Fireworks and birthday cake marked the 100th anniversary of Alberta yesterday. It was a chance to celebrate a century of a great province in a great country.
But this year marks another milestone in Alberta -- one that will not be marked with cake or parties: the 25th anniversary of the despised national energy program, a set of policies conceived by the Trudeau government to address soaring energy prices and the growing imbalance of resource wealth among the country's regions.
Sound familiar? Fast forward to 2005. As Albertans dance under the fireworks of their 100th year in Confederation, the national news headlines moan and groan: Oil hits $70 (U.S.); hurricane Katrina drives up gasoline prices; Ontario fears "have-not" status; Alberta debt-free, surplus to run into the billions; expert says Alberta will have to share its wealth.
It is eerie that Alberta's projected surplus is precisely the size of Ontario's projected deficit -- $2.8-billion. Of course, the $2.8-billion surplus in Alberta is the government's laughably low official forecast. Assuming that the bottom doesn't fall out of oil and gas prices -- which is always possible -- the surplus will be much higher.
All of these events point ominously toward disaster. Could Ottawa really be contemplating another raid on Alberta's riches? Is Ontario Premier Dalton McGuinty correct in calling Alberta's surplus the "elephant in the room?" Should we listen to the Timmins, Ont., city councillor who's called on Ottawa to reactivate the NEP?
For Alberta, another national energy program would be the equivalent of Central Canada's watching Ottawa close down every auto plant from Windsor to Quebec City. So hated is the NEP in Alberta that it has become entrenched in the province's psyche, an epic chapter of biblical proportions in its 100-year history. And while support for Alberta's secession from Canada is still quite low, the embers are hot. A NEP redux would be a litre of gasoline (even at $1.25 a litre) thrown on the smouldering anger of Albertans.
There are other ways to solve the dual problems of an impending energy crisis and a crisis of national unity. Over the course of this fall, the Canada West Foundation will explore creative ideas for managing Alberta's resource wealth. These ideas require uncommon political leadership -- not from Ottawa, but from Alberta.
For example, instead of painting a target on itself and waiting for another NEP, Alberta could initiate its own program -- call it the Western Energy Accord -- to partner with the other three western provinces. The idea would be to create a dedicated pool of energy revenue for strategic investment in energy resources throughout the West. This would increase the supply of energy for markets in Central Canada, the United States and around the world.
The catch is that this accord would not be limited to Alberta's oil and gas. It must include all of Western Canada's energy resources -- Manitoba's vast hydro power, Saskatchewan's powerhouse uranium deposits, B.C.'s coal and (yet to be developed) offshore oil, Arctic gas, coal-bed methane, wind energy -- the list of energy resources in the West goes on and on.
Through the accord, a portion of the cash derived from energy resources would be pooled and redistributed among the western provinces for investment in major energy projects. The concept is to broaden and expand energy production throughout the West to help meet national demand.
For example, a portion of Alberta's oil sands royalty money could help finance the construction of the Conawapa hydro dam in northern Manitoba, including the billions required for transmission lines to Ontario. This could go a long way to help meet Ontario's soaring demand for electricity.
A portion of the hydro revenues from Manitoba could then be funnelled back to Alberta to fund research and development in coal-bed methane. Revenue from southeastern B.C.'s coal deposits could help Saskatchewan invest in wind-power research or enhanced crude-oil recovery techniques. Energy revenue from Saskatchewan, in turn, would help fund energy projects elsewhere in the West, and so on.
The agreement should also see major investments in research and development in fledgling energy industries such as wind, solar, tidal, biomass, and hydrogen-cell energy. They may not all be economically viable today, but they are likely to be some day. Alberta and the West have a chance to be world leaders in clean, renewable energy research.
In the short run, Alberta would certainly be the primary contributor to the revenue pool. But, in the long run, it has the most to gain. The province is blessed with massive hydrocarbon resources, and prices are currently high. But the party cannot last forever. By forging an energy accord that includes all of Western Canada's energy resources -- many of which are clean and renewable -- Alberta would greatly strengthen its own long-term energy position.
Alberta has some pretty good cards in its hand at the moment. Spearheading this idea would show goodwill to its neighbouring provinces, hopefully abort any potential NEP from Ottawa, and provide Ontario with massive new amounts of hydro-electricity and other energy sources. It's a win-win solution based on long-term vision and co-operation.
Energy resources will continue to create wealth for Albertans. Other western provinces will develop their own resources. New sources of energy will be developed. Central Canada will gain access to greatly increased energy capacity. Confederation will be strengthened. And it will start with Alberta.
Todd Hirsch is chief economist at the Calgary-based Canada West Foundation.