Friday, February 05, 2016

Beginning To Sink In


The Conservatives are blaming Justin Trudeau for the mess in the oilpatch -- which is, Michael Harris writes exceedingly curious:

The latest nonsense out of the National Post (which is a business partner of the Canadian Association of Petroleum Producers and acts the part on its news and opinion pages) is that Trudeau has somehow failed Alberta. That’s right — you’re meant to believe that the whole thing has unravelled (in three months) because Oprah is now in the driver’s seat. Forty years of provincial Tories and a decade of federal Conservatives had nothing to do with it.

You have to remember that the Conservatives aren't speaking for all Albertans:

That longstanding delusion was smashed by Albertans themselves when they elected an NDP majority government in the last provincial election. Alberta is much, much more than any single industry. More importantly, no single industry can or should dictate its own rules to government, at least not in a democracy.

It’s the oil industry itself that has a lot to account for, not Trudeau. It was the industry’s so-called “hardball” approach to resource extraction and pipeline development that turned off environmentalists, First Nations, unions, other provinces and, finally, an entire country.

Everything Harper did was focused on the oil industry:

Point one: Stephen Harper never did regulate the energy sector, despite his serial broken promises to do so from the day he won government. He carried a brief for the industry from day one. Ironically, his actions turned out to be detrimental to the very people he was trying to help. Harper got a hernia pushing their interests in the wrong direction.

Point two: Harper deconstructed what environmental protections Canada had in place for air, water and land, creating what he must have thought was an obstacle-free path to rapid extraction and marketing of non-renewable resources for his cosseted pet industry. In the process, he drew the ire of President Barack Obama by calling approval of the Keystone XL pipeline a “no-brainer.” Maybe Harper didn’t care about the environment; other people clearly did.

Point three: Harper expanded the powers of the National Energy Board and made a public agency the captive of the oil industry, stocking it with industry players.

And, despite all his help, the oil business is in the dumpster. Harper may have sought to control a lot of things. But he couldn't control the price of oil. And, because the break even point for a barrel of bitumen is $80, nobody is making any money at $30 a barrel. At those prices, all that goo will stay in the ground.

The future is now in wind, solar and green energy in general. The business plan for Alberta, for Albertans and for the rest of the country has changed. That reality is just beginning to sink in.


Trevor said...

You may want to further research the break even point of bitumen as from wikipedia and various oil company press releases it seems to be $30-40 per barrel but many articles have it between 30-100 not sure if we will ever get a true cost from the oil companies though. Also the low dollar is helping. But I agree Alberta and the whole country needs to diversify and invest in other industries.

lungta said...

under the harp, the oil industry itself estimated it received 35 billion in government the good times
i don't know if that included tax reduction for "job creators" which lead they said to about 1/2 of corporate wealth to idle in bank accounts
anyone in the oil industry over the last ten years could have been set for life
and indeed many that i know of are
but like all lottery winners (9 out of ten broke in very few years) lots are suffering
will the "job creators step up?
will we bail out personal bad management like they were bankers .....probably
support oil if it is nationalized
if it is private let it sink or swim like everybody else
endlessly bailing out the private sector at minimum return to the country is corporate welfare
at some point we will have to quit rewarding fiscal incompetence with more money
and now that the poster boy for economic incompetence is gone
we may get some adult decisions

Owen Gray said...

I've seen various prices, too. Trevor. The $80 figure was when the Canadian dollar and American dollar were close to par. So I'm sure the price has changed. But whatever the change, it still costs more to produce bitumen than you can sell it for on today's market.

ron wilton said...

Which makes all of this pipeline ballyhoo even more curious, particularly so when none of them will be operational for several years even if approved without incident, by which time climate changes should be a no-brainer even for pipeline and oil execs.

Current costs for shipping are $7 us per barrel via pipeline and $15 + by rail.

Apparently the 'smartest guys in the room' just want to double or triple their volumes before everything collapses.

Owen Gray said...

Let's hope we get some adult decisions, lungta, and not vague hopes that things will get better.

Owen Gray said...

I suspect you're right, ron. They want to make a killing and get out of town before all hell breaks loose.

Dana said...

Harris is worth paying attention to most of the time but he's really the only one. iPolitics certainly isn't worth subscribing to. For one thing, any publication that gives Tasha Kheiriddin space is short on critical judgement. For another, their comments sections are an absurdist nightmare.

The Toxic Sludge Party deems Justin to be a very influential presence in the world and powerful beyond even their wildest demonic dreams. They apparently believe he personally brought about the collapse of the global oil market, single handedly, before he was even the PM.

What a crowd of delusional dolts. They believed that their guy was omnipotent and infallible so this guy must be too.

Ahhh... don't me started...

Pamela Mac Neil said...

Harper did not administer anything Owen,instead he controlled almost everything, but did nothing. That control produced a level of ineptness and incompetency never seen before by a Canadian Prime Minister. The mess that Harper has left has yet to be completely revealed.The smearing and blaming of the wreck Harper made of Canada on Trudeau is nothing short of libel.
The lying is jaw dropping.

Owen Gray said...

Tasha has been socking it to the Liberals these days, Dana. It's hard for Conservatives to accept that their guy was not what he promised to be.

Owen Gray said...

They have learned nothing, Pam. But they were never known for their open minds.

Dana said...

"...socking it to..." is pretty much the perfect way to characterize her empty headed drivel. As trivial and meaningless as a comedy show from the 60s. Minus the wit.

Owen Gray said...

The Harperites have always been an angry bunch, Dana. But wit has never been one of their calling cards -- unlike, say, John Crosbie, who used it like a rapier.

The Mound of Sound said...

My suspicion is that Trudeau is ready, willing and able to pursue political compromise even on high-cost/high-carbon fossil energy such as bitumen. I sense that he'd be content if the market took it down but he doesn't want to risk the political fallout of being seen to stand up to the Calgary Petroleum Club. He keeps reminding us that he's not his father. I don't think he really grasps what that means.

Owen Gray said...

My hunch is that he'll approve Energy East, Mound. What that will mean in the long run -- particularly when it comes to meeting the commitments he made in Paris -- is hard to predict.