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Oil Industry Relieved After Major Conservative Win In Alberta

The United Conservative Party won the provincial vote in Alberta with an overwhelming majority, promising a harder line on energy issues as a champion for the oil industry.

The leader, Jason Kenney, pledged on the campaign trail to remove the carbon tax introduced in the oil province and challenge legislation that neighbor British Columbia is pushing that would give it more power over inter-province infrastructure projects. The goal is to stop for good the Trans Mountain oil pipeline expansion project.

The UCP victory spells more trouble for the two neighboring provinces if Kenney stays true to his promises. It also spells more tension between Alberta and Ottawa, as the UCP leader has also vowed to get the federal government in line regarding the now-notorious project.

In addition, Kenney has said he planned to hold a referendum in Alberta regarding the so-called equalization payments the federal government distributes to smoothen financial inequalities among provinces. Plans are to tie these payments to the construction of new pipelines.

The pipeline problem has become Alberta’s Achilles’ heel, costing it billions in lost profits from crude oil exports as production grows but existing pipelines cannot cope with the additional load. This has spurred more exports by rail and the acquisition by the outgoing Rachel Notley government of more rail cars to boost the export capacity in the face of pipeline bottlenecks.

The shortage also forced the government to institute obligatory production cuts that met with strong opposition from some industry players and may have additionally tipped the scales in favor of the United Conservative Party in the election.

Canadian media report that Kenney has already threatened British Columbia to turn the gasoline tap off “within an hour” of taking office if it continues to try and stop the Trans Mountain expansion. This might very well be the first shot in the second inter-province Battle of the Pipelines.

By Irina Slav for Oilprice.com

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