Bloomberg News

Alberta’s New Premier Faces Oil Price, Economic Volatility

October 03, 2011

Oct. 3 (Bloomberg) -- Alison Redford, who yesterday defeated two challengers to become the next premier of Alberta, faces a slumping oil price and economic volatility in the U.S., the province’s biggest export market.

The lawyer and former minister of justice for the province won the nomination to lead the Progressive Conservative Association of Alberta, which has governed the province for 40 years. Redford becomes Alberta’s first female premier and the third leading a Canadian province.

“Make no mistake, we are going to do things differently,” she said in her 2 a.m. acceptance speech from the provincial capital in Edmonton. “We have a lot to do.”

Redford, 46, takes over from Premier Ed Stelmach, 60, who announced he was stepping down in January after pressure from his Cabinet, including former Finance Minister Ted Morton, mounted over a budget deficit and earlier missteps over royalties paid to government coffers by oil and gas companies. She will face economic uncertainty amid slowing growth in the U.S., a slumping price for oil, Alberta’s main export, as well as pressure from the rival Wildrose Alliance.

“It’s a challenging environment for any new government,” said Toronto-Dominion Bank Chief Economist Craig Alexander in an interview. “There’s a lot of uncertainty about the price of oil and how that will impact Alberta.”

More Demands on Province

Oil and natural gas production drives Alberta’s economy, generating about a third of the provincial government’s revenue and employing one out of six workers, according to government statistics. The Canadian Energy Research Institute expects Canada’s oil sands to attract C$2.08 trillion ($2 trillion) in investments and ongoing operational expenditure in the next 25 years.

Oil capped the largest quarterly drop since the 2008 financial crisis by tumbling to a one-year low as signs of slowing growth in China, the U.S. and Germany heightened concern that fuel demand will weaken. Prices tumbled 17 percent from the end of June, the biggest quarterly decline since the 56 percent plunge during the last three months of 2008 and traded at $79.20 a barrel on the New York Mercantile Exchange on Sept. 30.

Investment in Alberta’s oil sands will help boost the population to 4 million in 2014 from 3.76 million now, the provincial finance ministry expects. While a larger population bolsters the economy, it also increases demands for education, housing and health care, which is publicly funded in Alberta, said Anthony Sayers, an associate professor of political science at the University of Calgary.

Health Care

“Alberta spends more per capita than any other province on health care, while the demand for health care keeps tracking upward,” Sayers said in an interview. “This is a problem in light of the cyclical nature of government revenue from the oil and gas sector.”

The leadership campaign highlighted differences among candidates Gary Mar and Doug Horner over the future of health care spending, with Redford proposing to maintain the current publicly funded system while Mar favored allowing private funding options.

Redford was first elected in 2008 after ousting Craig Cheffins of the provincial Liberal Party in the electoral district of Calgary Elbow, formerly held by ex-Premier Ralph Klein.

She was born in British Columbia, received a law degree from the University of Saskatchewan in 1988 and has worked in Serbia, Zimbabwe and Afghanistan monitoring elections and providing human rights training.

Redford is married to Glen Jermyn and has a daughter named Sarah, according to her campaign website.

--With assistance from Gene Laverty in Calgary and Margot Habiby in Dallas. Editors: David Scanlan, Sylvia Wier

To contact the reporters on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net; Gene Laverty at glaverty@bloomberg.net.

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net


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