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For Alberta, and for Canada as a whole, it’s becoming increasingly obvious that oil — once an economic blessing — has become a curse.

That word — ‘curse’ — is one development economists use to describe the anomalous position of countries awash in natural resource wealth (like oil) where economic growth is nevertheless sluggish and outcomes are actually weaker than in countries that aren’t as “blessed”.

When oil prices are high, there’s so much money to be made in extracting it that other sectors of the economy tend to languish. Agriculture and manufacturing suffer because nobody can compete with the inflated wages in the resource sector. Government revenues are subject to booms and busts, driven by global commodity cycles completely beyond local political control. And oil wealth too often breeds corruption, as those close to power scramble for a share of the resource manna.

Classic cases include countries like Venezuela, Kazakhstan and Angola — places where the economy is utterly screwed up and poverty is rampant, despite copious oil wealth. But the resource curse can also, in its own way, afflict wealthy countries like Canada.

The statistics are striking. In the two decades between 1994 and 2014, Alberta’s GDP grew by an average of 3.5 per cent a year. The province, with something over 11 per cent of Canada’s population, accounted for 25 per cent of net new jobs for the entire country in the ten years to 2014. Two years ago, resource concerns, led by the oilsands producers, invested $126 billion in their facilities, accounting for almost half of all non-residential capital investment in Canada.

We all benefited. Revenues from Alberta flowed into federal coffers, boosting overall growth and, along with a well-cultivated housing bubble, allowing Canada to avoid the worst of the Great Recession of 2008-09. Furthermore, Alberta provided a huge safety valve for surplus labour from other parts of the country. Thousands of skilled and not-so-skilled workers from the Atlantic provinces, Quebec and Ontario flocked to Fort McMurray for the high wages, sending money home like immigrants providing remittances to their families abroad.

Thankfully, we’ve had no venal politicians and oligarchs in Alberta and Saskatchewan hoovering up bribes and siphoning royalties from the treasury into Swiss bank accounts. Our oil wealth has been democratically spread around — particularly in Alberta, where royalty money flowed into provincial coffers, swelling the size of government and allowing for generous public services while income taxes were kept rock-bottom.

That is Alberta’s big problem: Its oil costs relatively more to produce, it has no short-term solution to what could be a long-term price crash — and what ails it won’t change if we build a dozen pipelines to tidewater. That is Alberta’s big problem: Its oil costs relatively more to produce, it has no short-term solution to what could be a long-term price crash — and what ails it won’t change if we build a dozen pipelines to tidewater.

Alberta is still the only province without some sort of sales tax. With the torrent of money flowing out of the ground in northern Alberta, nobody gave a thought to tomorrow.

Which would have been fine, if oil were not a commodity like others. But as with Saskatchewan potash, Ontario nickel and Quebec iron ore, oil is subject to supply and demand and the vagaries of commodity cycles. If you’re not a low-cost producer, you’re cooked when prices dive. And that is Alberta’s big problem: Its oil costs relatively more to produce, it has no short-term solution to what could be a long-term price crash — and what ails it won’t change if we build a dozen pipelines to tidewater.

Look at any bar chart comparing production costs for oil worldwide and Canadian oil is usually somewhere at the top, along with the North Sea, where the industry is dying fast. What’s the use of having the world’s third largest petroleum reserves if they’re totally uneconomic at current prices?

The Saudi oil minister, Ali Al-Naimi, could have been talking directly to Canada’s oil industry this week when he told an energy conference in Houston that he plans to pump as much oil as he can to maintain his market share — even if the price remains mired where it is, around US $30 a barrel.

“Inefficient, uneconomic producers will have to get out. That’s tough to say, but that’s fact,” the Saudi said.

For now, the oilsands plants continue to pump out bitumen, even at these low prices, because of long-term commitments — and the fact that you can’t turn off a complex, continuous process like bitumen extraction for a few weeks at a time. But you can be damn sure that at current prices, construction of new projects will slow; eventually, if prices don’t improve substantially, some operations will be mothballed.

And we all know Canada’s bitumen sector isn’t going to win any environmental awards anytime soon. If the world is truly getting serious about fighting climate change, the oilsands and its unfortunate carbon footprint are looking less and less viable.

The problem is that while we were busy convincing ourselves that turning northern Alberta into a giant open-pit mine was the surest way to fortune, we forgot about the benefits of a diversified economy. It became our version of the resource curse. In 2014, natural resources accounted for a whopping 31 per cent of Alberta’s GDP, the same as in Saskatchewan. In Newfoundland, it was 33 per cent. In Ontario, natural resources accounted for only 7 per cent of GDP, while in Quebec the figure was 10 per cent.

That’s actually good news — proof that our future is not solely dependent on a return to $100-per-barrel oil, which may never happen. Already, we can see signs that lower oil prices, a devalued currency and a stronger U.S. economy are pointing to a revival of manufacturing in central Canada. It won’t be as spectacular as the halcyon days in Fort McMurray, but what’s good for Ontario’s automotive factories and Quebec’s aerospace industry is actually good for us all — including Albertans.

Alan Freeman is a Senior Fellow at the University of Ottawa’s Graduate School of Public and International Affairs. He came to the U of O from the Department of Finance, where he served as assistant deputy minister of consultations and communications. Alan joined the public service in 2008 after a distinguished career in journalism as a parliamentary reporter and business journalist for The Canadian Press, The Wall Street Journal and The Globe and Mail. At the Globe, he spent more than 10 years as a foreign correspondent based in Berlin, London and Washington.

The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.