Alberta’s Oil and Quebec Seperation

Rafe Mair looks back at history, then contemplates high oil prices and resulting tensions in Confederation, in his Tyee column:

First some history. With the arrival of the Organization of the Petroleum Exporting Countries (OPEC) in 1965, the oil price fix has been in and we all know about the crisis in 1974 that brought about huge lineups at the gas pumps in the U.S. What Alberta has amnesia about is the fact that back in the ’60s, they were given subsidies at industrial Canada’s expense because world prices were so low.In 1980, oil prices went from under a dollar to $20 and the federal government stepped in with the National Energy Program which, in effect, forced Alberta to sell to Ontario below world prices. The agreement was, of course, much more complex than that. The cow pies hit the Alberta fan and Premier Lougheed cut production and threatened to hold back on exploration. Bumpers on Alberta cars had stickers saying “Let those Eastern bastards freeze in the dark.” It wasn’t a pretty sight.

There is an historic basis for this depth of Albertan hatred of the industrial heartland. In the beginning, control of resources was given to the provinces under the British North America Act. The idea was that Ontario would produce the goods from resource provinces and then, hiding behind the skirts of high tariffs and with very favourable freight rates, would sell the finished products back to captive consumers in Western Canada. This generated intense bad feelings towards the “East” which are felt today.

There is another tidbit. Alberta and Saskatchewan did not come into Confederation as a high contracting party, as did B.C., but were carved out of territory ceded to Canada at the time of the BNA Act and were made provinces in 1905. It wasn’t until 1930 that they got the same powers over resources held by other provinces. When you have to fight like hell to get something, you tend to fight like hell to keep it.

Down a bad road

Now let’s put on our seers hat and look a little down the road. Only someone recently arrived from Mars wouldn’t see that the price of oil is (in spurts no doubt) steadily rising and there is no end in sight. Many experts believe that we have now “peaked,” meaning we are using more oil than we are discovering and, of course, shortages breed high prices. Much of the world’s oil is produced in politically unstable countries hostile to America and her friends. Those oil producers see Canada as one of those friends of the U.S., though that may not be the unanimous view of Canadians. It’s not hard to imagine oil going to $90-100 dollars and, as Helmut Pastrick, economist for the credit unions told me a couple of weeks ago, when that happens, all economic projections are out the window.

Now comes time, as the cowboys say, for the nut cutting. As oil reaches new heights, what happens to Ontario industry already hard hit by globalization and the high-priced Canadian dollar? No points for that one. But the political issue then becomes: what options does Prime Minister Harper have?

There’s no point consulting the Constitution for the answer because if the NEP is any guide, Ottawa acts first then dares the provinces to take the matter to the Supreme Court of Canada. It would be nice to think that the federal government would make sure they were on sound legal grounds before they move, but that’s not the way it works. Especially when, as in this case, they are on very shaky ground indeed.

There’s a reason for that. If Prime Minister Harper were to seek a Supreme Court ruling, the fuss that would cause in the far west would be as great as if he just did it and asked questions later, plus he would not get the big political buzz in Ontario he badly needs.

Let’s get to the root of the matter. If — no, make that when oil starts to flirt with $100 per barrel, industrial Canada, for which read Southern Ontario, will be in big trouble. Industries already hard hit will be demanding that Ottawa “do something,” bearing in mind that at this point the province of Alberta far from being just rich, will be stinking rich. Rolling in lolly and loving every minute of it. If past experience is any guide, there will be no point to Prime Minister Harper asking Alberta to be good Canadians and share. Any Alberta premier who succumbed to that sort of sentimental twaddle would be boiled in some of that excess oil.

Harper’s dilemma

While Mr. Harper has a solid base of support in Western Canada and is bullish about prospects in Quebec, he can’t win without a goodly number of Ontario votes and he certainly will never capture a majority without solid support from Canada’s industrial engine.

And, the Catch 22? He needs the far west but he can only get that by sacrificing Ontario, which he needs even more.

But the PM’s troubles don’t stop there. The Liberals know that if they are to revive, Ontario must be won back. And here’s the crunch: they don’t give a fiddler’s passing of wind about the far west of the country. They’ve been governing without Alberta and B.C. for years and will cheerfully do it again, given the chance.

Assume that when the crunch comes, Mr. Harper, knowing that there is no middle way, gives relief to Ontario at the expense of Alberta. What’s the likely fall-out in Alberta and B.C., especially the former? In my view it has the potential to split the country.

Another Catch 22 lands at 24 Sussex Drive in the form of Quebec. Seeing the mines exploding all over the political playing field, Quebec will sense an opportunity to demand it receive more federal concessions of power, and will demand it with the usual Quebec unsaid threat, “or else.”

I contend that the foregoing is a very possible scenario and that our politicians are whistling past the graveyard on this. For, as I said at the beginning, Canadians and especially their politicians don’t like to face problems until they are upon them. By then, they’re hugely difficult if not impossible to solve without leaving constitutional carnage.