We’ve seen this movie before. It ends badly.
The oil price crashes. Rigs quickly idle and oilsand expansions are mothballed. Transient workers scatter to their home provinces. Housing prices fall. Office towers empty out. In short order, the Alberta government swings a blunt axe at bloated program spending.
As in the past, there’s a measure of giddy Eastern glee at the discount sticker on a fill-up these days as a comeuppance to blue-eyed sheiks filling their vaults from a once-lofty world oil price.
But there’s a hidden high price for all Canadians in the cost of that cheap gas.
With oil tumbling toward $40 a barrel, Canada’s only goose is about to stop laying golden economic eggs.
Consider Alberta’s disproportionate contribution to Confederation as the only province which does not – yet – receive federal equalization payments.
Every Albertan contributes $5,000 more every year to Ottawa than they receive in federal transfers and services. Every Quebecer, by contrast, rakes in $1,800 more than they pay into the federal treasury.
Oil production is not just an Alberta advantage.
Some estimates show 3,000 workers from New Brunswick alone earn an oil sector paycheque averaging $120,000 a year. That money is sent home to create an estimated 2,000 jobs in an otherwise flat-lined Atlantic economy.
And for every dollar of oilsands investment, three dollars of economic activity is spun out to business outside of Alberta.
So easterners might want to ponder the true price of a western oil boom gone bust. Everybody shared in the Alberta dividend – and we’ll all suffer when it’s cut.
We can say goodbye to any more election goodies from Ottawa. Promised tax breaks could still be in jeopardy, despite the finance minister’s rosy optimism.
For anyone counting on surging industrial activity to counter the energy sector slowdown, well, dream on. It’s doubtful manufacturing activity will rise with sufficient speed or strength to replace a healthy oil patch payoff.
Of course, Alberta will rise again. It always does.
But until it gets premium-priced fuel, Canadians will feel the sputter of an Alberta economic engine running out of gas.