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Oil patch woes: Alberta rages at Trudeau amid downturn

Local economic slumps worsened by federal government's disputes with China, indigenous peoples

Alberta's capacity to ship crude has lagged the ability to produce it, leading to a glut that forced producers to cut output.

Winnipeg, Manitoba

IN 35 years of working in Alberta's oil patch, home to the world's third-largest crude reserves, Ray Mildenberger endured a volatile industry's ups and downs without being laid off.

That changed in October, when Mr Mildenberger, 60, and five co-workers of an oil service company in Grande Prairie, Alberta, lost their jobs.

He turned to selling truck parts to pay the mortgage. "I took the first thing I could secure," he said. "There have been a lot more lay-offs here lately. I consider myself lucky."

Alongside the lay-offs, local food banks report strains from rising demand, while across the province oil wells have shut down. But although global oil and crop prices have slumped since the boom of 2008 to 2014, the root causes of Alberta's problems are uniquely Canadian.

Canola exports, another mainstay of the western economy, have been hit by a diplomatic dispute with major buyer China, and the federal government's frayed relations with indigenous peoples have stymied attempts to boost oil transport capacity.

Albertans blame Liberal Prime Minister Justin Trudeau. He was re-elected in October, but lost his parliamentary majority and failed to win a single seat in Alberta. A Western separatist movement - #Wexit - has sprung up.

"It has been a long five years of an economic downturn and people blame the Trudeau government. Everybody knows somebody who's lost their job," said Duane Bratt, a political science professor at Mount Royal University.

Mr Trudeau named former foreign minister Chrystia Freeland, an Alberta native, to spearhead his efforts in the West. This week, the government is hearing Alberta's case for an increase in economic aid, though it has yet to promise it.

Alberta's economic growth slowed to 0.6 per cent in 2019, from 2.2 per cent in 2018, intensifying pressure on Mr Trudeau to complete a pipeline needed to move the province's crude to international markets, and to resolve the fight with China that has hurt canola sales.

Bank of Canada governor Stephen Poloz said last month that Alberta was still adjusting to weaker oil prices.

Benchmark US crude prices have stabilised around US$60 a barrel after recovering from multi-year lows in 2016. But the current price is still down 43 per cent from 2014. Moody's credit rating agency downgraded Alberta this month, citing in part its dependence on oil.

The bigger problem for the oil patch, though, is the struggle to expand pipelines that would allow more crude shipping. The capacity to transport crude has lagged the ability to produce it, leading to an inland glut.

So wide was the discrepancy, the Alberta government forced producers this year to cut output, a rarity for any oil-producing country outside of the Organization of the Petroleum Exporting Countries (Opec).

The Trudeau government is aware of Alberta's problems, spokesman Matt Pascuzzo said. "Now is the time to listen to people's concerns and priorities, and to chart a path forward together," he said.

For farmers, low prices have been compounded by waterlogged fields that left crops unharvested before winter.

"This will be one of the worst years we've experienced," said Andre Harpe, 55, who farms near Valhalla Centre, Alberta.

In Grande Prairie, a city of 55,000 inhabitants about 60 km to the south-east, a rising number of people have used the food bank since oil prices crashed in 2014, said Peter Kim, executive director of the Salvation Army's local branch. "It's not just the single moms with their children," he said. "There are people who have vehicles, have mortgages, and yet they have to use the food bank."

According to Mr Mildenberger, no one in the capital is listening. "We're not a country," he said. "We're 10 areas that support one area, Ottawa." REUTERS