Canada’s Welfare Kingdom: Alberta
If governments removed explicit subsidies and imposed corrective taxes, fuel prices would increase. This would lead firms and households to consider environmental costs when making consumption and investment decisions. The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease, and more fiscal space for governments.
- Fossil Fuel Subsidies Surged to Record $7 Trillion, International Monetary Fund
Gregg Wall (5-10-2025)
It’s been an interesting two weeks here in Alberta, Canada. The ultra conservative central banker, Mark Carney, was voted in as prime minister, under the Liberal party (thanks in large part to Donald Trump). W/in a matter of hours Alberta’s premier, Dani Smith, began rallying her rabidly populist base to support secession, going so far as to issue an ultimatum and a list of demands to Ottawa. Alberta’s populist-right government has done tremendous damage to the Alberta economy, public healthcare, jobs and opportunity, and even ran off a renewables industry, billions in investments, and tens of thousands of jobs. But for reasons unknown, premier Smith’s rural base of support is accepting of all this failure. The United Conservative Party (UCP) faithful appear to be single issue voters, to wit: hating Trudeau, despising Libs, and forever foaming at the mouth over something called equalization payments.
Alberta’s claim to fame isn’t its beautiful Rockies, its majestic farmland and prairie, Alberta’s indigenous population and growing diversity… but rather, at least for the far-right UCP voter, Alberta’s fame and pride stems from Fort McMurray’s dark pit of tar sands hell. In their minds, Alberta is oil country. And as result of that oil, its revenue, and perceived wealth, Alberta transfers somewhere between $15 to $25 billion, per annum, more in various forms of tax revenue to the federal government than Alberta receives back. All the other provinces & territories are net contributors on a much smaller scale, like BC and Ontario, or receive more from the Feds than they pay in. This issue, that Alberta pays in more than they receive from the Feds is a never-ending source of angst for Alberta’s rural population, who are deeply worried about this relatively paltry sum and feel that the O&G industry has been constrained and put upon by the Feds (even though PM Trudeau did what PM Harper did not achieve, build a taxpayer funded pipeline for the industry to the Pacific).
I say ‘relatively paltry sum’ because when we examine the reality that the entire Fort McMurray O&G operation is one of the biggest taxpayer funded money pits known to humanity, as is the global O&G industry… the deception & illusion that Alberta O&G is a godsend, a gift that is being abused by the Libs and all the other Canadian provinces, quickly evaporates. The reality is the Liberal party leadership are in on the scam, maintaining the charade that this industry is viable, likely at the behest of the industry insiders, high net worth individuals, and politicians, who are the primary beneficiaries of endless federal and provincial welfare flowing into the industry.
The reality, thanks to the Fort McMurray operation, Alberta is the recipient of hundreds of billions of dollars in subsidies annually. The O&G industry receives far more in funding … direct subsidies, indirect subsidies, and externalities (known costs & expense passed onto the general public) … than any other industry in Canada or the world for that matter. Moreover, Alberta oil is some of the most toxic form of sludge on the planet, w/ some of the highest, if not the highest, production, processing, travel, and refining costs on the planet (much of it, presently, exported to the United States). In short, this is some really nasty stuff, in an industry already noted for cancer alleys, killing one in five humans through air pollution, destroying clean air, polluting fresh water, turning land into Superfund sites (or FCSAP in Canada), and basically, cancelling the planet. In short, Fort McMurray, Alberta is the epicenter of hell on earth.
As for the hundreds of billions in subsidies? Here, I refer to the International Monetary Fund (IMF) analysis that states global fossil fuels subsidies are $7 trillion per annum… the lion’s share of those subsidies are intangibles/indirect and externalities (that is, known costs and expense paid for by society at large or simply avoided at the moment, a deadly & toxic can endlessly being kicked down the road for future generations). More recently, two Dartmouth professors released another study, designed to tie 111 fossil fuels companies to their emissions, and concluded that these companies have generated $28 trillion in climate damages to the planet, between 1991 and 2020. The goal of this study is to tie fossil fuel companies directly to their liabilities to achieve better outcomes in civil litigation (so the industry can be held accountable, like Big Tobacco). And the icing on the cake, the University of Chicago and Wharton School estimate that fossil fuels consumed by corporations will cause $87 trillion in social costs by 2050, in the United States alone. That is, eighty-seven trillion U.S. dollars… as noted by Bloomberg multiples of U.S. GDP and the offending companies’ market caps.
Those are interesting numbers but how do they tie into Canada? Indeed, these are global studies, but we know that Canada produces between five and six percent of global oil and gas production. If we take 5% of the IMF number of $7 trillion, we can estimate that Canada’s oil patch receives $350 billion in subsidies per annum, again most of this figure is indirect subsidies and externalities (like the town of Jasper, AB burning down last summer, Canada’s pristine forests and parklands that catch fire every summer, greater cardio vascular and lung disease tied to the garbage Fort McMurray’s products emit into the air, higher food costs and property insurance premiums as a result of the climate catastrophe unfolding before our very eyes, etc.). So, there’s that. Now, if we take 5% of the $28 trillion in liabilities, outlined and published in Nature by the Dartmouth team, we get unfunded liabilities for Canadian O&G of 1.4 trillion dollars (these are American dollars by the way; if we apply the Canadian exchange rate these figures climb higher, 35% to 40% higher). This, from an O&G industry that is reporting out record profits, that uses tax cuts and all manner of government welfare to engage in stock manipulation (aka stock buybacks) and pay themselves astronomical dividends, while employing fewer and fewer Canadians & Albertans as time passes by. This, from an industry that has abandoned O&G wells throughout Alberta and for whom, Alberta’s premier has graciously sought to clean up at taxpayer expense (with estimates ranging from $33 to $70 billion to hundreds of billions of dollars). Hundreds of billions for well cleanup, land remediation, a climate crisis, higher food costs, contaminated air, water increasingly poisoned along with fish and wildlife… $1.4 trillion doesn’t really seem like a lot. Does it? The figure appears low.
The point to all this is … with the Fort McMurray pit of hell & Canadian O&G industry consuming $350 billion in subsidies from Canada, the public, the taxpayer, and factoring in the ever increasing costs of living & dying… and with unfunded liabilities of $1.4 trillion (more than likely, much higher)… perhaps the rock ribbed, rugged individualists, aka the UCP party faithful, shouldn’t get their panties in a wad over the $15 or $25 billion Alberta sends to Ottawa annually. Maybe? (Note, the $16 to $25 billion paid to Alberta, per annum, in royalties, land use, rents, and taxes, and the $53 billion, for the years 2007 through 2019, paid to the Feds in corporate income taxes, royalties, and fees… by Alberta O&G… doesn’t begin to cover the endless ocean of public and taxpayer subsidies that keeps this industry alive & in existence. By the way, that $53 billion figure comes from the Canadian Energy Centre, a pro-industry lobbying group, founded & funded by the far-right, provincial government. Nor have we delved into the forgone opportunity costs of plowing hundreds of billions into this lethal industry, so a tiny segment of the population can grow filthy rich, instead of placing that money into far more productive uses.)
Alberta Premier Danielle Smith is shown at a press conference in Calgary on Thursday, Dec. 19, 2024. PHOTO BY JIM WELLS /Postmedia (w/ editing from JM Hamilton Blog)
The bottom line, if Fort McMurray’s criminal and repugnant O&G industry was cut off from direct subsidies and forced to pay $1.4 trillion in past liabilities, the industry would go bankrupt and cease to exist, at least in its present form. Which might explain why the Queen of the Damned, premier Dani Smith, shut down the Renewables industry in Alberta, so as to leave the province almost entirely dependent upon a dying, vile, and repugnant O&G industry. Interestingly, before Dani Smith was premier, she was a lobbyist for the oil and gas industry. Notice, Alberta’s conservative voters get really excited about $15 to $25 billion paid annually to Ottawa; but conveniently, these same individuals go silent when their pet industry, O&G, is the recipient of hundreds of billions in government, public, and taxpayer funded subsidies and welfare, annually.
Does it get anymore corrupt and rotten then that? Well, I’m afraid it does, because if we examine Dani’s and UCP's track record, the conservative government’s reign of chaos & terror has been a complete abortion, including but not limited to:
Tanking Alberta;
Betrays Alberta & Canada;
Trashed healthcare; and
Endless Scandals, including CorruptCare and crony deal making with taxpayer money.
And now, UCP and their supporters want a referendum on independence (as a coverup & distraction from the aforementioned laundry list of failures and past sins)? In fact, UCP plans on amending the rules that would lower the number of signatures required to make that referendum a reality.
UCP can’t manage Alberta or its affairs now, and the party has saddled Alberta with a trillion dollars – plus in fossil fuels liabilities and hundreds of billions in subsidies, per annum. Make no mistake about it, the management and ownership of Alberta O&G, and the industry globally, have zero intentions of paying those liabilities. UCP has, arguably, done this with their partners in crime, the Liberals in Ottawa.
Meanwhile, the crazies and freaks, the UCP cult, want to be a sovereign nation. There’s a thought. From a purely financial perspective, perhaps Canada and Canadian taxpayers would be well advised to cut Alberta, and its trillions in subsides and liabilities, loose?
Then again, perhaps a better solution is to bankrupt the industry, nationalize, with the proceeds funding a green transition, cleanup, remediation, and reparations to First Nations.
Copyright JM Hamilton Publishing 2025
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