The second coming of Peter Lougheed
Alberta's Conservative dynasty and booming oil sands industry are getting an upbraiding from an unlikely source"the man who started it all
Globe and Mail Update
August 28, 2008 at 5:47 PM EDT
The man with the grey hair, the bad knees and the intense blue eyes made his way to the front desk of the Peter Lougheed Centre in Calgary. The young nurse on the overnight shift looked up and asked why he was there. Knee replacement, he said. Name? she asked. Peter Lougheed, he said.
"I guess the shift was changing," Lougheed recalls, "and the gal at the desk, she'd been working all night. I could just see that flash in the eyes: 'Have I got a nut case on my hands, at a quarter to 7 in the morning?' "
He laughs with delight. "It was a 10-second thing, but I saw her looking: Where the hell's the orderly?"
After all, why would she know anything about him? It's been more than 20 years since Peter Lougheed stepped down as premier of Alberta. A whole generation has been born and grown up since he disappeared from the headlines. He's no longer the guardian of Alberta's riches against the depredations of the federal government, no longer the voice of the new West going toe to toe with Pierre Trudeau, no longer the man sought by Progressive Conservatives across the country to head the party""the best leader we never had" is what older Tories still say.
Even so, the nurse might have recognized him, for there is a new Peter Lougheed. At 80, he has returned to the public arena to poke friends and foes, Albertans, Canadians and Americans, with a very sharp stick. In particular, he is poking relentlessly and angrily at the full-speed-ahead modus operandi of the oil industry and the Alberta government.
From his 47th-floor corner office at the law firm Bennett Jones, Lougheed has a commanding view of what matters in Alberta's business world. Up there, it's hard at first to share his anxiety. The man himself is relaxed in shirt sleeves, laughing and smiling, even when he is remarking on the number of people in Calgary who are distinctly unhappy about the things he is saying. With that, he gestures toward the array of gleaming office towers on 4th and 5th Avenues, which house just about every oil company you have ever heard of, and then some.
But then it is as though the man who once ruled it all with such confidence is suddenly reminded that neither he nor anyone else can control a provincial economy overheated by the full-bore development of the oil sands. "Would somebody please outline to me the advantages of our doing it this way?" he asks. "For me, an Albertan? What are they? Can you give me a couple of them? What do I as an Albertan gain by this mad rush up there?"
The first evidence that Lougheed was emerging from political hibernation came at a barbecue he attended at the Calgary home of the United States consul general in the summer of 2005. It was an impressive gathering. The U.S. ambassador, David Wilkins, had flown in from Ottawa, as had then-finance minister Ralph Goodale.
The guest of honour was John Snow, the U.S. Secretary of the Treasury.
Snow had arrived in Canada to discuss the oil sands. Alberta was already shipping more than a million barrels of crude oil to the United States every day; Washington, anxious about energy security, wanted more. Lougheed was invited because of his stature in both business and politics"and because of his friendship with the United States. He was, after all, one of the instigators of Canada-U.S. free trade.
Snow and Lougheed got to chatting during the evening. For Snow, it was a shock when the former premier said Canada should consider exporting its oil to China, India or other Asian markets. Why not, Lougheed asked: It's Alberta's oil.
Snow was visibly surprised and upset. He protested that the terms of the North American Free Trade Agreement forbid sales of surplus oil to China, that Canada is obliged to sell to the U.S. Lougheed interjected: Having been on the Canadian team that negotiated NAFTA, he knew for a fact that Snow was wrong.
As he recounts the conversation with the agitated Treasury Secretary, Lougheed smiles the smile of a man who does not mind the prospect of a fight, even with a friend and neighbour: "It was quite an unusual dinner. It was polite, but, you know…"
However, after the smile, Lougheed acknowledges there is contention regarding NAFTA's proportionality clause, which specifies that Canada must not reduce the share of its oil production that it ships to the U.S. The clause was inserted in NAFTA because Canada thought it needed a guaranteed market for its oil"what a difference a few years make!
Lougheed seems ready to dispute the American interpretation of the clause; that is a fight that would involve the federal government as well as Alberta. To the simple question of whether Alberta can resist the American pressure for guaranteed oil, he has a simple answer: "Sure. We own it. We're in a seller's market."
Within a few months of that private barbecue, Lougheed decided to become a public man again. At first, he sounded off about water, warning Canadians that the stuff is too precious to waste or even to sell. Specifically, he said, Canadians will have to protect their water from a thirsty neighbour. The United States, he said, "will be coming after our fresh water aggressively within three to five years. We must prepare, to ensure we aren't trapped in an ill-advised response. It would be a major mistake for Canada to handle this issue badly. With climate change and growing needs, Canadians will need all the fresh water we can conserve, particularly in the western provinces."
That warning was delivered in November, 2005, which means that, by Lougheed's reckoning, the U.S. will come after our water any day now.
"They are coming. And they are coming in a very strong way," he says. "How strong a charge? When it comes to water, people become emotional. It will be very strong. Maybe I am wrong, but it could be a proposal that includes threats of retaliation to our country.
"I hope that when the time comes, Canada will be ready. The reality is that fresh water is more valuable than crude oil."
Wait a minute. Is that Maude Barlow talking? Lougheed's assertion seems almost a heresy in the province that, beginning under the selfsame Peter Lougheed, has built its present and future prosperity on roughnecking, not tree hugging.
But memories are short. The long, laissez-faire rule of Ralph Klein has obscured the Lougheed record: Lougheed led a version of the Conservative party that embraced state planning of the economy. Indeed, the oil sands were seeded by the Lougheed government's 50% investment in the Syncrude project. It is no accident that Lougheed started speaking up as the Klein era appeared to be coming to an end. He went public with his concerns, he says, "because I felt and still feel strongly that the public policy of Alberta is wrong, and that they're trying to do too much, too quickly," he says.
Ever polite, Lougheed tries not to blame Ralph Klein for everything that he sees amiss in Alberta. But ask him indirectly"via a question about Klein's successor, Ed Stelmach, and his government"and his unedited feelings come out: "They really inherited a lot of messes," he says bluntly.
Lougheed's key recommendation is that Alberta should put the brakes on oil sands development. "We should have more orderly development," he says. "That means, do one plant, finish it and build another plant, finish it, do another plant"instead of having four of them go on at the same time."
As well, Lougheed has said it was unwise to use the province's deposits of natural gas to extract oil from the oil sands. He has urged the new government to rebuild the Heritage Fund that he had created as a rainy-day reserve for the province and that his successors largely spent. He warned that the whole structure of oil royalties in the province should be revised because the people of Alberta were not getting their fair share. And he urged Alberta to take a leading role in the development of federalism.
There appears to be no windmill at which Lougheed will not tilt. He caused some agitation by suggesting that the oil industry should pay half the cost of twinning the dangerous Highway 63, which runs 400 kilometres from Edmonton to the oil sands boom town of Fort McMurray. Brandishing a clipping from the morning paper, he suddenly focuses on plans by American refineries to expand their capacity to handle Alberta oil, particularly production from the oil sands: "This is exactly what I'm opposed to," he declares. "These are our jobs. The best jobs in the oil sands are on the refining side of it. We should be having the upgraders here."
There is a key idea underpinning Lougheed's complaints: It's our oil. The people of Alberta are paying for the boom in high prices, but they're not getting the benefits of the boom in high royalties. And, as he was with Snow, he's adamant that it's up to Alberta where the oil goes. "We're the owners of the resource and we're the sellers, in a sellers' market. We should be trying to get a second buyer in Asia, and in China in particular. Let's get China interested in a long-term contract"not ownership; they don't need to do that. But let's get a pipeline out to Prince Rupert and let's get the oil on the tankers and let's get another market. Any seller is better off having two buyers than one buyer."
Not that the former premier has the province onside on all of this. "I don't represent with this view the majority of Albertans," Lougheed says. "But it's getting to be that more and more are agreeing with me. They're starting to be impacted by the cost factors all around us, and then they're saying, 'I remember Lougheed saying that we're going too fast.' "
Polls suggest Lougheed may be closer to the mainstream than he thinks. A poll conducted for the green-leaning Pembina Institute in the spring of 2007 reported that 71% of Albertans believe new oil sands approvals should be suspended until infrastructure and environmental issues have been addressed. And 74% think the rate of development should be managed by the provincial government, compared to the 20% who feel that the pace should be decided by market forces. Half of those polled believe oil sands development has been too fast; 56% thought that the province is not getting its fair share from its oil and gas resources.
Roger Gibbins, president of the Canada West Foundation, a Calgary-based think tank, believes that the former premier carries weight because he kept his powder dry and concentrated on the big issues. Moreover, as the Pembina numbers suggest, many people are receptive to his sort of ideas.
"Within the province, there is a very lively debate about the pace of growth, so Lougheed was speaking to a real audience," says Gibbins. "A fair bit of polling demonstrated that an overwhelming majority of Albertans supported a change in the royalty review and did not buy into the industry argument, and in fact was quite skeptical about the positive contribution of the industry to the province. I would be hesitant to say that Lougheed was speaking to a minority constituency."
If nothing else, the polls indicate an unexpected divergence between Alberta's people and its government"unexpected because the people (or at least those who voted in a record low turnout) returned the Tories under Stelmach in a landslide election victory last spring.
Chris Severson-Baker of the Pembina Institute says that Lougheed has seemed radical because Klein and Stelmach are of the small-c conservative school, which holds that if the pace of development is too fast, the market will correct it. It is not something for government to worry about.
"The ideology of the market pervades all the cabinet ministers," Severson-Baker declares. "When you sit down and chat with them, one of the first things they point out to you is, 'Look, we don't see it as our job to control the pace of development. That's for the market to decide.' "
The message from the Stelmach government is uncertain. The new Premier and his ministers may be convinced free-marketers. But, on royalties, they turned their backs on Klein, who was adamant that no revisions were necessary. "I think Mr. Stelmach came up with a pretty good balance," Lougheed says.
It amounts to raising about $2 billion more a year from the industry. The epithets that came from that side in reaction were predictable: Albertastan, disturbed, Goodbye Canada, socialist, killing the golden goose, shocked, aghast, Putinesque"all much the same as the complaints against Newfoundland Premier Danny Williams when he took on the oil companies over the province's offshore take.
"As soon as they saw it was a fait accompli, many of them pulled back," comments Lougheed, who has seen the pattern before. The retreat also had something to do with rising oil prices. "It's pretty hard to start crying when your share price is going way up and your profits are going way up, too."
Public-spirited Lougheed may be, but he is also settling accounts with Klein, the roughneck radio reporter-turned-politician who ruled Alberta from 1992 to 2006.
Peter McCormick, a political scientist at the University of Lethbridge, thinks of Klein as the interloper who stole the Conservative party from the party establishment; the establishment was, above all, Peter Lougheed, and the establishment regarded Klein as a hoodlum. Klein was the coarse, hard-drinking loudmouth who denounced eastern bums and creeps, and cursed homeless people. In contrast, the patrician Lougheed was the abstemious, superorganized workaholic who, as a politician, was as smooth as they come.
McCormick describes Lougheed as a creature of the 1970s. In that decade, there was a wave of provincial elections across Canada that returned reform governments. Regardless of party label, they were socially progressive, change-oriented, committed to the idea that government could solve problems and that government spending was a good thing""a remarkable decade for politics; in many ways, we're spoiled rotten for having lived through it. We'll never get that again," says McCormick.
Much the same kind of enthusiasm comes from Ipsos Reid pollster Darrell Bricker, who looks back on the Lougheed regime as Alberta's halcyon days. Of his successors"Don Getty, Klein and Stelmach"Bricker says: "It's not been a pantheon of heroes."
By contrast, he says, "If we went out and did a poll tomorrow, asking, name me one Alberta politician that you're particularly proud of, I'll bet you Lougheed's name would figure pretty prominently."
McCormick is obviously sympathetic to Lougheed but sees limits to his influence: "It's a long time since he's been premier. There are people like me that you can talk to about Lougheed, but most of my students don't know who he is. There's a very short political memory in this province, and Lougheed is starting to get on the wrong side of it."
If there is any association in the public mind, says Calgary pollster Janet Brown, the former premier is remembered for fighting for Alberta and standing up to Pierre Trudeau. Also, people remember him for setting up the Heritage Fund. Above all, Lougheed is revered in the business community, and that is a community that has clout.
Perhaps the constituency Lougheed cares most about is the Conservative party. He is trying to reclaim it for what he would regard as its better side, and convert Ed Stelmach into the bargain. "He's entirely different from Ralph Klein," Lougheed says. "So I've been very pleased about that. And I also sense that he recognizes the challenges that he has. I feel pretty good that over time he will come to grips with it all, but these are early days."
Right after last March's election, Stelmach was careful to make time for a long meeting with Lougheed. Last December, for the first time since Ralph Klein became premier, Lougheed attended the Premier's Christmas party at Calgary's McDougall Centre. The two men meet frequently and discuss things Conservative. And that, says Lougheed, "wasn't occurring for 13 years under Klein."
Why? Lougheed shrugs with what seems to be pretty lofty disdain: "It had no appeal. Klein didn't understand the party and he didn't have any interest in it, and he let the party basically fall apart. But Stelmach knows this and he's changing it."
Asked whether he and Stelmach talk about the oil sands and energy policies, Lougheed evades a direct answer and says he tries not to get involved in policy issues with the Premier: "He's got enough on his plate, so I'm not really pushing that""which is not exactly a denial.
"I think the jury's out with regard to Mr. Stelmach. I think he's got so many headaches that he's inherited"the health and education side and other places"that only time will tell whether or not he takes a more orderly view of the development of resources," says Lougheed.
Orderly development? A nice idea, but for Alberta and for the oil industry that made the province the wealthiest in Canada, that would be turning back the clock"back to the days when Peter Lougheed was premier.
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