Oil’s Deep State

Originally posted 7 October 2017

Kevin Taft’s new book Oil’s Deep State, sub-titled “How the petroleum industry undermines democracy and stops action on global warming- in Alberta and in Ottawa,” was released on 26 September to a large audience at the UofA’s TELUS Centre. The book launch was sponsored by the Parkland Institute and Alberta Views newsmagazine. The book is a “must read” for anyone who is interested in Alberta politics and society.

Before reviewing the book in detail, I wanted to recount one of the first encounters I had with Dr. Taft, the former Liberal Leader of the Opposition, also known by some as the “Best Premier Alberta Never Had.” Taft spoke at a forum organized by the Financial Management Institute (FMI) in September 2014, which I moderated.  The forum was intended to provide economic insights on Alberta.  Taft, who has a doctorate in business from the University of Warwick, spoke alongside a group of economists from the City of Edmonton, ATB Financial, the Government of Alberta, and the Alberta Investment Management Corporation. The presentation was coincidental with the recent “coronation” of Jim Prentice and change was in the air.  While Taft was apologetic that his talk was not in the mainstream of economists’ presentations- devoid of Powerpoint and charts- he made an eloquent case on the need for Alberta to change course away from fossil fuels as the central driver of Alberta’s economy.   His speech was informed by his study of the literature on global warming.  He believed that the prosperity Albertans enjoyed would soon depart the province as international agreements began to reduce growth prospects for fossil fuels.  I was so struck by the quality of Kevin’s research and presentation that I encouraged him to submit his talk to the Edmonton Journal for publication. Taft’s response was kind of : “aw shucks -they are not interested in the thoughts of an ex-politician.” Regrettably the declining readership of that paper were not privy to the evolution of Taft’s continuing contribution to political discourse in this province. In the event, Kevin and I kept in touch and over several lunches came to share an interest for Alberta history and political economy.

Oil's Deep State

Taft’s book concentrates in one volume a tremendous amount of information gleaned from a wide variety of primary and secondary sources. His central thesis is that democracy has been hi-jacked in Alberta and (probably) Canada by the energy industry (principally oil and gas and secondarily the coal burning electricity industries).  Taft offers compelling evidence about the intercourse between the public and private spheres in Alberta. The revolving door between the energy industry and the Government of Alberta’s energy department and energy regulator is laid bare. The sophistication of the various industry associations and their contributions to university institutes and various not-for-profit “think tanks” is described.

The State is captured

Taft draws upon documentation surfaced from environmental litigation aimed at finding  out what the oil industry knew about global warming and when. He recounts the sordid, and sometimes salacious, Bruce Carson trial which illuminated how far persons would go to blur the lines between public and private interests. (Carson held a senior role in Stephen Harper’s PMO and then a position at the University of Calgary’s Canada School of Energy and Environment, while co-chairing the Energy Policy Institute of Canada.) The Carson case shows “Big Oil’s” strength at penetrating the federal government’s policy-making functions in the key departments of Natural Resources, Environment, and the Privy Council Office.  Carsons’ trial, and ultimate indictment, illustrate that some governmental institutions were not subject to influence by money viz. the federal judiciary.

The Carson case study also sets the stage for Taft’s elegant adumbration of the “deep state” or the “captured” state. Referencing recent work by Peter Dale Scott (The American Deep State), Janine Wedel ( Unaccountable) and Mike Lofgren (The Deep State), Taft constructs a strong case that the oil industry has successfully captured the province of Alberta, and arguably the federal state.

In his book, Taft emphasizes that a “deep state” is different than a “petro state.”  In a petro state (nation states where oil was discovered and exploited like Saudi Arabia and Nigeria),  institutions were not in place to regulate the industry for the benefit of the general population- in other words, democratically.  In a “deep state,” democratic institutions were in place at the time that oil resources began to be exploited. In such democratic states, the existence of autonomous institutions is central to ensuring that political discourse is not muzzled and that different perspectives are allowed to be heard.  These institutions include periodic elections, political parties, legislatures, non-partisan public service, courts, universities and the media (to name the main institutions).  The relative autonomy of these institutions is essential to allowing differing perspectives on important matters (e.g. global warming) to be allowed to surface and be discussed.

Taft provides considerable evidence that Alberta has become a captive state. The most telling documents derive from Glenbow Museum’s transcripts of an interview with Pat Black (Nelson), the former Minister of Energy, Economic Development and Finance. In the transcript cited at length by Taft, the P.C. MLA from Calgary states that she took direction from the oil industry.  In particular, Black was a central figure in the development of the industry-led oilsands royalty scheme set up in the late 1990s that produced an unprecedented investment boom.

A second case of capture in Alberta is more disturbing.  In reviewing an application made by the Pembina Institute over the refusal by the Alberta Department of the Environment to allow the Pembina Institute the right to raise concerns at a hearing respecting withdrawal of water from the MacKay River, Honourable Justice R.P. Marceau excoriated the department. The trial surfaced an internal briefing for the Deputy Minister that recommended against allowing Pembina and the Fort McMurray Environmental Association to intervene since they were known critics of the oilsands. Justice Marceau found unequivocally that the briefing note created an apprehension of bias and that four (not one or two) of the principles of natural justice had been violated.  The judge therefore quashed the decision of the Director, who was responsible for administering part of the Environmental Protection and Enhancement Act. [Read the judgement here:Pembina v. Environment and Sustainable Resources Development]

Principles of Natural Justice cited in the judgment

  1. A fair and open procedure
  2. the right to be heard
  3. consideration by the decision maker tasked with the duty to decide and
  4. decisions are to be free from the reasonable apprehension of bias.

Another case also comes out of the University of Calgary which illminatedthe conflict  between academic freedom and the desire of corporate donors (Enbridge in this case) to influence an academic program. While the University’s President Elizabeth Cannon, who sat on the board of the Enbridge Income Fund (a related issuer to Enbridge) was cleared of any wrong-doing, the departure of one  senior academic and the Dean of Business, highlights the murky interplay of public interest, institutional interest, and corporate interest.

Another example of institutional capture was the dissolution of the Energy Resources Conservation Board and the creation of the Alberta Energy Regulator (AER) in 2012-13.  This re-organization placed “industry-safe” leaders into positions to control the resource development of the province. The new regulator was made responsible for environmental protection, water and public lands as they related to energy development. As part of this move, 150 environmental officers were transferred from the Environment department to the energy regulator.  [See an earlier where Albertarecessionwatch.com commented on the inflated self-importance portrayed by the AER [AER advertises..again) 

Taft also cites the provincial judiciary as another institution populated by lawyers with ties to the oil industry and the Progressive Conservative party.  He notes that changes have taken place to the nomination process since the NDP took power that should ameliorate the over-reliance on Tory lawyers who serve on the provincial bench.

The Current State of Play

What may be somewhat controversial is the author’s view on recent policy developments regarding the oil sands and the environment. Since the election of the NDP government in May of 2015, the Government has implemented a royalty review and a climate change “leadership” policy.  Taft notes Notley’s initial statements upon taking office on energy as comforting to the industry. Given the circumstances of the economy and the deteriorating fiscal situation of the province, it is not surprising the new government did not want a fight with the industry. The appointment of Dave Mowat and Peter Tertzakian were surely viewed positively by the industry as was the appointment of Dr. Andrew Leach the Enbridge Professor of Energy Policy at the Alberta Business School to preside over the climate change effort. Neither report represented any significant change for oil producers. However, the tone of the debate changed in the sense that these initiatives created an environment of goodwill that enabled some breakthroughs on the pipeline files, notably the Kinder-Morgan Trans Mountain file.

Taft also mentions the over-the-top responses of Premier Notley, Shannon Phillips and Gil McGowan to the “LEAP manifesto” last April 2016.  [Read the manifesto at: Leap Manifesto ] Instead of letting the industry take the lead in criticizing the “manifesto,” according to Taft, NDP’s Alberta leadership fell in line with the underlying tenets of Oil’s Deep State.

Further Work

Taft, at the book launch, encouraged the audience to become involved in public discourse and to inquire and study issues central to the health of the Alberta community.  He acknowledged that Bill 1 of the new government- to eliminate corporate and union donations- was a step in the right direction.  Measures to reduce carbon emissions, including the use of alternative, renewable sources of energy are starting points.  The LEAP manifesto does not call for closing down the energy industry tomorrow but to rather begin planning the transition from fossil fuels.

Since the release of the book, TransCanada Corporation announced its decision to abandon the $15 billion Energy East pipeline project. The decision, interpreted by some as the imposition of Quebec’s political power over Alberta’s quest to provide Canadians good jobs, underlines the power of the industry to shape public opinion, regulatory decisions, and public policy.  Underlying the nasty inter-regional debate is the myth that the energy industry is a benign social and economic force unselfishly providing “well paid jobs” and paying the bills for many Alberta government programs.

Taft’s insightful analysis suggests otherwise. Many readers (if I have any!) may have experienced the weight of conscience to speak up when living in a society where only one perspective has been the norm.

Canada must prepare now for the postcarbon economy9-10-17 GM

The Liberals’ tricky balance between climate and energy9-10-17 GM

‘Oil deep state’ controls Alberta, says Taft7-10-17 EJ

Heated Climate10-7-17 GM


This entry was posted in Economic Data, Politics on by .

About albertarecessionwatch

Former Director, Institute for Public Economics, University of Alberta and currently Fellow of the Institute. Former executive with Alberta Treasury Branches. Worked for the Alberta government for 12 years with Federal and Intergovernmental Affairs and Alberta Treasury. Areas of focus: financial institutions legislation and policy, government borrowing, and relations with credit rating agencies. Ph.D in Political Science (Uof A), Masters of Public Administration and BComm. (Carleton University). Author of Politics and Public Debt: The Dominion, the Banks and Alberta's Social Credit. Presently working on study of Alberta provincial agency board appointments.

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