The new face of the oilsands

For Alison Redford to succeed, she’ll have to become an ambassador for the sector.

(Photo: Jeff McIntosh/CP)

One of new Alberta premier Alison Redford’s key responsibilities is to ensure the success of the energy sector. Our prosperity depends on navigating a host of market and policy issues. Resolving those effectively, however, will require the sector to earn broader public support.

The premier recognizes the need to reduce dependence on non-renewable resource revenues, diversify markets, invest in renewable energy, reduce environmental footprints and mitigate labour shortages. This is all to the good.

But the increasingly worrisome issue is that such a large percentage of the population, both in the province and in other regions, does not understand how their economic welfare is linked to the success of the petroleum sector. And while the protests in New York and elsewhere are for now focused on the financial sector and economic inequality, their target may well shift to “big business” in general. That means the already controversy-plagued oil and gas sector.

The failure of so many to connect petroleum to their own their economic welfare is no doubt related to the growing extent of the linkages. About two-thirds of all employment and incomes generated by petroleum are actually in other sectors—manufacturing, construction, finance, trade and business services across the country. Similarly, the average citizen does not see that a large proportion of the benefits they receive is via the $60 billion or so the sector pays each year to governments nationwide, without which that citizen would receive fewer services or pay higher taxes. In fact, the petroleum sector accounts for about one half of all incomes, employment and government revenues in Alberta, and approximately half of all Canadian goods and services exports. It is the dominant contributor to our favorable trade balance, it is the largest private-sector investor in the national economy, and it accounts for about one-quarter of all tangible national wealth.

A broader public understanding of its role in our economy will allow smarter policy decisions. And nobody is better positioned to get the message out than Redford. Communicating a better understanding of the sector may prove her most vital challenge.

Robert Mansell is a professor of economics and academic director of the University of Calgary’s School of Public Policy.