Alberta’s CBR Fiasco: NDP Clowns to the Left, UCP Jokers to the Right

Written by David Thomas, Canadian Contributing Editor

In a desperately irrational move at the end of its term in the winter of 2019, Alberta’s former NDP (New Democratic Party) government tried to defy Economics 101 by dramatically increasing crude-by-rail capacity in order to raise prices. Nobody outside former Premier Rachel Notley’s statist brain trust thought that was a good idea. Especially not the railways: CN and Canadian Pacific both insisted that the government commit to paying the $C3.7 billion contract price, whether or not the trains were needed. In the event, “or not” turned out to be a very wise condition for the railways.

In one of its first acts upon election in May 2019, the far-right (by Canadian standards) United Conservative Party (UCP) government of Premier Jason Kenney said it would dump the contracts to private enterprise. In February 2020, Kenney triumphantly announced that all 19 of the car loading and train operations contracts had been sold, at a mere loss of C$1.3 billion. As it turns out, that wasn’t even close to being true.

The sales had not actually been completed before the Armageddon of global oversupply and COVID-19 economic contraction conspired to send the price of Alberta oil well below zero. The true loss on the contracts was C$2.1 billion, according to an official financial update issued at the end of August.

Canadian Energy Centre Ltd. Director and Alberta Energy Minister Sonya Savage (a former Enbridge, Inc. lobbyist) had to fess up even more: The C$2.1 billion loss accounted for only 50,000 daily barrels of the 120,000-barrel contractual minimum: Another 70,000 barrels of capacity is still being paid for and remains to be disposed of. At that rate, the government will pay considerably more to dump the contracts than it would have to simply pay up and walk away.

Thus, a mildly socialist government foolishly nationalized Alberta CBR, and then a wildly capitalist government foolishly re-privatized it. The eventual total loss to Canadian taxpayers remains a mystery, but the fire-sale divestments make the original folly of C$3.7 million look like a good deal.

With no more Hail Marys in the playbook, Alberta’s deficit this year is projected to exceed $C24 billion, all of it due to improvident dependence on oil royalties thgat have evaporated in the heat of declining demand, energy investors’ crush on hydrogen, and the rush by the global oil giants to enhance their ESG (environmental, social and governance) scores by extricating themselves from Alberta’s climate-offending tar sands.

Contributing Editor David Thomas is a reporter who has covered government and society since graduating from Ottawa’s Carleton University with degrees in political science and journalism. He has written for National Geographic, Maclean’s, The Globe and Mail, The Gazette, and The Canadian Press news agency from postings in Ottawa, Montreal, Quebec City, Toronto and London, England. “Railroading has been a personal fascination since a childhood timed fortunately enough to witness the golden years of steam on the late-to-dieselize Canadian National and Canadian Pacific,” he says.

Further Reading

Alberta government says tank car order imminent

All she wants for Christmas are her two tank trains

Alberta inks CBR deal with CN, CP

Fuzzy math, politics and railcars

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