Tuesday, August 05, 2008

The Political Ground is Going to be Shifting Between Ottawa, Washington and Alberta

There are strange things happening politically these days. Everything old is becoming new again. In Canada we have Prime Minister Harper promoting asymmetrical open federalism and musing about transferring some international and foreign relations powers to the provinces.

This approach is the same as Joe Clark proposed many years ago in his view of Canada being a “Community of Communities.” Pierre Trudeau, a strong centralist, called Clark the “Head Waiter for the Provinces.” Paul Martin was also becoming very adept in this Head Waiter role too. I wonder if Harper will wear this tag too. Elizabeth May is likely to be the source of such a “reprimand.”

Quebec and Alberta will love the new Harper approach to redefining a decentralized Canada. Many others, primarily those who are Ottawa-dependent and Ontario, who is in economic decline, will see it as weakening Confederation. It will mean that Alberta will become more aggressive in setting up more foreign offices to advance its trade beyond the US and help recruit for labour shortages. This is an idea that is already in the works and bound to happen.

Obama is reviving some old ideas of Ronald Reagan and revising his energy position too. Obama’s suggestion that the Americans release their Strategic Petroleum Reserves to reduce oil prices was a tactic effectively implemented by President Ronald Reagan. In Reagan’s day this policy decision had a dramatic and immediate downward impact on oil prices. Releasing these oil reserves put Alberta’s economy immediately into the dumpster.

This happened just before the NEP took hold, which would have devastated the Alberta economy if it was given the chance. The NEP’s disastrous impact on Alberta’s economy is an urban myth because Reagan’s release of the Strategic Oil Reserves actually beat the federal Liberals to the punch in destroying the Alberta economy back then. But we Albertan’s have never “forgotten” the NEP - nor have we ever forgiven the Federal Liberals for it.
Obama is now “nuancing” his off shore drilling opposition and his anti-NAFTA stance now too.

All this Obama shifting has significant implications for Alberta and especially the oil sands development. One of the reasons Obama want to release the Strategic Oil Reserves now is to put light crude on the market to reduce gasoline prices. He also wants to replace the reserves with heavy oil that is lower priced but requires refining. I expect the Americans are going to be looking to Alberta’s oil sands as a long term source of that heavier oil, and why wouldn’t they?

If Obama becomes President with a Democratic Congress and all this happens, the States will soon start seeing the oil sands as their best source for reliable continental energy supply. Then Alberta will need to respond. Alberta's response will be to take advantage of Harper’s new decentralized Canada approach of more provincial powers on international matters.

Alberta will have to establish its own provincial foreign policy to deal directly with the United States. It will start being about energy and environmental matters around processing and exporting of oil sands - a provincially owned natural resource with serious international and geo-political implications. Who knows where it will lead but, one thing for sure, it will be interesting times.