Monday, April 15, 2019

The Pathology Of Oil

The Albertan mind, Andrew Nikiforuk writes, has been warped by the politics of oil:

Oil, a commodity that nurtures dependency, has so coddled the Alberta mind that it has fostered a provincial culture of victimization as poisonous as the identity politics unsettling university campuses.
Every day the province’s oil-obsessed politicos warn Albertans that Canada is a dangerous place full of self-righteous climate activists (and some are indeed self-righteous), anti-pipeline protestors, dumb courts, stubborn First Nations, and nasty liberals.
Moreover the province’s potential for offence-taking has become as grand as Justin Trudeau’s vindictive Liberal Party of Canada. It can’t tolerate any truth-telling either. 

That pathology has been on full display during the election campaign:

The province’s allergy to criticism has grown so formidable that United Conservative Party leader Jason Kenney proposes to set up a Saudi-like war room in the energy ministry to respond to any micro-aggressions and offensive material. Should it be called Snowflake Central?
Albertans have become such a fragile, oil-reliant people, reasons Kenney, that the province now needs the equivalent of university Bias Response Teams, in this case to foster “a safe and inclusive environment” for its petroleum exporters who have now claimed Alberta’s identity as their own.
(The rulers of Venezuela, Saudi Arabia and Russia, we should remember, don’t much like oil critics, either. The political records show that oil relishes conflict and breeds political aggression like no other commodity, except cocaine.) 
 Kenney, a belligerent proponent of oil-safetyism, would much rather play the blame game than accept the truth that the rapid development of bitumen mining in Fort McMurray violated two fundamental principles of risk mitigation: go slow and save the money.

Peter Lougheed understood that going all in on oil was a path to disaster. But, after he retired, his successors bet the farm on what they thought was black gold. And that tunnel vision caused a collapse in the price of oil:

Over many years, Alberta’s Tories repeatedly gambled that the price of bitumen, a garbage crude that requires upgrading and complex refining, could only go higher, and they bet wrong. 
[Art Berman] recently documented how combined Canadian and U.S. unconventional oil production from the tar sands and Permian Basin “surged in 2014 and caused oil prices to collapse.” As prices fell, producers — including OPEC — rejected any production cuts.

Unfortunately, that tale has not been made public during the Alberta election.

Image: Vervantis


Toby said...

Albertans are living with mass hysteria. Facts don't count.

The Mound of Sound said...

I haven't posted for a few days while I've mulled over the Alberta elections in the context of what they portend for British Columbia and for Canada generally.

Like Nikiforuk, I've looked at the role of oil as something other than a resource in Alberta politics. Oil has become a casus belli in Alberta politics. Kenney, I fear, would transform it into his own personal Reichstag Fire to feed his base in a very Trumpian manner.

Kenney has shown himself in this campaign to be as unprincipled and manipulative as he ever was while in federal politics. He knows that the prognosis for high-carbon/high-cost/low-value fossil fuels is grim. He also knows that a good chunk of UCP's supporters are tied to Alberta's fossil fuel economy.

The Globe's Gary Mason had an eye-opening column about how Albertans have the lowest post-secondary education levels in Canada. Young people, primarily men, saw little use for advanced education when high-wage jobs were readily available in the oil patch.

No matter than Alberta's boom and bust, Mardi Gras economy, takes a severe toll on this minimally-educated segment of the work force whenever heavy crude prices bottom out. The province even has laws to cushion the blow. For example Alberta prohibits lawsuits for deficiencies on personal contracts. If you house, purchased at top prices when your pockets were bursting with petro-bucks, collapses in value when the bust hits, you can simply walk in to the bank, hand the manager the keys and walk away from the mortgage debt without being pursued for the deficiency. Dealers in cars, trucks, boats and recreational vehicles go through the same thing. Their lots become full of surrendered vehicles. A couple of years later, everything is up and running again.

Now think like Jason Kenney. You know that there's a real risk of bitumen becoming a "stranded asset." You know that will leave a lot of the public fearful and furious. Even if bitumen becomes stranded as so many have warned in recent years, it is still invaluable as a political resource. Blame "the other." Blame Ottawa but especially British Columbia for causing Alberta's woes. Play the martyr. Vow revenge, even separation. Play it for all it's worth. Keep the fires stoked. It's unclear how long a shrewd hustler like Kenney can keep that ball in play but it should last another election, perhaps two.

Owen Gray said...

That disease appears to have infected lots of people in lots of places, Toby -- not just Albertans.

Owen Gray said...

Kenny has been on the side of our darker angels for a long time, Mound. That should be obvious. But, apparently, it's not.

Lorne said...

I do wonder if Kenney is much different from any of our other 'leaders' today, Mound. I am hard-pressed to think of any who are providing what could be considered real vision and direction these days. I guess that is what we get when the objective of those vying for office is bald power, not public service.

Lorne said...

Sorry, Owen. I think in my previous comment I referred to you as Mound. An honest mistake, since I read both of you everyday.

the salamander said...

.. i've copied to email.. then trashed two attempts at a response to this post.. (a huge fan of Climenhaga of course) .. Kenney looks so vulnerable its crazy.. Hell, he's like a short Scheer doppleganger on his forced election lose weight regime or has a girlfriend or boyfriend now who hates body fat.. The spawn of Harris and Harper, both Kenney & Scheer are.. plus the late saint sellout Flaherty another Harper bagman like weenie waver Tony Clement, or the crude rude London party boyo Baird. The conflation of dibit into Alberta oil when it is not, irritates me. Kenney of course tries to wind this up into a national item.. its sink or swim for Canada and Alberta the lifeguard - crusade time and he's Joan of Arc.. whining at the fake burning holy stake he trundles to every town hall.. its a large scale grifter exhibition.. hardly about oil.. its about dilbit and natural gas, not 'oil' .. we refine oil in Canada, wherever there's an oil refinery or close to where imported oil arrives, like the Irving superport and refinery complex.. we export LNG and Dilbit folks.. we do not export oil.. can I be more blunt ? USA exports oil and natural gas.. and have blown out both price points - and ranges .. and for lower sulphur product. Why else would TWI Texas West Intermediate be the benchmark oil for North America ? If TWI is the filet mignon.. WCS Western Canada Select is the fatty hamburger or sausage

Owen Gray said...

Actually, your comment follows nicely on Mound's comment, Lorne. Mound wrote today about George Monbiot's take on things. And, because you have read his post, you know that Monbiot doesn't look to the politcal class for solutions.

Owen Gray said...

We seem to be beset on all sides by con men, sal. Kenny is just another one.

e.a.f. said...

where ever there are natural resources, and jobs plenty, you see young people leaving school early to go to work. We saw it in the lumber industry in Quebec and B.C. Alberta is the only province to go through this.

The law which deals with homes and mortgages has support from me. It was brought in back in the 1970s and it enabled working women and men to get on with their lives. Many were able to do so without declaring bankruptcy. Just the mental anxiety of declaring bankruptcy and the once stigma of it, was why the law was brought in, back in the day. What the premier of the day was actually doing was telling the banks, you made your money in the good times, now eat it while we're in the bad times. Banks knew who they were loaning to, they knew the risks but they did it to make money. It evened things out. As I recall when the changes were implanted interest rates in this country where on the upswing and remember signing a 19 1/2 Mortgage for $3.5 million in 1982 and that was the best rate available. People in B.C. couldn't keep up with the interest rates and they lost their homes, their credit ratings, etc. In Alberta, they lost their homes, but were able to recover that much faster.

Kenney has used the tar/oil to his advantage and people like to be in denial. Can recall it well when parts of B.C. were experiencing official unemployment rates in the 1970/80s of 15% and unofficial closer to 30%. However, back in the early 80s the U.I.C. payments were larger and longer. In Kelowna it was the largest payroll at the time. Now with less access to E.I. and shorter time periods, it isn't there when people could really use it. Divide and conquer has always worked well for politicians.

people will eventually see that Kenney is lying to them. Now it took B.C. 16 years of B.C. Liebercon rule to come to that conclusion, but it happens. Renewable energy sources are going to be the way of the future. My thought on the tar/oil has been to leave it in the ground, use if for national purposes only. Have the refineries here, but big oil companies wanted something different and so did the politicians. As the old saying goes, if you don't learn from history, you are bound to repeat it.

If Jason becomes premier of Alberta, good luck to all of them as he pulls a ford, cutting, cutting, cutting.

Owen Gray said...

Kenny is not The Answer Man, e.a.f. The sooner Albertans figure that out, the better.