Exactly how low oil can go, and for how long it remains at that level, will be Saskatchewan’s key political question in 2015.
Of course, it won’t be the only key political question in 2015.
What kind of crop can we expect in 2015? Will we again struggle to get it to port as we did with the grain-handling delays last winter? How deep will government have to dip into its reserves to pay for additional crop insurance, flood or other natural disasters?
Will oil losses we suffer be offset by gains in potash sales and royalty taxes?
And then there are the more political questions less directly related to the economy:
How will Premier Brad Wall’s Saskatchewan Party survive the mounting pressures of seven years in government?
Can it address major developing problems like chronic struggles of care home and acute health care staffing, especially if there isn’t readily available revenue to bail them out of problems?
Will the growth of the past decade – an extra 100,000-plus people – begin to take a toll on roads, and school and hospital infrastructure? If there is an economic slowdown, will it be severe enough to cause the kind of depopulation Saskatchewan witnessed in the late 1980s and 1990s?
Will a Sask. Party government that hasn’t exactly faced much adversity in seven prosperous years be up to the challenge of such issues? Or are we already seeing signs of a government more caught up in political gamesmanship and too ill prepared for the tough challenges that lie ahead?
But no matter how many challenges the Sask. Party faces in 2015, is it any easier for the NDP in what will either be an election year or one leading up to an election in April 2016?
Can anyone take Cam Broten’s NDP seriously? Is his party’s track record, in rural Saskatchewan in particular, still too damning for New Democrats to win anything other than a few urban seats?
Will we see in 2015 some meaningful alternative policies from the NDP, who have been granted the luxury in this period between elections of raising and critiquing government issues without yet being asked to provide options?
And perhaps more critically from the NDP perspective: Has the combination of the Wall/Sask. Party government and oil wealth of the past seven years fundamentally changed Saskatchewan to the point where a majority of voters – for philosophical reasons – no longer see the NDP as a credible governing option?
All or any of the above may become fascinating questions in 2015.
But whether any or all of them are answered in this coming year really boils down to that one critical question: What will the price of oil be?
It isn’t so much that at 12 per cent of all revenue, oil is the only driving force in the economy. A reduction in revenue – even one as major as the $30 US drop in price that we have seen in recent weeks – is clearly survivable. We have scraped by before.
But there does seem to be a general dissatisfaction in today’s new Saskatchewan with just scraping by. In fact, the Wall government has built its entire image around the notion that this province is done being a have-not that simply scrapes by.
Saskatchewan, we have been repeatedly told, has become an economic leader.
Well, while we remain a long way away from returning to have-not status, current oil at less than $60 US a barrel will make it very difficult to balance this year’s budget and next.
We will have to tighten our belts, but how much will very much depend on what the price of oil does.
Clearly, even the complete collapse of oil prices may not be enough to unseat the Wall government this time around, but what oil prices do may say much about how the Wall government does in 2015.
