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By David Yager
October 31, 2022
The Liberal Party of Canada (LPC) is the most successful political entity in Canadian history. Of the 44 governments elected since 1867, 25 were Liberal.
There are several reasons. Give voters what they want. Exercise discipline to retain power. Always claim to act in the national interest but regional support will suffice. Play one region against another as required to sustain the “natural governing party.”
Success has come by governing from slightly left of centre. Free enterprise with a social conscience. Business and Bay Street have, until recently, always had a strong voice in Liberal politics and policy.
Justin Trudeau became LPC leader in 2013. Under his leadership, the Grits have moved further left than ever before.
Climate change emerged as a significant political issue this century. Many elections have been won all over the world by politicians and parties pledging to save their flock from the “climate emergency.” Attacking and obstructing fossil fuels has been a proven vote-getter.
Urbanization is a major factor. Over 80% of Canadians now live in towns and cities. Canada was 87% rural in 1851 but only 40% 100 years later. Today under 20% live in rural areas.
This has significantly changed political behavior, bad news for a resource-driven economy. Because every year fewer Canadians understand where their fuel, food, minerals and other essentials of life come from. So they can be persuaded to support policies that aren’t always in their best long-term interests.
Climate change was an election issue in 2015 when the Liberals won a majority government. Once in office, key positions were filled with career environmental activists who had never put their name on a ballot but began influencing climate and energy policies.
By the time the Liberals went back to voters in 2019, the direction of the country had changed significantly.
Under Stephen Harper’s Conservatives, Canada was going to be a hydrocarbon energy superpower.
Under Justin Trudeau’s Liberals, Canada was reshaped as a climate policy leader. This was popular with younger voters in urban Canada. Specific initiatives included a cancelled pipeline, replacing the National Energy Board, banning oil export tankers from BC’s northern coast, and promising national carbon taxes.
Illustrating its disconnect from business, the Trudeau administration showed little concern as billions of investment dollars fled the country. When more voices warned of Canada’s falling international competitiveness and increasing inability to attract foreign capital, it fell on deaf ears.
Further, the 2015 campaign pledge of a balanced budget by 2019 was replaced by continually rising deficits and debt. The Liberal pandemic response included more new debt per capita basis than any other G7 country.
The 2015 election was regionally polarizing. Of the 184 Liberal MPs elected only 12 came from the prairie provinces. While 17 Liberals were elected in BC, none were in the resource producing regions of the province.
By 2019 Trudeau’s star was fading. The Liberals were reduced to a minority government with only 157 seats. Only four Liberals MPs were elected on the prairies, all from Winnipeg. In total elected Liberals in the west declined by almost half from 29 to 15.
Then the Liberals ramped up their climate commitments. In 2020 Ottawa announced its carbon tax would increase annually to $170 per tonne by 2030. Provincial court challenges followed. In 2021 emission reduction targets by 2030 were increased significantly to exceed the 2015 Paris commitments. The oil and gas industry alone would somehow be 42% lower. The electricity grid would be net zero by 2035, the country net zero by 2050.
This made Trudeau and his ministers all-stars at the COP 26 climate conference in Glasgow in November of 2021. Canada was praised for being the only major oil and gas producer with existing and rising carbon taxes and very aggressive emission reduction targets.
But in the summer of 2021, the oil and gas industry felt fortunate to be alive after surviving the near-death experience of the 2020 oil price collapse. The new emission reduction targets and rising carbon taxes were just more bad news.
A parallel issue was the ESG investment phenomenon as more banks and institutional investors proudly and publicly declared their disdain for investing in fossil fuels.
The Liberals called a snap election in the summer of 2021 for reasons still not fully understood. While the number of seats rose by 3 to 160, regional and urban/rural polarization grew.
Since 1968 and after 17 federal elections, Alberta has elected a total of 20 Liberal MPs in 54 years. The most was four, and ten times it was zero.
In the 2021 election, the Greater Toronto Area elected 52 Liberal MPs in 12 hours. Nearly one-third of the current Liberal government was elected within 100 km. of downtown Toronto.
This is hardly the foundation of a national political dynasty, or a harmonious future for the country.
Nor does it fairly reflect the resource industries that drive Canada’s economy.
A “confidence and supply” agreement between the Liberals and NDP was struck earlier this year to help keep the Liberals in power.
Canada currently has the most left-wing federal government in its history.
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When governments decided to lock down the economy in early 2020 to prevent the spread of the COVID-19 virus and protect the world from the pandemic, little or no thought was given to how to restart it, what that would look like, or how long it would take.
Meanwhile, there were growing warnings that anti-fossil fuel policies and underinvestment in new reserves would cause supply and price problems.
These were ignored because of the short-term focus on the pandemic and the momentum of the “energy transition” and “Net Zero by 2050” mantras which had morphed into public policy.
But in the 13 months since the 2021 federal election, the world has been turned upside down. Inflation, interest rates, food prices, mortgage rates and energy costs are rising. In October average house prices in Canada were down 22% from their peak in February, and 6.7% in the past 12 months.
The Russian invasion of Ukraine has shattered the emotional tranquility of a world that has not seen large scale armed conflict in Europe since 1945. Europe’s economy has been crushed. This winter could be disastrous. A recession is already underway in Europe and is pending in North America. It simply needs to be proven by two quarters of declining GDP data
Regardless, the Liberals raised the carbon tax again on April 1.
Canada’s population demographics explain the new concerns going through the minds of so-called “millennials,” those born in the early 1980s to the late 1990s.
According to StatsCan, there were 38 million Canadians in 2021. Of those 15 million, nearly 40%, were aged 15 to 44, born in 1977 or later.
None remember the sky-high energy prices and gasoline shortages of the 1970s, the punitive interest rates and inflation rates of the 1980s, unemployment rates of 10% or higher from 1982 to 1985, or a housing market when prices went down, not up.
The misery that accompanied the Great Depression and the Second World War from 1929 to 1945 is only referenced by really old people and history books.
For this very fortunate age group, Europe had always been a safe, tranquil and interesting place with lots of really neat old stuff and exotic food, art and architecture. A wonderful place for a vacation. This has gotten progressively easier due to rising incomes and lower airfares.
These are the voters who were persuaded that climate change and fossil fuels were terrible, wind and solar electricity were great, and Justin Trudeau was pretty cool compared to the staid old fart he replaced, Stephen Harper.
And because they were mostly urban, fuel came from a gas pump, electricity from a wall socket, and food from the grocery store. What else do we need to know?
But dramatic events in Europe have forced Canada to make significant commitments to the international community. While the current Liberal government has invested significant political capital on climate policies and decarbonizing the Canadian economy, the rest of the world is on a frantic hunt for more oil, natural gas, and coal. Firewood is making a big comeback in Europe.
Never before has a major fossil fuel producer like Russia started a war in Europe and, by default, with the rest of the western world through NATO. Now Canada is being asked to increase oil and gas production, not reduce it.
Governments without North America’s abundant supplies of cheap energy and oil and gas are rapidly reversing prior climate and energy policies. Coal use is growing. The change in how the world regards fossil fuels is rapid and dramatic.
In response, shocked and upset voters have changed their views on what is important. That Canada should be a leading example of a decarbonizing world matters less as more Canadians want to know what can be done to get the world more fuel.
And reduce inflation, stabilize purchasing power, and get those terrible images of misery and suffering off their handphones.
A good place to start is more oil and gas. Canada has lots of both.
Recent polling for SecondStreet.org shows Canadians want to help. A Financial Post article October 26 read, “The poll of 1,535 Canadians found that 72 per cent of respondents either ‘somewhat’ or ‘strongly’ supported developing and exporting more oil and natural gas resources so that the world can reduce how much it purchases from Russia.”
It continues, “But support was weakest where it matters the most – in the federal government. The Trudeau government seems to have taken its marching orders from the 13 per cent of Canadian who are either ‘strongly’ or ‘somewhat’ opposed to exporting more of our oil and gas.”
Canadians now see Moscow as the enemy, not Fort McMurray.
Finally.
Even The Globe and Mail, long a reliable source of advice on the urgency of decarbonizing Canada and the world, published an editorial October 17 with the headline, “What if Canada could have a bigger oil and gas industry, and lower emissions? It’s possible.”
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What is a loyal Grit to do when the government is going in one direction, and voters in another. The Liberals rode the green, woke, urban, millennial, anti-oil wave to power in 2015 and have managed to cling to it for two subsequent elections.
But their list of accomplishments includes cancelled pipelines, banning oil exports tankers, crushed investor confidence, skyrocketing public debt, and a level of western regional alienation not seen since the last time a Trudeau was Prime Minster, Justin’s father Pierre.
And the Prime Minister himself? Teflon is the kindest description.
When the Russian tanks rolled into Ukraine, things changed. Quickly. Suddenly the federal government was promising to increase oil production by 300,000 b/d this year, and encouraging more LNG exports.
This occurred at the same time they were rolling out the details for their promised emission reduction commitments for oil, gas, and agriculture, the three things that the world is now terribly short of.
These contradictory positions offer few attractive alternatives.
Fissures in legendary Liberal political solidarity are emerging. While nobody will admit it, it is not unreasonable to conclude that the LPC brain trust now sees that their biggest asset in 2015 – Justin Trudeau – will be a huge liability in the next federal election.
Finance Minster and Deputy Prime Minister Chrystia Freeland recently went to Washington and started talking about a new world order that included more Canada and less Russia and China. After making the obligatory politically correct pledges about low carbon energy alternatives, this would include more oil and LNG from Canada.
In Toronto October 25 Natural Resources Minster Jonathan Wilkinson told a Toronto audience that “compromise” was required on fossil fuel replacement targets. A Financial Post article read, “As for the compromise implicit in an energy transition, Wilkinson suggested that Canada and the world should not seek an abrupt transition away from fossil fuels. Rather, he suggested people can expect that fossil-fuel consumption will continue at its current rate through the next decade or longer…”
Conservative politicians regularly hammer the government for its unwavering commitment to annual carbon tax increases for the next seven years even as disposable incomes are crushed by high inflation and rising interest rates.
The government is forced to talk about the generosity of its genius carbon tax rebates.
Ottawa’s plan to help feed the world by restricting the use of fertilizer is bizarre verging on politically suicidal. Anybody can figure out this either won’t work, will drive up costs, or both.
Today, 15 million Canadians aged 15 to 44 are finally paying attention to these policies, too many for the first time.
But now they are paying for them.
The Prime Minister is increasingly isolated in an often-incompressible defense of his own policies. When Trudeau told the visiting German Chancellor that Canada could send green hydrogen in a few years instead of LNG as soon as possible, he was widely ridiculed.
Trudeau’s recent comments that the Russia/Ukrainian war was advancing fossil fuel replacement and emission reductions in Canada left most perplexed. At minimum, they were contrary to official commitments to get Europe more oil and gas.
Liberal cabinet ministers don’t stray from the official party line unless they have concluded that defending existing government policies is bad for their careers.
Or they are positioning themselves to replace Justin Trudeau before the next election.
World and economic events have clobbered support for Liberal climate and energy policies. Can Ottawa change course? Will the LPC change leaders?
Perhaps Justin Trudeau is waiting for the snow to fall so he can take that contemplative walk his father took in 1984 before resigning.
Which came far too late. In the 1984 election the Liberal party was crushed as Conservative leader Brian Mulroney won 211 of 282 seats.
David Yager is an oil service executive, oil and gas writer, energy policy analyst, and author of From Miracle to Menace – Alberta, A Carbon Story. Find the book at www.miracletomenace.ca. He is President and CEO of Winterhawk Casing Expansion which is commercializing a new technology for improving wellbore integrity.
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