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Red tape, revolution, conflict, cronyism – all of these political factors make doing business in the global arena a challenge for even the best prepared companies. The world’s rapidly changing political environment poses significant obstacles, but also great opportunities for today’s business community. Understanding the nexus between politics and business has never been more important. Global Risk Insights provides expert political risk analysis for businesses and investors. Our goal is to help individuals and corporations analyze and understand how global political events are impacting economic & business climates. GRI provides this analysis so our readers can make better informed decisions about their economic activities in every corner of the world. From Washington, DC to Cairo to Beijing, our contributors are global in reach, local in expertise and have experience across the public and private sectors. Our contributors include current and former members of the US intelligence community, the financial sector, NGOs, and the Obama administration. GRI has been widely referenced by leading publications, including The Wall Street Journal, The New Yorker, Business Insider and many more. GRI contributors have been featured speakers at global energy conferences, Reuters Trading Africa forums and the London School of Economics Political Risk Society. We have also produced custom reports, including one for the Kuwaiti Minister of Finance.

New Government in Alberta Brings Uncertain Future for Canada’s Oil Industry

New government in Alberta brings uncertain future for Canada’s oil industry

As Canada prepares for a general election in the fall, the collapse of an aligned provincial government is likely to unsettle many federal conservatives and force a revaluation of electoral strategy as Alberta.

The May 5 2015 provincial election in Alberta, Canada saw a once-in-a-generation systemic shift in the province’s politics.

Traditionally a bastion of conservative politics, Alberta saw the dominant Progressive Conservative Party lose 60 seats and come in third after 44 years in power and seven consecutive majority governments.

In its place, the leftist New Democratic Party surged from 4 seats before the election to 53, enough to form a majority government. The Progressive Conservative Party is closely tied to the province’s burgeoning oil industry and is a tireless advocate for the continually delayed Keystone XL pipeline that would carry Alberta tar sand oil to refineries in Texas for processing and export.

The Alberta Progressive Conservative Party also had strong linkages with the governing federal Conservative party of Stephen Harper. The Prime Minister’s riding is in Alberta, and Jim Prentice, the Progressive Conservative leader, previously served as a cabinet minister of Stephen Harper.

As Canada prepares for a federal general election in the fall, the collapse of an aligned provincial government is likely to unsettle many federal conservatives and force a revaluation of electoral strategy, as Alberta can no longer be assumed to be a conservative heartland.

Former premier: Albertans should “look in the mirror” for cause of economic decline

While Alberta had been undergoing an economic boom for the past several years due to increasing global demand for oil, the collapse of the price of crude earlier this year has had a disastrous effect on its economy. The province rapidly went from a surplus to a five billion dollar deficit. Cutbacks in health, education, and other social services followed.

When asked who was responsible for the quick decline in Alberta’s economic fortunes, Jim Prentice responded that Albertans needed to only “look in the mirror” if they wanted to know who was to blame.

Coming from a government that many viewed as overly reliant on the oil sector and with questionable economic management skills, support for the formerly unassailable Progressive Conservative government began to rapidly drain away.

A proposed budget, which raised income taxes and individual user fees across the board while refusing to raise taxes on corporate or oil royalties, sealed the fate of the governing Progressive Conservatives. A strong debate performance by the New Democratic Party leader, Rachel Notley, also helped in their success.

In contrast to its predecessors, the incoming New Democratic Party government in Alberta has promised a sharp change in policy, particularly when it comes to the oil industry. A review of the royalty rates paid by oil companies, some of the lowest in the world, is already in the planning stages.

Further shifts – such as the end of the practice of using provincial dollars to promote the expansion of oil pipelines across national and international borders, and a promise to focus on addressing climate change issues – means that the oil industry in Alberta is entering a new phase, with a government now considerably less amenable to its economic interests.

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