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FILDEBRANDT: Alberta’s budget is shot, and will need a new one entirely

Alberta can now rely on next to zero oil revenue if these prices hold up, and the budget on which it is based, is entirely shot.

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Every Alberta budget since striking it lucky at Leduc Number One in 1947 has been tied to the sweet allure of natural resource revenues. And every five years or so, governments listen to the prognostications of academics and experts warning that this is a bad idea, and promise to do something about it. And then they don’t. It’s just politics, and it’s unlikely to change regardless of the party in government. You don’t have to like it, but you probably have to accept it.

However much government revenues in Alberta may be tied to revenues from oil and gas, Albertans have a reasonable expectation that government’s will make reasonable, conservative projections for prices in their budgets. Sometimes they do; most of the time they don’t.

The dramatic crash in world oil prices caused by Saudi Arabia and Russia’s price war has Alberta’s benchmark oil price (WTI) sitting at US $34.06/bbl as of writing this column. This is no fault of anyone in Alberta, or North America, but it is a crisis that will hit Alberta directly.

Recent Alberta governments of all partisan hues have a less than stellar record in projecting oil prices in their budgets, especially further out than the next fiscal year.

NDP MLA and former Alberta Finance Minister Joe Ceci

Former Alberta NDP Finance Minister Joe Ceci canned the practice of long-term five-year projections, reducing the budget to a mere three years. Long-term projections were always a bit of a crap-shoot, but this was mostly likely done to allow him to claim that the government was headed towards a balanced budget at some point in the distant future, without ever having to show the math about how he would do it.

But even the NDP’s shorter three-year fiscal plans were on average, poor at forecasting oil prices.

WTI Budget Projections (source: Western Standard, Derek Fildebrandt using data from Alberta Budgets)

In Rachel Notley’s four NDP budgets as premier, they overshot WTI prices by an average of US$5.23/bbl, if we use today’s sad WTI spot price as the benchmark for 2020-21. If we are more charitable and leave 2020-21 out of it, they still overshoot by US$3.07.

The first UCP budget undershot oil prices by a modest US$1.00/bbl, but that budget was tabled late in the fiscal year when predictions are always easier to make. That being said, the NDP’s first budget was also late in the year, and still managed to overshoot by US$5.00/bbl.

WTI Budget Projections (source: Western Standard, Derek Fildebrandt using data from Alberta Budgets)

The real test comes in the next three fiscal years, when UCP Finance Minister Travis Toews projected relatively (but not wildly) optimistic oil prices to reach US$62.00/bbl by 2021-22. This was key in their very (quite wildly) optimistic projections of an extra $8 billion in extra annual government revenues over the final two years of the budget.

The budget has only been tabled and the speech read in the legislature. It is currently being debated and is still roughly a month away from being passed into law.

So while the government defends a budget based on oil that was US$49.78/bbl when it was tabled – and projected to reach US$63.00/bbl, it now sits at a paltry US$34.06/bbl.

That, is a very, very big hole.

Let’s put it into more tangible terms. According to the budget’s own “revenue sensitivities” in the fiscal plan, every US$1.00 fluctuation in the price of WTI is worth $355 million to the government coffers.

With WTI now hovering around half of what the Toews projected in his budget, that would mean a theoretical shock of $8.5 billion a year to the government’s balance sheet. That however, is quite impossible for the simple reason that it only expects to net $5.1 billion in all non-renewable resources revenues (combined) in 2021-22.

The government’s “revenue sensitivities” are only useful within a range of relative sanity, after which they have to be rewritten. It goes without saying that if today’s WTI numbers hold anywhere near their current range, they will have to be thrown out entirely.

In fact, the entire Alberta budget may need to be thrown out. The revenue projections when it was tabled on February 27th were already optimistic – now, they are downright delusional, if they hold to them.

Chances of reaching the UCP’s balanced budget platform commitment by 2022-23 were already tenuous enough with the modest $1 billion spending cut spread over four year. They were relying on a thundering economy to do the heavy lifting for them – plus a few (relatively modest) tax increases here and there.

Since the UCP came to power, Ottawa has passed bills C-69 (no more pipelines), C-48 (tanker ban), and killed the Teck Frontier oil sands mine. As of today, global oil prices have fallen through the floor. None of those things are the UCP’s fault, but it is now the hand they are dealt.

If they wish to have a prayer of reaching a balanced budget by 2022-23, they will have to shelve this budget and reintroduce a new one with updated, realistic oil prices, and much more serious spending restraint.

Derek Fildebrandt is Publisher of the Western Standard and the President and CEO of Wildrose Media Corp.

Derek Fildebrandt is the Publisher, President & CEO of Western Standard New Media Corp. He served from 2015-2019 as a Member of the Alberta Legislative Assembly in the Wildrose and Freedom Conservative parties. From 2009-2014 he was the National Research Director and Alberta Director of the Canadian Taxpayers Federation. dfildebrandt@westernstandardonline.com

Energy

VENKATACHALAM & KAPLAN: Oil and gas production is essential to BC’s economy

Here’s another slice of statistical bread to consider: In 2017 the BC oil and gas industry purchased $5.6 billion worth of goods and services from other sectors.

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Guest column by Ven Venkatachalam and Lennie Kaplan of the Canadian Energy Centre

British Columbia has been producing oil and natural gas since 1952. In fact, as of 2018, BC produced 32% of Canada’s natural gas production and 2% of Canada’s conventional daily oil production. British Columbia collects royalties from oil and gas development, supporting the economic prosperity in the province.

Want to know how important the oil and natural gas industry is to the BC economy? Using customized Statistic Canada data from 2017 (the latest year available for this comparison), it turns out oil and gas in BC  generated about $18 billion in outputs, consisting primarily of the value of goods and services produced, as well as a GDP of $9.5 billion.

As for what most of us can relate to — jobs — the BC oil and gas industry was responsible for nearly 26,500 direct jobs and more than 36,100 indirect jobs (62,602 jobs in total) in 2017. Also relevant: The oil and gas sector paid out over $3.1 billion in wages and salaries to BC workers that year.

Here’s another slice of statistical bread to consider: In 2017 the BC oil and gas industry purchased $5.6 billion worth of goods and services from other sectors. That included $600 million from the finance and insurance sector, $770 million in professional services, and $2.8 billion from the manufacturing sector, to name just three examples.

Spending by the oil and gas sector in BC is not the only way to consider the impact of the industry. Given that a large chunk of the oil and gas sector is next door in Alberta, let’s look at what Alberta’s trade relationship with its westerly neighbour does for BC.

BC’s interprovincial trade in total with all provinces in 2017 amounted to $39.4 billion. Alberta was responsible for the largest amount at $15.4 billion, or about 38%, of that trade.

That share of BC’s trade exports is remarkable, given that Alberta’s share of Canada’s population was just 11.5 percent in 2017. Alberta consumers, businesses and governments buy far more from BC in goods and services than its population as a share of Canada would suggest would be the case. Alberta’s capital-intensive, high-wage-paying oil and gas sector is a major reason why.

If Alberta were a country, the province’s $15.4 billion in trade with BC would come in behind only the United States (about $22.3 billion in purchases of goods and services from BC) in 2017. In fact, Alberta’s importance to B.C. exports was ranked far ahead of China ($6.9 billion), Japan ($4.5 billion), and South Korea ($2.9 billion)—the next biggest destinations for BC’s trade exports.

BC has a natural advantage for market access in some respects when compared to the United States. For instance, BC’s coast is near to many Asian-Pacific markets than are U.S. Gulf Coast facilities. The distance between the U.S. Gulf Coast and to the Japanese ports of Himeji and Sodegaura is more than 9,000 nautical miles, compared to less than 4,200 nautical miles between those two Japanese ports and the coast of BC.

The recent demand for natural gas in Asia, especially Japan (the largest importer of LNG) and price increase for natural gas, presents an exciting opportunity for BC oil and gas industry. The IEA predicts that by 2024 , natural gas demand forecast in Asia will be up 7% from 2019’s pre-COVID-19  levels. 

Be it in employment, salaries and wages paid, GDP, or the purchase of goods and services, the impact of oil and natural gas (and Alberta) on BC’s economy and trade flows is significant.

Guest column by Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre

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Opinion

SLOBODIAN: Schuler the black sheep of the Manitoba Tory family

While piously bleating about responsibility in a pandemic, these sheep are cleverly deflecting from their sinister stand on something they don’t support — one’s right to medical privacy.

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One Manitoba MLA — the only one of 57 — has the courage to fight for the right to protect private health information. 

The rest are either timidly silent or scampering to microphones to vilify this flock member for daring to not run with their sheep in-crowd. 

Progressive Conservative Infrastructure Minister Ron Schuler is on the verge of getting ousted from Premier Heather Stefanson’s cabinet and banned from the legislature for refusing to reveal his COVID-19 vaccination status.

Stefanson decreed a COVID-19 vaccination mandate effective December 15 for everyone entering the building.

Years of hard work — Schuler was first elected in 1999, won five subsequent elections, and has held impressive posts — suddenly matter not. 

What about the constituents who democratically elected him to represent them? Pfft. Nobody cares.

Like health workers, teachers, oil workers, police officers, firefighters, restaurant employees, Manitobans from all walks of life who won’t comply with questionable, harsh forced mandates, Schuler may be deprived of a right to earn a living

And the lone elected voice of reason in perennial COVID-19 hysteria will be muzzled. 

The right to work is now taken away just because something irks elected officials. Not providing proof of COVID-19 vaccination irks them so much they casually destroy careers and lives.

Maybe Schuler’s vaccinated. Maybe he isn’t. He says it’s nobody’s business but his.

“As stated in the house, no one in Caucus is opposed to vaccinations, however, my personal health information is a private matter and I do not discuss my personal health information publicly,” said the Springfield-Ritchot MLA in a written statement to Western Standard.

He refuses media interview requests. Can’t blame him.

The Winnipeg Free Press polled all MLAs about their vaccination status. Aha! Schuler and Seine River PC MLA Janice Morley-Lecomte were outed for refusing to cough up personal information. Morley-Lecomte buckled to pressure and confirmed she’s vaccinated.

No one appears to have a problem with media infringing on liberty and freedom by giving itself licence to poke into something that — until COVID-19 was sacred — an individual’s right to keep health information private. 

In this COVID-19 madness, the obliging media increasingly oversteps boundaries it’s supposed to protect.

Angus Reid recently found 70% of 1,000 Canadians surveyed believe employees should be fired if they refuse to be vaccinated. That means they must reveal vaccination status which is private health information.

Would those surveyed feel the same way if a reporter chasing a story asked them about that embarrassing rash in private places, an abortion, reliance on anti-depressants, or any other medical conditions?

If so, it would be useless to run to one’s MLA for help. Readers revealed to me that one Manitoba MLA flippantly told an oil worker who refused the vaccine for religious convictions to just go get vaccinated. He lost his job. Another MLA coolly told a constituent to go hire a lawyer if she didn’t like the rules.

Schuler’s vaccination status commanded new attention when it was revealed that a 70-year-old assistant in his constituency office died of COVID-19. 

No details were provided on whether the assistant was vaccinated or where she contracted COVID-19. 

But NDP house leader and justice critic Nahanni Fontaine pounced, calling for Schuler to be booted from cabinet, saying it would be “unconscionable” if he remained.

To his credit, Liberal Leader Dougald Lamont said it would be wrong to jump to conclusions about the tragic death, but yes, Schuler should be tossed.

Health Minister Audrey Gordon told media she’s a “vaccine ambassador.”

“I’ve always tried to lead by example in my life. I’m a vaccine ambassador, and if others want to follow my lead, I strongly encourage them to do so,” said Gordon, who with two other cabinet ministers was outed for violating mandates whilst frolicking at a gala sans masks and social distancing.

Schuler has been participating in question period virtually for a few months. The chamber already only allows MLAs in who have received two doses.

Nonetheless, Stefanson imposed a tougher rule — get vaccinated or get banished. 

Back to the NDP’s Fontaine who told the Winnipeg Sun MLAs must “step up.” 

“And if MLAs don’t stand up, who the heck is supposed to step up?”

Oh, the irony of chastising an MLA who is doing exactly that. Schuler is stepping up heroically, not only for himself but for all being bullied into sharing personal information.

Former Ontario privacy commissioner Dr. Ann Cavoukian recently told Blacklock’s Reporter she rejects vaccine passports in any form.

“You’re talking about people’s personal health information. That is between your doctor and yourself. Now all of that has changed … I find it abhorrent,” said Cavoukian.

“People’s health status is considered to be the most private, sensitive information they have … The problem is privacy protection measures, once they are lifted in an emergency, are seldom restored.” 

Schuler appears to understand the sinister ramifications of that. This is about more than him.

The premier and MLAs who choose to represent only Manitobans who dutifully obey them may silence him.

While piously bleating about responsibility in a pandemic, these sheep are cleverly deflecting from their sinister stand on something they don’t support — one’s right to medical privacy.

Baaaa….

Slobodian is the Senior Manitoba Columnist for the Western Standard
lslobodian@westernstandardonline.com

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Opinion

LOGAN: It’s time to divest from Suzuki

“It’s time to send a message to Suzuki where it will hurt the most – his donors.”

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Eco-alarmist David Suzuki has become more than just your everyday environmental activist — he’s become a well-known Canadian brand.

And it’s a brand that helped create the David Suzuki Foundation, which in 2020 raised more than $13 million for various environmental causes.

But what happens when the namesake of your charitable foundation not only feeds into, but repeats the dangerous rhetoric being employed by extreme environmental groups like Extinction Rebellion?

It was at an Extinction Rebellion event in Victoria in November that Suzuki crossed the line between peaceful activism and extremism.

“There are going to be pipelines blown up if our leaders don’t pay attention to what’s going on,” vowed the 85-year-old activist, best known for hosting CBC’s The Nature of Things.

And he wasn’t ready to back down following the outrage sparked by his comments, telling Victoria’s CHEK News it was “absurd” for people to think he was inciting violence and didn’t regret his comment.

“I meant it. I said it. I regret that the media … would take the context of that article, which was a fine report, and put the headline that totally slants it as if I’m inciting violence,” Suzuki said.

The Foundation that bears his name was quick to distance itself from the co-founder’s comments, saying Suzuki wasn’t speaking on their behalf.

Suzuki eventually apologized for his remarks, saying they were said out of “extreme frustration,” and not meant to support violence.

But despite the apology, Suzuki refused to condemn Extinction Rebellion’s defense of his own comments, which only further raised the temperature.

“Not only will pipelines be blown up, but we can be certain that world leaders will be put on trial for treason or worse — be killed,” said Extinction Rebellion’s National Action & Strategy Coordinator Zain Haq, doubling down on Suzuki’s comment.

It’s time to send a message to Suzuki where it will hurt the most — his donors.

You can send a letter today to the David Suzuki Foundation’s largest donors telling them that his violent rhetoric is unacceptable. Just click on this link.

If activists like Suzuki won’t hold themselves accountable, you can do your part to make them accountable to the people who write their paycheque.

Let these companies and foundations know that it’s time to divest from Suzuki!

Guest column by Shawn Logan with the Canadian Energy Centre

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