How the oil industry created a ‘deep state’ in Canada

Opinion: The former leader of the Alberta Liberal Party warns that democratic institutions in Canada are falling under the sway of the oil industry

Oilsands development in Northern Alberta (Shutterstock)

Oilsands development in Northern Alberta (Shutterstock)

Kevin Taft is author of Oil’s Deep State (James Lorimer & Company Ltd., 2017) and former leader of the Alberta Liberal Party.

You may have heard the term “deep state” in recent months, especially out of the United States. It is a powerful term, but in Canada its meaning is getting stripped. Up here, “deep state” is in danger of becoming just another term for bureaucratic inertia and a resistant civil service. That distorts the concept, so let’s take a look at this term, and an example of a deep state in Canada.

Democracy depends on a wide range of institutions: political parties; courts, police, and media; non-partisan civil servants and arms-length regulators; and universities with experts who pursue truth wherever evidence may lead. A key feature of democracy is that these institutions are genuinely independent. They are not beholden to any private interest, and are instead loyal to the public interest and obedient to the rule of law.

But what happens when public institutions lose their independence? Even more, what happens when a whole series of democratic institutions falls under the sway of one private interest? This would occur, for example, when the governing party, the opposition party, the civil service, universities and regulators all follow the lead of the same private interest.

When several key democratic institutions are captured and held by the same private interest, a “deep state” forms. A deep state is an unofficial system of government that arises separately from, but is closely connected to, the official system. It is a public-private hybrid that operates outside public view. In a modern democracy like Canada, a deep state typically comprises leading owners and executives of major private interests and their allies, together with a selection of politicians and bureaucrats tied to the success of those private interests. A successful deep state captures and harnesses the institutions of democracy for its own use.

READ: Why oil sands protesters and companies both get it wrong

Very few private interests have the resources to establish a deep state. In Canada, one that does is the oil industry.

Deep states tend to arise when powerful interests are threatened. What’s the threat to Canada’s oil industry? Global warming. The link between fossil fuels and global warming has been known since the 1980s, and so has the solution to global warming: phasing out fossil fuels. Rather than accepting the science and adapting to other sources of energy, the oil industry has developed an aggressive campaign to obscure the science and advance its own interests.

In the late 1980s and early 1990s, healthy democracies like Canada’s responded as they should to global warming. University and government scientists conducted research; civil servants prepared plans and legislation to reduce emissions; political parties committed to action; and Canada’s Parliament endorsed international climate change agreements.

Then the oil industry went into action, and one by one these democratic institutions succumbed. The Harper Conservatives became clients of the oil industry, withdrawing from the Kyoto accord and silencing federal scientists. The federal Liberals and Alberta NDP committed to expanding pipelines and oil sands production. The National Energy Board was tarred by conflicts of interest and the Alberta Energy Regulator was chaired by a former oil executive, while millions of oil dollars flowed to universities. Enough public institutions were captured by the oil industry that a state within a state was created: a deep state. Meanwhile, the hazards of global warming predicted by science came at us like zombies in a horror movie.

Let’s look at how oil’s deep state is unfolding right now. In July 2017, the Canadian Association of Petroleum Producers (CAPP) published A competitive policy and regulatory framework for Alberta’s upstream oil and natural gas industry. A central recommendation of the strategy needs to be quoted at length:

CAPP recommends that the province [of Alberta] adopt a whole-of-government approach and mandate to strengthen Alberta’s investment attractiveness while achieving government policy objectives. This approach could be supported by a Sustainable Prosperity Steering Committee, comprised of senior representatives from the regulated community [i.e. the oil industry] and the province – notably the Premier’s Office, the ministries of Energy, Economic Development and Trade, and Environment and Parks and the Alberta Energy Regulator. The intent of the committee would be to provide government and industry oversight to steward reform initiatives and drive performance on key files, with a view to minimizing cumulative costs on industry while still achieving government outcomes.

CAPP’s strategy then tied this approach to “political engagement” with the federal government to ensure “streamlined policies” for the industry, specifically naming the National Energy Board and the Canadian Environmental Assessment Agency.

In short, Canada’s staggeringly powerful oil industry wants “oversight” (their word) of political, civil service, and regulatory institutions in both the Alberta and federal governments. Do the words “deep state” start to take on more meaning now?

Oil’s deep state is a triple threat to Canada. First, the environmental devastation brought on by the industry is piling up liabilities that far outweigh the gains to most Canadians. The cost of reclaiming over 300,000 oil and gas wells in Alberta likely exceeds $70 billion, and the cost of cleaning up the toxic tailings ponds and other damage at the oil sands could reach similar levels. There is nothing close to adequate funding in place to pay these costs, much less the forbidding costs of global warming.

The second threat is economic. Alberta’s oil sands royalty system is so tilted toward the industry that the Alberta government now earns more revenue from gaming and liquor than from bitumen royalties. (You read that correctly.) So the public benefits of expanding bitumen production are tenuous. On top of that, the world is working hard to end its dependence on oil, so hitching the country’s economy to an industry that must be phased out is recklessly short-sighted.

READ: No, it’s not ‘crazy’ to regulate emissions in the oil sands

Finally, we have the cost to democracy. As the country’s political parties, regulators, civil servants, universities, and other institutions come increasingly under the sway of the oil industry’s “whole-of-government” strategy, democracy itself begins to fail and we increasingly sacrifice the public interest of Canada to the interests of oil corporations.

The interests of Alberta and Canada are not the same as the interests of the oil industry—sometimes they overlap, and sometimes they are in direct conflict. The hard truth is that in coming decades the oil industry must be phased out in Canada and around the world if we are to avoid catastrophe from global warming. A healthy democracy can rise to that challenge; a country run by oil’s deep state cannot.




How the oil industry created a ‘deep state’ in Canada

  1. A ‘Deep State’ you say?

    In ALBERTA you say??

    I am shocked….SHOCKED I tell you!!

    Marvelous editorial Macleans! Thank you!

  2. All governments have a version of ‘deep state’. The adage of ‘follow the money’ if you want to understand a power structure is almost a universal truth. Limiting the ‘deep state’ control of the carbon culture to just Alberta is hiding the truth that it is our consumer society that is behind the manic nature of oil and our governments were only made decisions that fed this hunger. How many trips, cars, clothes, homes, personal pampering, tech gadgets, etc do individuals in the developed world consider essential to survival? Compare the answer to individuals in undeveloped parts of the world, who, in a lot of cases have a higher level of contentment. We spend so much effort blaming supply when it is really the market demand that is the problem. Watch any ‘reality’ or ‘interview’ style tv to see the promotion of a lifestyle that has no social, economic, or environmental redeeming value.

    Alberta’s only real problem is the addiction to resource revenue which is creating an artificially low tax situation. The flood of people (@ 100k per year, but now a net loss) from the rest of Canada for jobs or lower taxes is really just the rest of Canada shedding potential costs because of their own economic woes. In this sense all of Canada has been addicted to the revenue from the oil economy.

    • Nope sorry….we aren’t going back to the cave.

      We don’t need oil.

  3. The Canadian Deep State is the central Canadian Laurentian establishment…Power Corp, Bombardier, Westmount, Bay Street, the Annex, Forest Hill, and the subsidized Canadian media. The Liberal Party is their playground

    There were terrified that Harper would eventually dismantle them.

    • Now Ont is responsible for your lack of development??

      Get off your asses and do something beyond playing in the La Brea Tar Pit north

  4. “Thank You” to both McLean’s magazine and Mr. Taft for this insightful article. Connecting the “deep state” to the oil industry is very interesting, given that the Largest Mosque in North America has been built in Fort McMurray , with Saudi money. As well, the University of Alberta received a multi-million dollar donation from a Saudi prince to create the first “Islamic” gardens on its campus. How much farther does Saudi interests go? I noted with great interest your use of the phrase “whole-of-government” approach. Strangely enough (not) the first time I heard that phrase was in MP Iqra Khalids’ “Motion 103” — the “Islamophobia” motion. Let us hope that Canadians wake up soon, and claim back their democracy — before the all the sacrifices of lives made in World War 11 prove to have been in vain.

  5. Money talks. Canada is a ripe target due to it’s colonial legacy where governance by an upper class is an assumption; however, it is a general problem of democracy that politics is very much a sponsored activity. A smart man once observed ‘if you think they’re looking out for you, you ain’t even number two’. A classic problem is that when governments seek advice they inevitably look to industry experts; unfortunately, in modern times with rapidly advancing tech this leaves the field open to governments that look to project the future rather than extrapolate the past. This was amply exemplified by the Harper era National Energy Board which based on composition would more accurately be called the Fossil Fuel Extraction and Transport Association and which published volumes of inept nonsense about emerging energy technologies.
    One Canadian problem, another vestige of colonial times, is to be overly focused on resource exploitation and export of raw materials – this is particularly noticeable in the oil sector where almost all export is raw material and almost all processed and finished product is imported. Of course, there is a lot of hand-waving and political spin but no action, even an attempt to exploit an economy of scale argument while at the same time boasting the magnitude of the resource. We also are fed data of mythological proportions echoed by politicians: e.g. Lisa Raitt’s recent expounding on how Trans Canada which runs all its operations with 7000 employees would create 15000 more based on a single pipeline project where 2/3 of it would comprise repurposing existing operations (wasn’t she the one who told us that the oil industry would pay for the Lac Megantic clean up and then assigned most of the costs to the taxpayers?).

  6. I guess the Alberta Liberals need to blame their spectacular and chronic failure on something. An oil industry conspiracy is as good an excuse as any, and impossible to disprove. I don’t hear the provincial NDP complaining about an oil industry deep state these days. Funny how victory changes one’s perspective.

    Oh wait, I just did disprove the existence of said deep state. If such a nefarious and powerful phenomena really existed, the AB NDP never would have won. Nor would have Trudeau. Or are you arguing that they are so deep they don’t even have any influence? Which kind of makes your argument moot.

  7. Yup, Canada is a Bananoil Republic. Taft hit the well on the head.

  8. Deep state!!?? absolutely! Tell me…why was Quebec able to halt energy east with relative ease and BC may have to go to war according to Minister Carr to achieve the same right??!! The EE cancellation was a win win…good for trudeau and good for big oil because Asia (supposedly) is where the market is at. BC demands the SAME environmental review that Quebec got for EE, not the harper stacked joke that was carried out for the Kinder Morgan expansion. As for alberta!!?, BC WILL NOT sacrifice it ambient for a corrupt regime (conservative/reform/wild rose ad nausea)that pissed away decades of revenue and like a junkie at the pipe is begging for more!

  9. The Green/NDP government of BC, is protecting BC from “oil’s deep state”. Clark and the BC Liberals really, shafted British Columbians.