Whither Exports in a Sovereign Alberta?

To: Alberta referendum voters 

From: Herbert Emery 

Date: September 17, 2026  

Re: Whither Exports in a Sovereign Alberta?

This is another in a series the C.D. Howe Institute is presenting to better inform the public about the policy issues and complexities of the potential separation of Alberta, and its consequences on Albertans, businesses and the rest of Canada. Today: What’s the outlook for the oil industry and the economy in general.

Many disgruntled Alberta residents appear to see separation from Canada as path to a wealthier future that is unlikely to transpire if Alberta remains a province of Canada.

Is this truly the case? What considerations and consequences might arise for Alberta’s oil sector, specifically, and its economy more broadly?

As the October 19 referendum date approaches, the evidence will mount that the strongest case for Alberta autonomy is that it buys Albertans insurance against future federal interference in their economy rather than it as a wealth-creating institutional change.

Alberta in 2026 remains what one could describe as a “staples economy,” highly dependent on its energy and agriculture resources for its exports and wealth. Alberta’s post-Second World War economic development has been marked by several oil booms triggered by the Leduc discoveries in 1947, followed by the 1970s’ OPEC oil price spikes when the price per barrel jumped from $US4 to about $US10, and then the “peak oil” boom of the 2000s, which saw prices touch $US140 a barrel. Those two episodes ended with sharp drops in world oil prices and coincident federal government policies that were hostile to Alberta’s energy-based economy, notably Pierre Trudeau’s 1981 National Energy Program and, 35 years later, Justin Trudeau’s federal climate agenda.

Even with the wealth created by its oil in boom times, Alberta maintained a high dependence on energy exports as an economic driver and for public revenues, which is what made adversarial federal government policies so painful to the province. 

Those in favour of Alberta’s separation from Canada often argue the elimination of federal policies and regulations, and taxes, that limit the profitability of Alberta’s energy exports will trigger another energy export boom.

Existing analysis suggests elimination of federal climate policies and regulations could increase oil production. The Canada Energy Regulator’s 2026 , Alberta’s oil production could fall to 4.2 million barrels per day in 2050 compared to 5.1 million barrels per day by 2050 with current policy measures in place. Without achieving net zero, and possibly further removal of federal regulations, it is likely Alberta’s oil production increases beyond 5.1 million barrels per day – all else being equal.

The economic case for separation is strongest if one assumes that Canada will maintain its net zero target and federal regulations. So, if oil exports increase post-separation above what Alberta would export as a province of Canada, what are the possible economic impacts for Alberta? 

In the short run, investment in capital projects to expand oil production could have a positive if transitory impact on and labour incomes. But in the long run, for a resource exporting economy like Alberta, higher exports result in a larger economy but labour and capital do not have higher average incomes. With high reliance on interprovincial migration and immigration and external investors, Alberta is price taker, not a price maker, for labour and capital – labour incomes and returns on capital are determined by national and international markets. In Alberta, real estate prices and the value of the resources are the economic shock absorber of energy booms and busts.

Alberta’s next oil boom will be from the expansion of oilsands production, which results in different characteristics from the earlier episodes. In his 2022 C.D. Howe publication, Kent Fellows explains that the output from up-front investment in installed production capacity in the oilsands tends be not price responsive.  Consequently, where past energy prices resulted in booms and busts in investment and employment, in the next oilsands boom producer revenues and margins will fluctuate with export prices but not so much employment and investment. 

The gains from more barrels of oil produced and exported for most Alberta residents will largely be from an increase in resource revenues collected by the Alberta government.

For example, if oilsands production increased by 1 million barrels per day over current levels to around 6 million barrels per day, this could mean – under current tax and royalty regimes – about $4 billion in additional annual government revenues, or around $700 per Albertan per year which is around 6 percent of per capita total government revenues in 2026. 

A 6-percent gain in government revenues could be an optimistic forecast since there are potentially significant barriers to investment and oilsands output growth if Alberta separates from Canada.

First, political instability and policy uncertainty during the transition period could result in investors and companies taking a wait and see approach to investing in AlbertaTo offset this incentive to delay investment, Alberta would be under pressure to lower its royalty and tax rates to compensate owners of capital in Alberta energy projects for the higher risk, at least for the near term until investor capital costs have been recouped. This could lower, or at least delay, the potential public revenue gains from the increase in exports.

Second, in 2026 what is not clear, nor guaranteed, is how the increases in oil production will be transported to international markets. It is not a given that the currently-under-review West Coast Oil Pipeline would be built post-separation.

If it is built, and if separation results in neighbouring jurisdictions putting tolls or taxes on Alberta oil shipped across borders, then the neighbours capture a share of oil wealth, reducing the gains for Albertans. Perhaps additional pipeline capacity to the United States would be a likely outcome compared to crossing Canadian territory but would come with its own political risks, not unlike the experience of Keystone XL – approved in Canada but vetoed by two American presidents. This could also leave Alberta more dependent in the US market which may have limits on its absorption of Alberta oil without larger discounts on prices paid for Alberta oil.

The economic case for Alberta leaving Canada was likely stronger before the 2025 federal election as the Carney government continues to signal that the federal government will support Alberta’s energy sector development. But separatist leaning Albertans could legitimately argue that separation is necessary to lock in the conditions for prosperity since there is a risk that the federal government dominated by central Canadian voters could once again turn hostile towards Alberta economic interests in future.  

Insurance against future federal hostility towards Alberta’s energy industry is likely a less compelling case for separation than a simpler narrative of separation creating a wealthier Alberta.

But as more evaluations of the economic impacts of separation emerge, I expect that it will become clear that for separatist leaning Albertans, political autonomy is the more compelling reason for secession from Canada than the economic case.

Herbert Emery is the Vaughan Professor in Regional Economics at the University of New Brunswick. 

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The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.