Crude Observations

Truth and Consequences

And just like that, it’s over. The Alberta election has come and gone and lo and behold, we have a Danielle Smith led UCP majority, albeit a slightly smaller if not less humble majority. At the latest count the UCP won 49 seats and the NDP 38 making this one of the slimmest majorities in Alberta political history, which is kinda cool if you think about it, even if the UCP supporters are terrified of the commie pinko NDP hordes nipping at their heels and the NDP supporters are crying in their pillows about what mighta/shoulda been in the righteous fight against the scourge of religious and gender intolerance.


And the change hasn’t been subtle. I went to the doctor this morning and they actually charged me $250 to renew a prescription! OK. That’s not actually true. But it’s an example of a consequence of the choices that we as Albertans have made with this election result. Everyone claims that Danielle Smith advocates for more private delivery of services in health care. That is actually the truth. The consequence? We are probably going to get more private delivery of services in health care. Not my extreme example, but surgeries, testing, lab, manpower and other services are likely in the cross hairs.


And there is probably good and bad in that. We work with a lot of private health care delivery businesses – we call it industrial health care – clinics and such for remote and dangerous work sites – and I can tell you without reservation that their commitment to quality health care and positive results for their patients is every bit as strong as the public system.


Anyway, this isn’t a forum for my thoughts on private vs public health care and this is “short blog” week. What I really wanted to do was assess the consequences of the election and since I like nothing more than pop culture references, I chose to do this as a selection of Truths and Consequences. Like the game show that ran on TV from 1950 to 1988 after being a radio hit for 10 years prior.


The gist of the show is that you had to answer a trivia question and if you got it wrong there were consequences. Some good. Some bad.


In my version, we will review some truths about the recently executed election and look at the consequences.


Truth: The UCP won the election


Consequence: We need to be prepared for Danielle Smith to implement her agenda over the next four years after which she and her party will be judged on how that worked out. This is the reality of electoral politics.


Truth: The UCP majority is small by Alberta standards


Consequence: The UCP and by extension Danielle Smith will have to be very cognizant of the level of support they have and where it is coming from. I don’t think there is any particular by-election risk and party discipline will be uniformly strong. But there is a necessary gut check and period of reflection required to figure out exactly why the results skewed the way they did.


Truth: The UCP is stronger in rural Alberta than in the cities


Consequence: The cities of Calgary and Edmonton will be under-represented in the legislature and likely Cabinet. Edmonton is all orange so they are on the outside looking in and Calgary elected more NDP than UCP MLA’s so caucus discipline for the remaining members of the legislature will be critical to get citizens concerns addressed. It will be up to Danielle Smith and her senior leadership team to determine how they want to play this, but if they decided to lean into the rural support they would be leaving in essence two thirds of the population behind, betting hard on solidifying support they already can count on and risking further erosion to a potentially more moderate brand of conservatism seeking to come to the centre and win back the cities.


Truth: Turnout was lousy


Consequence: We don’t actually know how much support wither the NDP or the UCP had because more than 1 million registered Alberta voters out of 2.5 million stayed home. What is up with that? Was it disdain for the choices or laziness? We may never know but I am inclined to believe the latter. That said, the consequence is that in an election that turned on seven votes for the unpopular Tyler Shandro and handed control of Calgary to Bob in Ponoka, the outcome could have been markedly different had people cared enough. And it’s OK if people don’t care. Just stop complaining.


Truth: The NDP is incapable of connecting with the electorate on economic matters.


Consequence: Whether it’s the own goal of pledging to raise corporate taxes from 8% to 11% (38% increase! Drink!) or it’s inability to convince the line voter that their heart was in the right place for oil and gas, the NDP’s inability to seal the deal in corporate Calgary with its economic bonafides could mean that this election may prove to be the high water mark for the NDP against a unified conservative opposition. If the economy continues top perform even reasonably well, the economic argument against the NDP by the UCP can only gather strength


Truth: Suncor is laying off a shwack of people


Consequence: The oil and gas sector doesn’t really care about you or politics. This isn’t a knock. It’s a business. Their duty is to their shareholders and right now, Suncor is a laggard. And they don’t exist to support political agendas. There is no surprise at this announcement and there should be no surprise they waited until Thursday. This way they get both the lower corporate tax rate but they also get to deduct yet more severance costs against that putative taxable income. Winning! But the real consequence, aside from unemployment for tax-paying Albertans is that Danielle Smith needs to address the politics of this. It’s not Husky axing an entire building during the NDP reign. It’s a leading Alberta company dumping thousands under a newly elected pro-business, low tax UCP majority. This is one that Danielle Smith should take personally. They waited. There should be payback. Maybe if the oilsands companies don’t need employees who pay provincial and federal income tax it is time to review royalties. Never mind R* nonsense. Maybe it’s time for a Fair Share discussion.


Truth: It wasn’t about the arena.


Consequence: I have seen lots of people say the UCP won because of the arena deal. First off, I think we can all objectively admit that they lost Calgary. Second, the people who would have changed their minds about their vote based on arena funding probably isn’t that great. And given that the city appears to be split, if it happened it was probably an equal amount swapping positions. The real consequence of this election truth about the UCP commitment to the arena is that we will finally get an arena. I have no opinion either way on this aside from that if I was the city I would have done things differently. Long story short, we are allowed to want nice things and if government is going to fund that, so be it.


Truth: The election is over and the results are final.


Consequence: It is time to move on. I wish Danielle Smith and her government the best of luck navigating the rural/urban divide they have inherited and have reasonable hopes they can distribute positions of influence to capable MLAs in the various cabinet posts that will affect all our lives. The talent pool is diminished with some key MLAs going down to defeat but there will always be some rising stars. Governing from the right and trying to woo back the centre will be difficult, but they need to try or run the risk of fracturing the party. On the NDP side, a reckoning is here, but it is hard to see Rachel Notley stepping down as leader after such a good showing. One more electoral cycle for her. I also see Danielle Smith lasting another electoral cycle as long as she can keep herself above the chaos. It’s a tall task but doable.


See y’all next week!




Oh, before I go. Everyone in Calgary needs to go see the Calgary Surge. Calgary’s new professional basketball team. They are part of the Canadian Elite Basketball League. They are very exciting. It is a place to be seen. More fun than the Flames were this year and more affordable.


Kudos to the community leaders who avoided the politics and just made it happen because of their dedication and passion.


Maybe if everyone gets together to support them, four years from now some political party can win an election (or at least a bunch of Calgary based MLAs) by pledging to build them a new arena!


Prices as at June 2, 2023

  • Oil prices are down for the week (boo!) again. WCS gap widens.
  • Storage posted an increase week over week once
  • Production held flat
  • Rig Counts: Alberta up marginally; US down week over week
  • Natural gas storage above last year; above the 5-year avg
  • WTI Crude: $71.96 ($72.82)
  • Western Canada Select: $55.84 ($59.86)
  • AECO Spot: $1.99
  • NYMEX Gas: 2.18 ($2.37)
  • US/Canadian Dollar: $0.744 ($0.735)



  • As at May 26, 2023, US crude oil supplies were at 459.7 million barrels, an increase of 4.5 million barrels from the previous week and an increase of 44.9 million barrels above last year.
    • The number of days oil supply in storage is 28.7 compared to 25.9 last year at this time.
    • Production was down for the week at 12.200 million barrels per day. Production last year at the same time was 11.900 million barrels per day.
    • Imports rose to 7.217 million barrels from 5.850 million barrels per day compared to 6.218 million barrels per day last year.
    • Crude exports from the US rose to 4.915 million barrels per day from 4.549 million barrels per day last week compared to 3.990 million barrels per day a year ago
    • Canadian exports to the US were 3.589 million barrels a day
    • Refinery inputs rose during the during the week to 15.992 million barrels per day
  • As at May 26, 2023, US natural gas in storage was 2,446 billion cubic feet (Bcf), which is 17% higher than the 5-year average and about 29% higher than last year’s level, following an implied net increase of 110 Bcf during the report week
    • Overall U.S. natural gas consumption fell by 2.2% during the report week.
    • Production was down 0.5% for the week. Imports from Canada were unchanged from the week before. Exports to Mexico increased 3.2% for the week.
    • LNG exports totaled 87 Bcf for the week.
  • As of June 2, 2023, the Canadian rig count was up 10 at 97 (AB – 67; BC – 17; SK – 11; MB – 1; Other – 1). Rig count for the same period last year was 117.
  • US Onshore Oil rig count at June 2, 2023 is at 555, down 15 from the week prior.
  • Natural gas rigs drilling in the United States were unchanged at 137.
  • Offshore rig count was flat at 22.
  • US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 40%/60%


Bizarro Factoid of the Week

OPEC+ is meeting this weekend. They aren’t allowing usual media coverage nonsense. Saudi Arabia needs $80 to balance their budget. Hmm.

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