The more things change, the more they stay the same.
The Liberals won a third consecutive minority government on Monday. They gained eleven seats from the 2021 election, putting them at 169 total seats. This was still three seats short of the 172 they needed to form a majority government.
The Liberals have been in power since 2015, when Justin Trudeau’s team won a majority government with 184 of the total 338 seats.
Albertan politicians had mixed reactions to the results.
Conservative MP Michael Cooper told a crowd of supporters in his riding of St. Albert, “The national result is not what we hoped it would be. But the good news in what is no doubt a disappointing night nationally is that the Liberals have been kept to a minority government.”
Town of Innisfail Mayor Jean Barclay hopes that “the province and the federal government will find a way to work together. It takes both parties to have a relationship.”
“When I listen to Prime Minister Carney and his vision for building Canada and building economic corridors, Alberta is so well-positioned to be at the forefront of that,” she told The Albertan.
Premier Danielle Smith did not meet the news with such optimism. She’s already scheduled a special caucus meeting for Friday to discuss how Alberta might move forward in the face of a fourth federal Liberal government. “We will no longer tolerate having our industries threatened and our resources landlocked by Ottawa,” she wrote in a statement.
Business Likes Stability
A minority government may stand in the way of Alberta’s energy development plans.
Carney’s campaign platform included the promise of building national energy corridors. With only a minority government, he’ll need the support of other parties to make that happen.
The Bloc and the NDP are both unlikely candidates for that job. Former NDP leader Jagmeet Singh said that an “east-west energy grid” was a much higher priority for his party than nation-building pipelines.
Yves-François Blanchet, leader of the separatist Bloc Quebecois, has said of pipelines, “There is no more of a chance that I would support Energy East than there is a chance that I would sign the Canadian Constitution.”
Conservatives could be slow to support Liberal resource development initiatives. Such nation-building programs might boost public support for the Liberals in Alberta and Saskatchewan, meaning Conservatives could stand to lose their decades-long dominance in Western Canada.
Historically, Canadians have elected a minority government fifty percent of the time.Minority governments have been great for passing nation-building policies such as universal healthcare and the Canadian Pension Plan. They’ve been less of a boon for business. Business runs best with a bit of certainty. And the only certainty a minority government can bring is its uncertainty.
The Oil Sands Problem
Instability at the federal level aside, developing Alberta’s oil comes with a high level of risk.
Worldwide oil prices have the ultimate say on the value of Albertan crude. This is something no government, federal or provincial, can control.
Most of Alberta’s known oil reserves are in the tar sands. Building new tar sands projects costs billions, and need to be open for years before they’ve paid for themselves. The mines and the pipelines required to transport the oil cost billions of dollars upfront to build. They don’t always pay off.
The US learned this lesson the hard way. They have four times more pipelines than any other country in the world. In 2021, half of them were sitting empty. Investors scrambled to build pipelines before the pandemic, when prices were high. But then prices dropped and drilling stopped. The stream of oil into pipelines turned to a trickle and then dried up.
These days, much of the world is prioritizing fracked gas, which is easier and cheaper to produce.
As former Imperial Oil executive Ross Belot writes, “Unlike the billion-dollar requirements of oil sands projects, there is a much lower barrier to entry for fracking: a typical 500-barrel-per-day well would cost only $5 to $10 million to build. Fracked wells produce most of their oil within three years, making them far less susceptible to market changes.”
Not A Safe Bet
Danielle Smith has promised Albertans that she will “reset” the province’s relationship with Ottawa. Her focus is on expanding Alberta’s oil industry.
In her first meeting with Carney, Danielle Smith laid out a list of demands. These included “guaranteeing Alberta full access to unfettered oil and gas corridors to the north, east, and west” and “eliminating the oil and gas emissions cap.”
Many oil companies have avoided their responsibility to clean up and properly close wells once they are used up. Recently, the government has chosen to pass cleanup costs to citizens rather than requiring companies to pay.
And given their dependence on worldwide oil prices, pipelines and tar sands can quickly become more costly to citizens than they are profitable.
Moreover, given Canada’s trend of electing minority governments, pipelines are a bet on Liberals and Conservatives working as a team, not just in the upcoming Parliament but for decades to come.
