Ottawa's 'on a different economic planet' with no fix for oil glut: Alberta finance minister - Action News
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Ottawa's 'on a different economic planet' with no fix for oil glut: Alberta finance minister

Alberta's finance minister is disappointed that despite a strong focus on exports in the federal government's fall fiscal update, there was no line item for oil-by-rail.

Joe Ceci asks how feds will address punishing oil price differential

Alberta Finance Minister Joe Ceci is asking the federal government to increase capacity for oil-by-rail. (CBC)

Alberta's finance minister says the latest federal economic statement shows Ottawa is out of touch with his province's needs.

Nothing in the statement will help Alberta producers deal with the impact of the currentheavy price discount on their product, Joe Ceci said.

The differential, or price gap, between West Texas Intermediate and Western Canadian Selectaveraged around $45 US per barrel last month. Thatstressedthe need to get Alberta crude to markets besides the U.S., he said.

"Ottawa isliving on a different economic planet. We must get our product to tidewater and nothing today moves us closer to doing that. This update does not address one of the biggest concernsAlbertanshave:getting fair value for our non-renewable resource," Cecitold media Wednesday afternoon.

The provincialfinance minister said he was disappointed that, despite a strong focus on exports in the federal government's fall fiscal update, there was no line item for oil-by-rail or any other specific action toaddress the impact the oil price differential has had on Canada's economy.

Premier Rachel Notley'sgovernment has been pushing Ottawa for increased rail capacity in the absence of new pipelines.

The fiscal update outlines $17.6 billion in new spending over six years, $16.5 billion of which is measures aimed at boosting business productivity.

That includes an allocation of $1.1 billion toward infrastructure and resources for exports, with the goal of boosting the country's overseas exportsto focus on markets beyond the U.S.

The update points out that 99 per cent of Canada's oil is exported to its southern neighbours, creating a "near-total reliance" on the U.S. market.

Over the next three years, the federal government is allocating $13.6 million to improve rail passenger and freight data to help supply chains operate more efficiently.

But Cecisaid while he's happy with other items in the fiscal update,specific action needs to be taken to address the impact the oil price differential has had on Canada's economy.

"The crisis in this province affects the whole country we have, this week in Parliament Hill a ticker that's showing the amount of revenue that's not coming into this country as a result of oil glut," said Ceci.

Not a 'realistic expectation'

However Bev Dahlby, research director at the University of Calgary's school of public policy, said while the update didn't specifically take Alberta into account, perhaps that shouldn't be a surprise, given Ottawa's $4.5-billion purchase of the stalled Trans Mountain pipeline expansion.

"I don't think there was any more that they could do," Dahlby said. "In this fiscal update I don't think that was a realistic expectation."

Ben Brunnen of the Canadian Association of Petroleum Producers said he'd like to see more done to help the oil industry's competitiveness. (Anis Heydari/CBC)

In an interview onCBC'sPower & Politics, Canada's Finance Minister BillMorneauwas asked if there was anything in his plan to immediately address the effects of the differential.

"First of all, let me just say, this is a really big challenge. This has been a challenge that's been coming for a while;it's the reason that we stepped forward with the Trans Mountain pipeline purchase," Morneau said. "It's one that we're committed to working through in the right way. So I really understand how people are feeling."

As for what he meant by the "right way," he said the federal government's goal was to respond to the Federal Court, which levied criticism over how the approval of the pipeline expansion was handled.

Specifically, Morneausaid the focus will be on considering issues on the West Coast and holding meaningful consultations with Indigenous peoples, in order to move forward to have the oil and gas sector and the economy be successful.

Listen to Finance Minister Bill Morneau's full interview on Power & Politics:

Morneau on the government's fall economic update

6 years ago
Duration 8:22
Finance Minister Bill Morneau joined Power & Politics Wednesday to explain the government's fall economic update and why there's no plan to return to a balanced budget.

The finance minister also said he believeditems in the plan would have"an immediate impact" on the oil and gas sector, along with the rest of Canadian industry, despite not being specifically geared to addressthe differential.

"I don't want to suggest that we've found a solution for that problem. That is a really difficult, long-term problem, and I think it's something that clearly the sector's working together with the Alberta government on," Morneautold host Vassy Kapelos.

"We're going to continue to be resolute in our goal of assuring that we can get the cleanest resources in the world to international markets. We think that's important so we're on it."

CAPPVP says more help needed

Ben Brunnen vice-president of fiscal and oilsands at the Canadian Association of Petroleum Producerssaid the fiscal update included one boon for oil companies:allowing them the ability to write off capital expenditures more quickly.

Businesses will be able to write off the full cost of machinery and equipment used for the manufacturing or processing of goods, as well as the cost of some clean energy equipment.

"These changes actually help Canada's oil and gas industry in that they can recover their costs faster which is helpful for competitiveness," Brunnen said.

Costing $80M each day

But, he said, it won't be enough to solve the problems the industry is facing.

"Overall I would say this is a positive first step but more work needs to be done to improve the competitiveness of the oil and gas sector."

That message was echoed by the Calgary Chamber of Commerce, which gave the federal government credit for its business-friendly initiativesbut said without addressing market access, its measures fall short.

"We continue to urge the federal government to take actions to remove regulatory barriers," said chamber president Sandip Lalli in an emailed statement.

"We are disillusioned the economic update did not meaningfully address the issues that are costing the Canadian economy as much as $80 million a day."

With files from Diane Yanko, Anis Heydari, Janyce McGregor, Rachel Ward