/Liberals face challenge engaging in Alberta’s, Saskatchewan’s oil industry with no presence there

Liberals face challenge engaging in Alberta’s, Saskatchewan’s oil industry with no presence there

CALGARY — The Liberals’ total rout in Alberta and Saskatchewan and the unceremonious unseating of Natural Resources Minster Amarjeet Sohi has posed another headache for the re-elected ruling party — finding a minister who can engage with the country’s biggest oil and gas producing provinces.

The Liberals lost their seats in Calgary, Edmonton and Regina during Monday’s federal election, resulting in a Liberal minority government without representation in the country’s two largest oil and gas producing provinces.

A minority government, potentially aided by parties hostile to the oilpatch, has already cast a gloom over downtown Calgary.

The mood was further darkened after Husky Energy Inc. announced Tuesday it was laying off an undisclosed number of employees, adding to Alberta’s high unemployment rate, which stands at 6.6 per cent — a full point above the national average.

Without a voice from Alberta and Saskatchewan among its ranks, the Liberals are ill-prepared to deal with the challenges facing the oil and gas sector, which produces Canada’s largest export product, analysts say.

Both Trudeau and Bill Morneau, who was finance minister prior to the election, had said the government would reach out to the two provinces but analysts say that effort will be fraught with challenges, including picking a natural resources minister that can navigate the minefield that’s the oil and gas sector in a country that handed 70 per cent of the seats to parties supportive of tackling climate change.

In years past, former prime minister Stephen Harper would use Senators as ministers from regions where he lacked elected representatives. But Prime Minister Justin Trudeau’s decision to turn Liberal Senators into an independent block leaves him without that option.

“There’s clearly a problem. I don’t think there’s an easy solution,” said Ted Morton, an executive fellow at the University of Calgary and formerly a long-time cabinet minister in Alberta provincial politics.

“If they can find a minister who is connected to Bay Street, to federal finance and can articulate the importance of the energy sector to the economy and Trudeau’s commitment to following through on Trans Mountain, then that’s the best they can do,” Morton said.

Even if Trudeau finds a minister who understands Bay Street and investments — and Bill Morneau would fit the description — the government still face a challenge in relating directly to the struggles of working people in the province, Morton said.

We’re into our fifth year of a downturn and people are angry. Not just angry but scared.

Ted Morton, executive fellow, University of Calgary, and former cabinet minister, Alberta

“What people are talking about are bankruptcies, layoffs, people defaulting on mortgages, car loans and the impact of that causing, frankly, divorce and breakup,” he said. “We’re into our fifth year of a downturn and people are angry. Not just angry but scared.”

Another potential pick for natural resources minister is Winnipeg South Centre’s Jim Carr, who held the position for part of Trudeau’s first term before being appointed to another portfolio, University of Alberta associated professor of political science Jared Wesley said.

“You’d think they’ve to tap someone from Manitoba before they would tap somebody from B.C. — given the dynamics,” Wesley said.

Alberta considers the Trans Mountain pipeline expansion to the West Coast a vital way to diversify its exports, but the project is controversial in B.C. where NDP, the Green Party and some Liberals opposed the project on the campaign trail.

Trudeau’s government purchased the Trans Mountain pipeline system and expansion project from Houston-based Kinder Morgan Inc. for $4.5 billion in 2018 when the Texas pipeline company threatened to pull out of the project.

Some in the energy industry believe that investment is a signal the Liberals will commit to finishing the project.

I think it would be completely irresponsible to spend taxpayers money on a pipeline then not move forward

Tristan Goodman, president, EPAC

“I think it would be completely irresponsible to spend taxpayers money on a pipeline then not move forward,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents small- to mid-sized oil and gas companies.

“I’m still cautiously optimistic they made a commitment to get that done,” he said.

There is also mounting frustration in both provinces about equalization payments at a time when the energy sector is reeling and when most political parties have been either ambivalent or obstructive to new pipelines.

Adding to the pressure, Saskatchewan Premier Scott Moe called for a “new deal” Tuesday between the province and the federal government, including a new equalization formula. Similarly, Alberta Premier Jason Kenney said he spoke to Prime Minister Justin Trudeau and “underscored the deep frustration expressed by Albertans is very real.”

Dan Tsubouchi, principal and chief market strategist with Calgary-based private equity firm SAF Group, said in an email investors quit the energy sector during a Liberal majority government and that trend could continue now.

“If the status quo wasn’t attracting capital, how can a minority that will see some gives (to coalition partners like the NDP, Bloc Quebecois or Green Party) be viewed as more attractive – it can’t,” Tsubouchi said.

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