Alberta Premier Rachel Notley deserves credit for taking bold measures to address an immediate crisis affecting her province, and the Canadian economy as a whole.
The price of oil has been hitting historic lows, thanks in part to a glut in the market. Notley, who has been defending this industry since her election, responded as she had to and on Sunday announced an 8.7-per-cent cut in Alberta production to clear out the oversupply.
The effect was pretty much immediate, with the price of Alberta oil jumping 35 per cent the next day to US$29.95 a barrel, compared with $21.93 the Friday before.
As a result of the glut, Alberta oil has been selling for much less than the world price. Notley knew this could not continue, and acted. Labour, her government's right-wing opposition party and the stock market all supported her actions. Quite a feat.
The big news from the announcement, however, is in the details, and the actions Notley is taking to build a stronger future for the industry.
In the build-up to announcing the production cut, Notley said that her government will also ensure more refineries are built in the province in the years ahead.
Unions have long called for increased upgrading and refining in Canada.
This is the sort of measure that will help Alberta most in the long run, and will provide good energy jobs for future generations.
There is no doubt that the crisis in oil prices has hit the Alberta economy hard. By some measures, the low price per barrel, at one point selling at about a quarter of what American oil was fetching, has cost the Canadian economy $80 million a day.
Alberta and Saskatchewan have no doubt felt the brunt of that hit, with the oil sector shedding about 3,000 jobs in the past year, and more than 32,000 since the industry's peak employment in 2014.
It is no secret that resource economies are subject to booms and busts, which is why former Prime Minister Stephen Harper was warned against boosting oil at the expense of other industries.
Oil continues to be a vital part of the Canadian economy. Relying on exports of raw bitumen, however, only made us more vulnerable to the booms and busts, which is why unions have long called for increased upgrading and refining in Canada.
We owe it to the hard-working people in the oil industry, to the provinces where it is most prevalent and to future generations to ensure we get as much economically out of the oil sector as we can. Doing that means upgrading and refining raw bitumen into higher-value products such as heating oil and gasoline, and creating energy jobs here rather than exporting raw bitumen to be upgraded and refined elsewhere.
It means more stability for the industry.
Besides creating good jobs in Canada, I believe that upgrading and refining the bitumen in Canada would add a much-needed level of stability to the oil sector. The current glut in the market, pipeline and transportation issues only elevate the need for the federal government to implement a national energy strategy for Canada.
As the current price crisis has shown, the emphasis on exporting raw bitumen to be processed out of the country left Alberta and the Canadian economy as a whole vulnerable to the whims of the market.
It is worth noting that while the raw bitumen exporters are glad that Notley cut production because their businesses were in crisis, the companies that upgrade and refine oil in the province did not see the need for such urgent action because they were doing OK.
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In other words, the companies that upgrade and refine oil in Canada have remained more stable throughout the crisis in prices.
To me, that shows the value of upgrading and refining at home. It means more stability for the industry, for the workers it employs, and their families and communities.
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