Retaliating against Washington with an export tax on energy could hand Alberta separatists ammunition against Ottawa

Ottawa has tried forcing its will on Alberta’s energy industry before. It ended badly.

In 1980, the Trudeau government imposed the National Energy Program and forced much of Alberta’s oil to be sold below world prices. In February 1982, Olds-Didsbury elected Gordon Kesler of the Western Canada Concept, the first separatist sent to Alberta’s legislature. No referendum was on the calendar then. There is one now.

Yet after trade talks with Washington collapsed, another fight over Alberta energy is being proposed. Ontario Premier Doug Ford and former Alberta premier Jason Kenney have both argued for using Alberta’s energy resources as leverage against the United States.

And the Sierra Club, no friend to Alberta, emailed a fundraising letter pushing Ottawa to retaliate by taxing the oil and gas we ship south. The export-tax idea belongs to climate activist Seth Klein, who proposed a 15 per cent tax that he estimates would raise “close to $25 billion” a year. The letter calls an export tax “a Federal choice” that “the Alberta Government has no grounds to oppose.”

No grounds? There are three, and each is public record.

Start with the Supreme Court. In 1980, Ottawa proposed a tax on exported natural gas under the National Energy Program. Alberta challenged it because the province owned the gas the levy would catch. In Re Exported Natural Gas Tax, the court struck the tax down as it applied to Alberta’s own gas. Section 125 of the Constitution says no property belonging to a province “shall be liable to Taxation.”

The ruling still matters because Alberta owns 81 per cent of the province’s mineral rights. Companies producing conventional oil from Crown resources owe Alberta a royalty, and the province takes that royalty in actual barrels rather than cash. That oil, sold on Alberta’s behalf by the Alberta Petroleum Marketing Commission, remains provincial property and is beyond Ottawa’s taxing power under Section 125.

Second, section 92A gives Alberta exclusive say over how much comes out of the ground. Former Alberta premier Peter Lougheed used that power in 1981, cutting output in stages toward 180,000 barrels a day. Ottawa’s grab for a bigger share of Alberta’s oil revenues backfired: it had to charge Canadians an extra $1.15 a barrel for replacement foreign oil.

Third, we signed a treaty. CUSMA article 2.15 bans export taxes unless the same tax applies at home.

Alberta Premier Danielle Smith calls withholding our energy “not a viable option.” Prime Minister Mark Carney says he does not “see the value of it.” They are right.

Alberta heavy oil sells into a narrow market of refineries built for it. As energy analyst Heather Exner-Pirot puts it, “Just like Americans pay the tariffs, if we impose an export tax, it’s our companies that are responsible for paying the export tax.” Much of that cost lands back on Alberta producers. They get less for their oil, and Alberta gets less in royalties to help pay for schools and hospitals.

Then there is separatism. Albertans vote Oct. 19 on 10 questions, including whether to begin the legal process toward a binding separation vote. While support for leaving has fallen from 28 per cent in January to about 18 per cent in June, another fight with Ottawa could reignite it.

In their haste to punish Donald Trump, proponents of an export tax would risk damaging Canada instead. The Constitution stopped Ottawa once, and a treaty bars the tax now.

You cannot save a country by giving a province reasons to leave.

Dr. Marco Navarro-Génie is vice-president of research and policy at the Frontier Centre for Public Policy, which will host Reclaiming the North in Winnipeg on Sept. 14 and 15, featuring retired lieutenant-general Michel Maisonneuve, former Norway House Cree Nation chief Ron Evans and Frontier president David Leis. Marco is the author of three books, including the 2023 release Canada’s COVID: The Story of a Pandemic Moral Panic, co-authored with Barry Cooper.