
Whatever the plan is, she told us Friday, “I promise you this: your jobs, your kids and your futures will remain our absolute focus. No matter what, I won’t stop fighting for you.”
This post also appears on David Climenhaga’s blog, AlbertaPolitics.ca.
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