After Disastrous Auto Bailout In 2009, Alberta's Oil/Gas Sector Wants $15 Billion More Of The Same
As the world weathers an economic crisis being likened to the leadup to the Great Depression, Canada’s federal government is reportedly preparing a $15 billion bailout package for the oil and gas industry — which is raising questions about the best ways to support workers, while incentivizing environmental innovation. Oil prices have tumbled alongside global markets, with the price of Western Canadian Select — the benchmark commonly used to measure the value of crude from Alberta’s oilsands — falling to just above US$5 per barrel last week.
Following reports of a federal bailout for the oil and gas industry, on Friday the Government of Alberta also announced it would step up support for the sector. The provincial government will make $113 million in payments for levies owed to the Alberta Energy Regulator — which is normally entirely funded by industry — on behalf of struggling companies for six months. These moves have led some to question whether, and how, the oil and gas industry should be supported through the economic challenges of the pandemic.
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In 2009, facing a catastrophic collapse in the automotive sector in Ontario, the federal government sought to bail out the industry by providing a total of $13.7 billion in loans to Chrysler, GM and their Canadian subsidiaries. Many of those loans were converted into government-owned shares in the company, with the Ontario government also pitching in money in return for shares. “What a disaster that bailout was,” Gordon Laxer, a political economist and professor emeritus at the University of Alberta, told The Narwhal.
He notes that Canadian taxpayers were left on the hook as the number of jobs in the industry dwindled and factories shuttered. “The lessons from the TARP subsidy program should not be repeated,” Jeff Rubin, former chief economist with CIBC World Markets, told The Narwhal. When all was said and done, Canadian taxpayers were left holding the bag,” he said. “There’s not much to show for the money in terms of long-term job creation,” Rubin added. “Just because Ottawa buys shares in these companies doesn’t mean these companies are going to continue to employ Canadians in the future.” That leaves open the question of how a struggling oil industry could be supported without leaving workers out of jobs — and taxpayers on the hook.
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https://thenarwhal.ca/a-bailout-for-the-oil-and-gas-industry-heres-why-experts-say-its-not-a-long-term-solution/
