There’s no doubt about it – the political circus that enveloped Alberta Premier Alison Redford did damage to the fortunes of her Progressive Conservative Party, which has held sway in Alberta for 43 years.
Ms. Redford’s announcement Wednesday that she will resign, effective Sunday, will remove the focus from a leader on shaky ground but is bound to shift it to sparring among those vying to take her place.
If there is one place where there is little worry about the whole mess, though, it is the oil patch.
Sure, there was no shortage of chatter in downtown Calgary recently about defections from the Redford caucus, questions about her travel expenses, her alleged bullying of MLAs and her seemingly tenuous grip on power. But unlike past episodes when Alberta premiers were pilloried and pushed out by those in their own ranks, energy and finance brass have not worried about risks to their businesses.
Given the outcomes of past skirmishes between the powerful industry and the government, most recently during Ms. Redford’s predecessor’s administration, chances are slim to none that there will be any shift to energy policy that would be detrimental to oil and gas operations, regardless of the eventual leader or ruling party.
That means that energy companies, investors and the brokerages that deal with them have been able to watch with interest as the drama in Edmonton unfolded, while at the same time enjoying a business rebound that is filling both corporate and, interestingly, government coffers.
So far this year, Canadian energy firms have done more than $7-billion worth of merger and acquisition deals, compared with just $750-million in the first three months of last year, and buyers are having a much easier time raising money for transactions. This shows that providers of capital have discounted the Premier’s woes. In fact, investors from other provinces, the United States and overseas haven’t even asked about them, a top Calgary investment banker says.
As she struggled before announcing her decision to step down, it must have almost been enough to make Ms. Redford pine for the dark days of early 2013. That is when a gaping discount on Alberta heavy oil prices – which she termed the bitumen bubble – threatened to sap $6-billion from the province’s revenue while natural gas prices remained in the tank, prompting companies to slash spending.
Now the economic picture is much brighter, and Alberta is on the brink of climbing back into the black for the first time in six years, but it did nothing to quell the dissension in the party.
Ugly was the only way to describe her numbers: According to a ThinkHQ Public Affairs poll released on Wednesday, Ms. Redford’s approval rating had tumbled to 18 per cent from 35 per cent in January and a high of 58 per cent in August, 2012, when she was still seen as the fresh new face of the Alberta PCs. The big beneficiary has been the Wildrose Party, Alberta’s right-wing alternative, and its leader Danielle Smith, whose support had surged to 51 per cent.
Ms. Redford was a staunch advocate for the energy sector. She had pledged not to breathe a word about raising oil and gas royalties, a road down which former Premier Ed Stelmach trod, only to wind up the target of derision from energy executives. Many threatened to take their business elsewhere before the changes to the fiscal regime were eventually softened.
She was a frequent flyer to Washington, where she bent the ears of U.S. politicians in support of TransCanada Corp.’s Keystone XL pipeline, albeit with inconclusive results. She also resisted imposing tougher limits on greenhouse gas emissions.
Oil executives had been awfully quiet as the crisis snowballed, but that’s not surprising given the potential scenarios. None requires much advocacy from a business perspective.
After Wednesday, the first one is that the PCs hold a leadership race, claw back support and win a general election again, leaving energy policy as is. The second is that industry-friendly Wildrose wins the next election, and imposes no new economic or environmental burdens on the sector – essentially leaving energy policy as is.
If those options hold, expect the oil patch to stay on the sidelines.