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Calgary — The Alberta oil patch is in uncharted political territory after the NDP’s unprecedented rise to power. The energy sector, the province’s dominant industry and one that’s been friendly with the Progressive Conservatives, will find itself dealing with a left-of-centre premier and ruling party that have been among its harshest critics on issues of royalties, taxes and environmental policy.
NDP Leader Rachel Notley, who ended nearly 44 years of Progressive Conservative rule in Alberta in an extraordinary majority win on Tuesday, has said her government would review the royalties rates paid by oil and gas companies, increase corporate taxes, strengthen environmental rules and halt the practice of spending taxpayer dollars to promote pipeline projects in Washington and elsewhere.
The stunning change comes at a time when oil prices are just starting to recover from lows that had sapped billions of dollars of government energy revenues as the sector fell into a downturn.
The NDP’s stated policies are “directionally negative” for the industry, as they point to higher costs, said Samir Kayande, analyst at ITG Investment Research in Calgary. For instance, a royalty review does not suggest that rates will be cut, he said.
“I think everyone needs to take a deep breath here, though, because governments that don’t grow the economy don’t get re-elected,” Mr. Kayande said. “I think it’s in the NDP’s interest to have a strong economy.”
The party has been much more closely associated with the unions that represent energy workers than the managers of oil producers. In fact, it had been more than two decades since any NDP politician represented a Calgary riding. That all changed on Tuesday.
Another focus, according to Ms. Notley’s platform, will be bolstering the province’s reputation on climate change as previous governments have resisted establishing tougher targets for carbon reduction from the oil sands and other industries. Some energy experts have said a better record on climate could help the industry further its aims to improve access to markets.
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