Crude Observations


Welcome dear readers to what is my favourite day of the year – February 30th, the day after Leap Day which as we all know is the greatest holiday of them all, what with the appearance of Leap Day William and the efforts to avoid the coming of March since as we all know “Real life is for March!”.


And in the spirit of that day, I’m going to something I only do every four years, publish a stream of consciousness rant, mainly because I can. But before I do that, I just want to remind everyone here about some Leap Day wisdom that I took to heart writing this week’s treatise.


“Live every day as if it’s Leap Day, and every Leap Day as if it’s your last. Oh and, if you should ever see an old man in a blue suit busting out of the ocean, take the time to say ‘howdy,’ it might just be worth your while.”


Another day after Leap Day fact is that it is also, coincidentally, the last day of a very eventful week for the people and government of Alberta. Or should I say more specifically, those people who don’t like renewables and think that we spend too much on, you know, social services and the poors.


That’s right, earlier this week the Danielle Smith TBA government rolled out their genius plans for renewable development in the province (after our trendsetting pause on new approvals for renewable projects, an idea subsequently hijacked with much fanfare by Joe Biden who enacted an equally economy and job killing ban on new LNG project approvals).


Then, not satisfied that she/they (what pronoun do you even use for a premiere or government? Are there dumb rules for that? Do I need to ask my dad for permission?) had done enough to make inexplicable policy decisions, they dropped a budget on us.


First, let’s talk about this whole new Renewables policy debacle. Or to be more accurate, the parts of it I don’t like (hint, it’s most of it).


As you may recall, about 7 months ago, the government announced that they were pausing new approvals for renewables projects while they went about reviewing how those approvals were done and what rules should exist about siting, clean-up and the like. At the time there was much hue and cry and hand-wringing about how this was just a sop to the fossil fuel industry in the province, a denial of climate change and the energy transition, a favour to incumbent and overcharging utilities and hypocrisy and cynicism given the way the province “enforces” clean-up and reclamation in the patch.


Well as it turns out – it was a lot of that! And maybe more. Perhaps less. The vey definition of FUBAR policy-making.


The key points of the policy announcement as far as I can figure are as follows:


  • No solar farms on actual farms
  • No wind turbines where it’s windy
  • Confiscation of property rights for property owners when they want renewables, eminent domain when Murray wants a well
  • Those dirty polluting renewables people need to post a bond for clean-up of their messy mess. What? What about oil and gas companies? Look! Squirrel!


OK fine. I’m not saying regulation is bad. But bad regulation is stupid. Imbalanced regulation is stupider. Shooting an industry experiencing 50% growth every year is stupidest.


But I digress.


At their core, the new Alberta regulations theoretically try to balance the needs of the agriculture industry to manage their business and protect prime farmland against that same land being covered willy-nilly by solar panels (and to be fair, while respecting property rights, this isn’t such a bad regulatory requirement for a “bread-basket” industry, although I am reliably informed that agricultural land “classification” doesn’t really exist). And the desire to protect pristine views from the blight of wind farms, while also noble, isn’t really supported by much else than someone’s sense of natural aesthetic.


So maybe it all comes back to ideology. Clearly this is a government that doesn’t really like the renewables industry and, to be frank, it is puzzling to me why there is so much antipathy towards it.


Could it be they don’t want the billions of dollars of investment? Looking at yesterday’s budget, it’s clear that incremental investment is welcome. Maybe they don’t like the hundreds of millions of property tax dollars that will flow into (mostly) rural municipalities? I suppose that is consistent with their lack of enforcement of property tax collection on laggard oil and gas companies (admittedly not a problem with the big companies).


Does David Parker not like seeing wind turbines as he hopscotches across Alberta raising cain and threatening local politicians with eternal damnation for wanting to properly fund public schools? That’s as good an excuse as any for a truly perplexing attempt to kneecap an industry that was leading the country in growth.


Something like 93% of the renewable energy investment in Canada was happening in Alberta. This is not a bad thing.


Maybe they don’t like people having jobs. Do they not realize that investment in renewables requires labour? In fact ir requires a lot of labour? Granted it’s not always the most highly skilled variety, but a significant portion of the installation work is being performent by Alberta tradespeople, many of whom also work in the … you guessed it … oil and gas industry.


In fact, many of the companies that do construction and maintenance work in the oil patch also contract to the companies that are building industrial scale renewable facilities.


Does Danielle Smith and the UCP hate the energy services sector?


Or, maybe it’s about ensuring a reliable power supply, since as we all know, sometimes the wind doesn’t blow and sometimes (well every day) the sun doesn’t shine. So we need to have those reliable gas plants available to pump out all those electrons for us. Except you know what, sometimes those gas plants are also offline – for scheduled maintenance or turnarounds. Sometimes they also break down. Or sometimes, they just don’t sell their power into the market because they don’t like the price they are getting. Wait. What?


Yes, you read that right. In our beautiful competitive energy market, large baseload generators are allowed, by the government, to withhold power if they don’t like the price they receive. It’s called “economic withholding”. And because we have a monopoly of baseload power suppliers, when power is withheld, it jacks up the price. So much that Alberta has the highest prices for electricity in Canada – almost twice as high.


You know what fixes that? More generation. You know who’s not building more generation? The monopoly utilities. You know who is? The renewables sector.


So, I ask again, why is the UCP and Danielle Smith so against the renewables sector and so enabling of higher electricity prices. Whose interests do these new rules actually serve?


Do I need to square the circle for y’all?


Don’t for a second think this is mainly about kowtowing to oil and gas companies.


So, what about the budget?


Right, that thing.


First off – like all UCP budgets, it seems to have a real hate on for the things “regular” Albertans care about, like health care, educating their children and having good infrastructure in the way of public transit.


If these are things you care about, you will be happy to know that funding for health care is rising. Just not keeping up with population growth and inflation. The same for education, both at the primary and post-secondary level.


What does this mean for me and you? Well, I could go for a deep dive and really get specific, but let’s put it this way.


We are going to be less healthy, have shorter lives, which I suppose won’t matter that much because we will be less educated in aggregate, so we won’t care as much. Also, if we want to get anywhere, we’ll need a car to get around because there will be less public transit for us.


Speaking of cars, the UCP also introduced an EV surcharge based on weight. This is something that exists in other jurisdictions so it’s not that “out there” and it is supposed to compensate for the fact that EV’s don’t pay a gas tax, so I get it. But it is really on brand with the UCP’s war on renewables. Worthy of note, there is no tax on hydrogen vehicles – but that could be because there is only one in the province that I’m aware of – the one used by Ms Smith as a prop in a “hydrogen industry” photo-op.


Couple of other goodies worthy of note.


Land transfer taxes are going up. Wait, not just up. Doubling. Take that homebuyers!


Sin taxes are going up.


But wait, aren’t we getting an income tax cut? That was a centre-piece of the UCP and Danielle Smith’s election platform.


Ha – sucker! Did you actually think a campaign promise meant anything? That shiny bauble is so far off the table.


Yes, but the Heritage Fund is going to get some cash in it so we are saving for a rainy day. Danielle said that just last week!




OK, but we are going to finally get off the oil and gas royalty roller-coaster. That was promised. Ha! Dude, are you new here (TBF, you probably are, since we are seeing in-migration of close to 200,000 a year)?


No. We are seeing record royalties this year. Close to $17 billion if the price forecasts hold at an average of US$74 WTI (reasonable) and C$2.90 per GJ. And a $0.759 Canada/US exchange rate.


With all that money who needs a PST to stabilize government finances.


So really, the budget is just a continuation of the same old policies and priorities that I guess “we” voted for.


You get the government you deserve. Even when they lie and break their promises.


But hey, at least the utility companies can still withhold power from the market if they don’t like the prices they are getting. Now with less competition, so more impunity.

Crude Observations
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