Danielle Smith And The Fallacy Of An Independent Alberta

What Advocates For Alberta Miss

Alberta Independence is not a rational idea. Given the nature of the Alberta economy, the oil dependence, the volatility in revenue, and the nature of being a landlocked landmass, it doesn’t make any sense. No matter how pissed you are at Justin Trudeau or Mark Carney, it does not make any rational sense, as Jason Kenney keeps underlining on Twitter these days. It’s an irrational response to (somewhat legitimate) grievances, which is that this Liberal government prioritizes other things than what Alberta would want it to prioritize, and they keep winning. But this underlines the idiocy of it as a proposition.

Alberta wants the rest of Canada to bend over backwards to accommodate them - guaranteeing tidewater access, an addition ~$2B+ in federal transfers, repeal of Bill C-69, amongst other things - while threatening (albeit obliquely) that if they don’t get what they want they’ll take their ball and go home. The problem for Alberta? They want the rest of us to treat their irrationality with a rational response, and that’s not guaranteed.

The rational, emotionless side of me thinks this is a negotiation, and even if she doesn’t get everything she wants it’s not a crime to start from a maximalist position to try and get half a loaf. If she gets the $2.3B in federal transfers and some form of quasi-repeal of the worst parts of Bill C-69 that enables everyone to pretend we didn’t repeal it while gutting it, that’s pretty good for Albertans. It’s the kind of horse trading other provinces engage in all the time. Doug Ford today added tunnelling the 401 as a “nation building” project, which will never happen but does exist to be traded away in whatever “deal” Carney and Ford eventually strike to do most of the other items on Doug’s list. I get it, even when I don’t like it.

The problem is, Smith isn’t putting up a batshit policy idea, she’s mainstreaming separatist ideas and defending proponents of independence as something other than traitors, which they are. And she, and the rest of the chucklefucks in her government and who agree with her, are not owed a rational response to their irrationality. What I wrote above is what the rational, sensible, reasonable part of my brain wants to say. What the irrational and pissed off side of my brain wants to say is “fuck you, you threatened separation, let’s turn off the taps of TMX”. Is it rational? No. Do I care? Not really.

It is not really my place to cosplay as an expert in oil and the Alberta economy, but the Alberta budget is on thin ice right now. They budgeted for $68/barrel WTI at a $17 differential, which is a fancy way of saying they budgeted for $51 WCS. Right now that’s $46, and every dollar the 52 week average is below it is worth $750M in revenue to the government a year. One or two days of low trading is not a crisis, but if this continues Alberta’s fucked.

Alberta’s budget is actually a decent trick, continuing to price in a $17 differential between WTI and WCS. That’s what the differential used to trade at, but the emergence of TMX has reduced the differential to closer to $10 most days. Had Trump not decided to fuck the global economy, the Alberta government would have had a decent chance of beating or at least meeting its revenue projections, either because their projection on WTI was right and the differential was smaller, or by being low on WTI and getting bailed out by a smaller differential. As a matter of conservative assumptions, it was smart. But it doesn’t matter when Trump fucks all.

The advantage of confederation, at least financially, is that our bonds don’t trade simply on the oil price. Alberta’s would, if they were independent, and they would require the good will of every future Liberal government - and it would almost universally be Liberal governments, given the CPC would lose 34 MPs and the Liberals would lose 2 - to not want to fuck around with the independent country. At any point we could increase the differential simply by deciding we felt like it, since we own TMX. How independent will Alberta ever truly be if their credit rating and bond yields are dependent on a foreign government’s goodwill - especially when the remaining citizens of that foreign government are pissed as fuck at you?

The great intellectual crisis Danielle Smith faces is that she wants something from the rest of Canada she’s not willing to give the rest of Canada, a rational response. She expects us to ignore the legitimate anger so many of us feel at being extorted by Albertans, and to give her a good deal she can take home to claim a victory. The problem is, the idea of giving her a victory goes down about as well as drinking one’s own piss.

What Smith needs to understand is that leverage is gained by how much the alternative will hurt. The reason Tom Cruise has more leverage when negotiating a movie deal than the 7th person in a CBS procedural is because their importance isn’t the same. Alberta had an immense amount of economic leverage when oil was at its peak. Now its complaints sound like whining from the former jock who stopped working out and is mad his abs went away.

Alberta will never get Canada to treat it more rationally than it treats Canada. We will not look at her insanity and go “well, she has a reasonable point and we must indulge her even if we dislike her tactics”, we will tell her to shove it. She is burning industrial quantities of good will and making it harder, not easier, to see the Canadian government give her what she wants.

If she came to this with a renewed sense of purpose and engagement, like Ford and Houston and Kinew all have, I’d be much more willing to give her enough to let her have a win. I hate Ford, and the fact that we all just let certain aspects of Kinew’s past go drives me fucking batshit, but they’ve both been helpful to the Canadian cause so you know what, they get their pet projects funded. It’s the price of doing business. But I know that I speak for a lot of Canadians when I say Smith won’t get the same benefit that even a Scott Moe will now.

Danielle Smith made clear her allegiances are with the “loyal Albertans” who want an independent country and not with Canadians. That’s her right. But the fantasy of independence is reliant on Canada being rational where Alberta isn’t. Don’t fucking bet on it. Every Albertan needs to understand that our good will is not automatic and cannot be assumed indefinitely. And if she doesn’t put this back in the bottle fast, it’ll be lost for a generation.