Oil has a nasty way of sticking to everything it touches, including the best-laid plans of men, governments and hired gunslingers in the spin-rooms of the nation.
Not so long ago, black gold was Canada’s economic salvation. It was better than manufacturing, technological innovation in the non-resource sector, and even financial services at generating long-term jobs and huge dividends for high-flying investors.
Indeed, so went the fairy tale, oil was the last, best hope to power these industries and aspirations and return the country to its always mythological status as the world’s next, big superpower of opportunity.
Oh well. Easy come, easy go – which has become, in New Brunswick, our preferred provincial slogan, beating out such bromides as “Be in this place” and (my personal favorite) “Hell, it could be worse, though we don’t possibly see how”.
Still, Alberta’s blackened, big sky country may want to rip a page from the picture-perfect province’s sloganeering songbook as it begins to send thousands of expat Maritimers back home to their sea-bound coasts.
With oil hovering below $50 a barrel – down more than 100 per cent since mid-October – and no discernible bottom to the price plunge, the West’s formerly gilded streets are about to be lined with foreclosure notices, each prettily packaged in recyclable envelopes, courtesy of your friendly, neighbourhood big, Bay-Street bank.
Oh, how the ironies abound.
To Stephen Harper’s Conservatives, oil meant certain reelection in October. That’s because royalties from this resource enabled their utterly fantastical predictions of surplus, their wholly irresponsible promise to permit income splitting among families that could well afford to pay the tax man that which is properly due to him, and their cynically calculated (and needlessly costly) diversions regarding the Child Tax Credit.
Now, they’ll be lucky to muster enough cash to cover the cost of the laces for the finance minister’s new shoes come budget time some months away.
As it is, they can’t work fast enough to fit themselves for boots of clay.
According to a Globe and Mail report last Thursday, “The Conservative government will not release the federal budget until at least April, a delay meant to give Finance Minister Joe Oliver more time to assess the impact of plunging oil prices on the Canadian economy.”
As Mr. Oliver told a press conference in Ottawa, “Given the current market instability, I will not bring forward our budget earlier than April. We need all the information we can obtain before finalizing our decisions. . .“This new reality poses a great, though not entirely unprecedented challenge. . .It represents the third largest price decline in the last four decades, exceeded only by the 1986 OPEC collapse and the sharp decline and rapid recovery we saw during the Great Recession. . .Given the current volatility, there is no consensus about how low will prices fall and how long they stay there. Nevertheless, every knowledgeable person I have spoken to believes, and history tells us, that prices will eventually move well above (the) current level.”
In fact, though oil’s price may not have yet bottomed, there is, evidently, a point at which the Canadian economy’s ability to compensate for its clear and utter dependence on the stuff simply fails.
Only a week ago, Ontario Premier Kathleen Wynne all-but bragged about the coming resurgence in her province’s manufacturing sector. Low petroleum prices, she noted, meant a lower valuation of the Canadian dollar against its U.S. counterpart. Since south of the border is where more than $300-billion of this country’s good wind up each and ever year, logically the boon to exporting ought to be commensurately marvelous. Read: Who needs oil?
Well, apparently, we do; and the sticky, messy stuff is not cooperating.
Says former finance department deputy minister Scott Clark, in a separate Globe piece last week, “If the government tries too hard to show a surplus, in other words twists and turns in the wind and does everything to show a surplus, I think you lose political and professional creditability. . .The reality is a lot has changed and if I were the Conservative government, I’d be saying ‘that’s the fact.’ Things have changed and we should just realize that and deal with it.”
Of course, that makes just too much sense for this country’s leadership, almost more enamoured of its own talking points on oil than it is with the sticky stuff, itself – if that’s even possible.