Earlier this month, Jason Kenney, Alberta’s premier, sent out the following tweet.
Three days later, he shared this tweet.
In the first, he shares this graph (although recoloured it to UCP blue) that was originally part of an article by Siddhartha Bhattacharya, an economist with ATB Economics.
And sure enough, Alberta’s exports to outside Canada to appear to be up significantly between April and May 2022. In fact, it looks like it’d been rising for pretty much the last two years. To be fair, though for the first year (March 2020 to March 2021), it was all recovery growth, with nearly every month being below pre-pandemic levels.
In his tweet, Kenney claimed “Alberta exports are at an all time high!”
However, while the graph does seem to show this, there’s a pretty big caveat.
You see, the graph shows the value of exports, not the volume. And while increased volume could also increase aggregate value, it’s not the only thing that can lead to higher export value.
For example, in his article, Bhattacharya claimed that the value of energy exports “were up by $1.7 billion from April, mainly driven by the energy sector.” In fact, he goes on to say that energy exports “were responsible for over 90% of the aggregate monthly increase.”
In other words, nearly all that increase was in the energy sector.
But check this out.
This shows oil production between May 2021 and May 2022.
In May 2022, Alberta produced 17.07 million cubic metres of oil. The month before, however, we produced 17.34 million m3. Yet the value of our energy exports was $13.03 billion in April and $14.56 billion in May.
So, what gives? Were we just hoarding extracted oil so that we could increase exports by 54.5% over a 5-month period?
According to Bhattacharya, West Texas Intermediate, the most common measure of the price of oil increased from an average of US$102 a barrel in April to US$110 a barrel a month later.
See for yourself in this chart.
This is what oil prices looked during April and May for West Texas Intermediate, according to Business Insider.
At the end of April, WTI sat at $104.69 a barrel. At the end of May, it had jumped to $114.67.
And April itself saw higher oil prices than February, which closed at $95.72 a barrell on the 28th.
So, we weren’t exporting more oil in Alberta. We were exporting more expensive oil. And since the data Kenney was citing is the value of the exports, when the cost of the products your exporting increase, the total value of what you increase also goes up.
Furthermore, Bhattacharya went on to say that “higher prices played a role in boosting international sales of some non-energy markets including forestry and industrial machinery products.”
Case in point, the consumer price index went from 157.0 in April to 159.2 in May. Compared to a year ago, CPI in April was 6.3% higher in April and 7.1% higher in May. That means that inflation for Alberta was at 3.3% during that period.
So, it seems as though higher oil prices, as well as inflation, may have had more of an effect than actually selling more of what Alberta workers produce.
Same goes for the graph in his second tweet.
This one is also from a recent article by Bhattacharya. And it’s a similar story:
Through the first five months of the year, the rise in refined petroleum and coal product sales accounted for 60% of the total increase in manufacturing shipments in Alberta . . . . Higher prices were the main factor with the dollar value of refined petroleum and coal product sales in Canada up by 81% . . . . The impact of soaring prices was also seen in other parts of the manufacturing sector including food products and chemicals.
Check out this chart, which shows CPI for the last 5 years.
Notice anything? Here, let me overlay it onto Bhattacharya’s chart.
Manufacturing sales roughly mirror consumer price index. If CPI drops, so does the value of manufacturing sales. When CPI increases (inflation), so does the value of manufacturing sales.
Either way, these charts don’t prove what Kenney thinks they do. And he’s misleading the public by making it seems as though they do.
On that note, the last half of both tweets says, “Alberta’s Recovery Plan is working!”
But unless the UCP had planned to make things 7.1% more expensive than they were a year ago and increase global oil prices by 10 bucks a barrel, I don’t think this qualifies as definitive proof.
3 replies on “Is Alberta’s Recovery Plan really working?”
The tweets referenced at the start of this story are not showing up on screen
Interesting. I just checked again, and they show up for me.
They show for me.