00:03:14.020And so many things said, it's very true.
00:03:16.120Sorry, I didn't mean to interrupt you. The phrase recovery, because it really had a tough go with the NDP and the regulations and the taxes. Has Alberta recovered from that NDP experiment, or are there still taxes or regulations on industry that have yet to be removed?
00:03:35.900well a combination of things but let's uh first start uh the economic recovery council really
00:03:43.020started out of the pandemic it was a terrible year 2020 because you not only had a huge drop
00:03:50.060in oil prices due to the pandemic as people quit driving around the world and things like that
00:03:57.260but also you had the people forget the russian saudi price war and so the price of oil dropped
00:04:03.340to less than $20 a barrel, which was just catastrophic for Alberta.
00:04:10.300And the Kenney government at that time, hats off to them, developed an economic recovery plan,
00:04:16.400which was even just a few months into the pandemic, way ahead of any other province.
00:04:22.320But that plan actually became sort of like the Bible for the province to come out of what was a really dire situation
00:04:32.080at that time. And it succeeded. It was all sorts of policies such as new irrigation for agriculture
00:04:44.100in the south. It cut the corporate income tax rate from 12% that the NDP did hike to 8%. So
00:04:54.300Alberta actually has the most competitive corporate tax system in Canada and actually
00:04:59.480actually matches quite well with the united states um and yeah as well uh alberta uh ended ended up
00:05:09.080investing in infrastructure and some roads and things like that uh and and diversified some of
00:05:15.760the other industries that it has even though oil and gas is still pretty important uh it it it's
00:05:21.500amazing how other industries have also grown in alberta and and i think this reflects something
00:05:27.060which i learned when i was on uh as i headed the economic recovery council when i had to meet every
00:05:33.940uh industry group in in alberta uh during that very difficult time and it was very interesting
00:05:40.580that when i met with them they didn't talk about giving them a handout it's an entrepreneurial
00:05:46.740economy and what people wanted was getting the government out of the way not in the way by the
00:05:52.660way this was contrary to ontario which i was involved in a very similar type of exercise
00:05:58.740where there people just kept on talking about how they needed some sort of government subsidy
00:06:03.700in order to to move ahead and so i think that's actually the one thing that really
00:06:08.420makes alberta very different from the rest of countries is this entrepreneurial society where
00:06:14.580people feel that they can actually achieve things without having the government uh always giving
00:06:21.380them money to to do it you know that's such an important observation some of the key industries
00:06:27.380in ontario i'm thinking the auto industry i'm thinking of steel the government's response is
00:06:33.220always another grant another loan another subsidy and none of that seems to be sticking whereas i
00:06:40.100i don't think i've ever heard alberta's oil and gas or mining industry actually ask for a bailout
00:06:46.020or a subsidy they at most it seems to me they're asking for rules to be removed from their from
00:06:52.500their path it really is is quite opposite and i don't know if it's just the nature of the of the
00:06:58.260industry um you know maybe oil is always going to be successful when you're next to the hungry
00:07:03.060economy of the united states but i i i think there's something to the free market approach
00:07:07.700what when you look at what's going on with the steel industry and the auto industry in ontario
00:07:12.980what would an Alberta-style solution be?
00:07:18.060Or is that just something that tariffs are going to overwhelm?
00:07:20.820Like, is there an Alberta solution to the auto sector and the steel sector?
00:07:26.280Well, I think right now, I think one of the calamities that Canada has faced,
00:11:30.160Why have they gone there rather than Quebec or Ontario?
00:11:32.640I'm not saying they have no data centers, but these mega, these giga centers.
00:11:37.720Why have they gone to Alberta, Saskatchewan?
00:11:40.100Well, I think if you look at a map of planned data centers for Canada,
00:11:48.080yes there are some for ontario and quebec and and the atlantic but the really big ones
00:11:53.840are going to be in saskatchewan and alberta the hyperscalers are looking at those two provinces
00:12:01.120and that's primarily i think because of uh because of the energy uh sources that are available
00:12:10.080that can support these centers but also it helps that you do have this
00:12:15.760entrepreneurial climate and governments that are willing to have regulations that that let's say
00:12:23.040make it easier i think for ai to to be developed now of course we're seeing a lot of reaction
00:12:29.360lately over over artificial intelligence some of it is inappropriate reaction for example
00:12:35.920concerns over water when actually a lot of these data centers tend to use recycled water so
00:12:42.480as someone remarked that i heard talking about it they only are going to use through their lifetime
00:12:48.080maybe two pools of water swimming pools of water in total for each of them so that's how little
00:12:55.280water they're going to use there's also concerns about driving up electricity prices but as pointed
00:13:00.320out if the ai centers are required to supply their own electricity which can happen in alberta
00:13:06.640because of natural gas supplies as well as in saskatchewan then they can actually end up
00:13:14.320contributing electricity to the overall system not just for the data center and that actually
00:13:20.320could help drive down electricity prices rather than going up i think the biggest concern these
00:13:25.680days about ai i think have to do uh with a completely different issue than data centers
00:13:32.240which by the way data centers are important not only for artificial intelligence but also
00:13:36.480for cloud computing, which everybody uses today as part of their internet, but also I think the
00:13:45.620real concern is over artificial intelligence and safety, and that, of course, is where some of the
00:13:50.500debate is today, but that's completely independent of the data center issue. Yeah, you know, I attended
00:13:55.720a fairly large anti-data center protest in the small town of Morinville, not too far from the
00:14:02.120Meta data center and they all were using talking points about water and energy
00:14:07.040what you've just discussed but when I press them a bit that was I think those
00:14:10.820were just messages that they were sort of programmed to say they were all
00:14:14.900actually worried about AI itself and I'm not sure if protesting out against a
00:14:19.820particular factory is going to stop this AI revolution which is I mean it's
00:14:24.880already here and by the way if they don't build the data center in Alberta
00:14:28.880Saskatchewan. They'll build it in Mississippi or whatever. What's so interesting to me about that
00:14:33.980is, I mean, I remember the word diversification used for Alberta's economy going back to Ralph
00:14:41.040Klein's days. I mean, and to me, it became code for the government's going to take a bunch of
00:14:47.340public money and give it as a gift to a company that has no hope of succeeding on its own. That's
00:14:54.420why they need the money. So diversification was always code for subsidies and picking favorites
00:15:01.360in the market and corporate welfare. But this AI diversification, it really is a diversification.
00:15:08.660It's a totally different industry, relies on energy, and I suppose even the cooler climate.
00:15:13.800I mean, if you had to cool a data center in Texas or one in Alberta, I mean, I know which would be
00:15:18.480easier. And I don't see government money, at least not in the ones that are being done in the
00:15:24.540prairies. Evan Solomon, the federal AI minister, is throwing cash around. That's, I think,
00:15:29.140all liberals know how to do, really. But I think this is actually a true diversification. And if
00:15:34.760you start adding up the dollars, it's not quite yet where the oil industry is. But I think they
00:15:40.760announced 50 billion worth of data centers in Saskatchewan. That's huge. Well, that's true.
00:15:47.640And frankly, Meta and Amazon and these other magnificent seven companies, let's say,
00:15:56.440that are worth over a trillion dollars each in market capitalization, they don't need
00:16:02.780government subsidies at all. They will be able to make enough profits, just like the
00:16:10.400oil and gas sector in Alberta. The oil and sand companies have done perfectly fine and they don't
00:16:15.740need to have government subsidies. In fact, I'm actually, this is one of the things in which I'm
00:16:22.120quite alarmed right now by federal policy is a sense that governments have to pick the winners
00:16:28.200and the losers under their philosophy of industrial policy that only the governments know which
00:16:33.820industry should be invested in. And then to attract people, they want to throw some subsidies along
00:16:39.580with it or create mixed enterprises, which is something we used to do back in the 1970s,
00:16:45.200which was actually a failure in policy.
00:16:48.480And so I think one of the things that I think is really important is for Alberta and Saskatchewan,
00:16:58.280that in attracting these businesses, they should make sure they have the regulations
00:17:02.120in place that make sure there isn't environmental harm to the population or the communities
00:17:06.920are hurt, but at the same time, don't interfere or delay the development of these things.
00:17:14.440And I think that's why Auburn and Saskatchewan have been successful, is because of a regulatory
00:17:18.720system that I think has been conducive for investment, but at the same time protects
00:17:23.140the interests of the people that can be affected if these various projects that are done don't
00:17:31.660take into account some of the things that might impact their lives.
00:17:35.540You know, my few dealings with Meta, that's the Facebook company, tell me they're very alive to those public policy issues and to winning hearts and minds. And I know some data centers in the States have done dramatic things, not just building parks and recreation centers and paving roads, but in one county, I think they were giving $50,000 bonuses to school teachers.
00:17:58.280like just a shocking amount of money that I mean first of all you're going to win the teachers
00:18:03.740over but but I mean just I mean that really is a giving back to the community move I mean it
00:18:09.580it's certainly uh you know the teachers union is going to be happy but but when you're getting
00:18:14.680that kind of obvious benefit to the local community it's going to change the discussion
00:18:19.400a little bit what's interesting is when I was at that protest I saw a lot of recycled climate
00:18:25.400protesters, anti-oil protesters. It's like they moved on. No one's really talking about global
00:18:31.060warming anymore. AI is the hot ticket. Port over their concerns. And like it was really quite
00:18:37.920striking. I was just at a, you know, a rebranding exercise for the anti-oil activists. That's what
00:18:44.520I saw with my own eyes. Hey, speaking of oil, it still is the number one export in Canada. I mean,
00:18:51.360It's by far larger than Canadian automobile exports to the States.
00:18:56.400And it's the one thing that, you know, in trade wars cannot be relocated.
00:19:02.080I mean, Donald Trump has expressly said he would prefer factories come home,
00:19:07.200especially if they're shipping into the States.
00:19:09.140He wants those factories in the States, not in Canada or Mexico.
00:19:21.360And I think that Trump acknowledges that because he's gone a little bit easy on tariffing oil and gas from Canada.
00:19:29.860What do you think the future is for Alberta oil and gas?
00:19:34.580In a way, railways have picked up some of the surplus that pipelines would have taken.
00:19:39.160When I was up at the Metadata Center, it's right next to an enormous oil train facility where these huge long trains, you know, there's all these refineries there.
00:19:49.540Like, frankly, because there's been no pipelines, they've been building more trains.
00:19:54.620What's the future of oil and gas in Alberta?
00:19:57.580And do you actually think any new pipelines will get built?
00:20:01.820Well, I think, first of all, oil and gas, I think we should separate them.
00:20:07.180Oil, of course, is very important in transportation.
00:20:11.940There will be a shift in the world towards more electrification of cars.
00:20:15.780uh but you know it's not something that's going to be done right away and as we've seen north
00:20:20.660america has not gone over very well uh but certainly there will be that demand but oil
00:20:26.100is also very important uh for plastics and for other types of uses bunker oil in shipping and
00:20:32.820things like that and it's very hard to move to new technologies if they're going to cost a lot more
00:20:38.420and and so that's been one of the reasons why uh this view that you know demand for oil is
00:20:44.340going to peak and et cetera et cetera uh has not happened yet but you know uh but it you know it
00:20:50.820will it will be um it will be in demand and it'll be particularly uh countries that have a good um
00:20:59.140that are relatively peaceful let's say and have good governance uh are going to do much better
00:21:04.980And so, because as we've seen now with the Iran-U.S. war, that the Strait of Hormuz is no longer a, let's say, a non-risky area for oil supply and demand.
00:21:24.980And so, what do people do when you have risk like that?
00:21:30.760So, people are going to try to look for alternatives.
00:21:33.500And so countries that are safer in supply are going to be able to sell their oil more likely.
00:21:42.440Secondly, there will be the countries themselves in the Middle East are going to look for alternative ways of avoiding using strata hormones in the future.
00:21:51.840And that could be pipelines going through Turkey, et cetera, et cetera.
00:21:55.060And then, of course, there will be an even greater shift towards other types of energy
00:22:02.180because the demand for energy is going to keep rising a lot over the next many years,
00:22:08.360not just due to artificial intelligence and the internet, but also for other reasons as well.
00:22:15.360And so you're going to need everything, I think, in order to provide that.
00:22:19.740natural gases is particularly in a good position because it's it's relatively
00:22:25.360cleaner but it's also very important for petrochemicals and other types of uses
00:22:31.280and you know in industry and and and as we've seen it's very important for
00:22:37.720electricity and so therefore natural gas I think particularly will have very
00:22:43.100strong demand in the coming years and so that puts Alberta I think in a very good
00:22:48.320position. And I think the idea of trying to diversify our demand, that we're not just selling
00:22:54.200over 90% of our natural gas and oil only to the United States, but to other countries are being
00:23:00.680able to do that is very important. And that will depend on infrastructure, pipeline infrastructure
00:23:07.120that allows natural gas and oil to be shipped to other parts of the world. Although we do have to
00:23:13.320Remember, the reason why many, even with the building of new pipelines, sometimes the U.S. market is still the better market in terms of the netbacks that companies can get because of lower transportation costs.
00:23:28.160The Keystone XL pipeline was going to bring about 800,000 barrels a day from Canada.
00:23:32.480It was going to start in Alberta, scooch over to Saskatchewan, pick up more oil there, and then come straight on down.
00:23:38.520And it was a glorious plan, and it was approved by both countries.
00:23:42.720But before it could be finished, Barack Obama killed it.
00:23:46.700And I'm trying to remember, I think Trump revived it.
00:23:49.260And then I think he was killed again on the very first day by Joe Biden.
00:24:24.720There's no government money needed on that one.
00:24:27.020But then you've got this Mark Carney idea that Danielle Smith seems to support of building
00:24:32.820a pipeline to the West Coast at a staggering cost, $35 billion a year.
00:24:38.200which is just, you know, that's triple what the original Kinder Morgan pipeline would have been.
00:24:45.640Do you think either of these pipelines will actually be built?
00:24:50.840Do you think that the one to the west will be stopped by some judge citing,
00:24:56.480oh, there's indigenous title or the requirement to consult more?
00:24:59.880Like, do you actually think either of them are going to be built?
00:25:03.500hard to tell uh and this is uh some of the risks that alberta continues to face in the case of the
00:25:11.900one going south um uh you know the old keystone xl by the way the pipe that tce originally laid
00:25:19.060is still there on the canadian side so it could be easily used by so uh by south pole uh anyway
00:25:25.800that that uh that doesn't require as many permitting uh as initially uh planned under
00:25:34.120the keystone because of the route that would be taken however uh who knows if in 2028 you get a
00:25:40.760democrat president that gets elected uh could put an end to very quickly to to the building
00:25:48.040of it unless permits and and and there was a final guarantee um before then uh the pipeline could go
00:25:56.040ahead of course the united states is very worried about energy security too so so the you know the
00:26:01.560agenda has changed uh you know 10 years ago it was all about climate change and people were scared
00:26:08.040that remember the uh greta thurnberg said that you know the world was going to uh disappear by the
00:26:14.4402030 if uh because of climate change well i guess those predictions uh uh aren't true it's very very
00:26:21.720funny how these things go from uh decade to decade uh but lately because of the ukrainian uh russian
00:26:27.640war and now uh what's happening in the middle east uh energy security is very important so the united
00:26:33.160states uh does want to have uh canadian oil it also wants venezuelan oil competition with them
00:26:40.520But I think it's not entirely clear how the Democrats may want to look at this after 2028, given the importance of energy security to the United States.
00:26:54.100As for the pipeline going out west, the part that concerns me is that maybe we really should be talking about two pipelines or three pipelines in the future, and not just one.
00:27:07.500But we're building the one with a whole bunch of provisals.
00:27:12.040You know, the oil gas companies, the oil sand companies have to invest over $20 billion into carbon capture and storage facilities in Canada that will take out roughly, I think, if I understand, 8 million tons a year of carbon out.
00:27:29.380And there's all sorts of issues that are involved that we haven't really had a good public discussion about yet.
00:27:34.620um and uh the industrial carbon price has been increased which is going to add to the cost of
00:27:41.460of of uh per barrel uh of of oil it's not too too too much for the oil sands but actually for
00:27:48.480conventional oil it's going to go up quite a bit um and uh and also power is going to be
00:27:54.140significantly affected which people don't talk about um then then we also have uh bc oh it's
00:28:01.200not a lot of money, but they get to extort a payment for them for transporting oil through
00:28:08.380British Columbia, even though it has no business to do that. In fact, it's a federal responsibility
00:28:15.080when it comes to interprovincial transportation and pipelines, et cetera. And BC is already
00:28:21.780collecting money through its property tax and its corporate income tax when it comes to pipelines.
00:28:25.820So this little extra bit is, I think, a really terrible precedent that we're setting up in Canada for the future.
00:28:35.380So, you know, it's all so full of politics, and we haven't even gotten into the potential tie-ups that could happen.
00:28:46.600You've been very generous with your time, and I don't want to keep you too long.
00:28:49.900I don't know of other jurisdictions in the world.
00:28:52.400Certainly no OPEC jurisdiction, not Russia, not the United States, not even California, has a carbon sequestration program that's regarded as a genuine business.
00:29:05.960Like even in California, they exempt their very heavy L.A. oil fields, Bakersfield, I think it's called.
00:29:12.860Only in Canada do we say, oh, yeah, we're going to decarbonize oil.