Yet despite all this a myth of prosperity still reigns. It is still generally an accepted belief that the oilsands "revenue" is paying for services, etc. That there is actually revenue at all, for that matter. Take this article I just came across by Michael Den Tandt for instance:
His first portion focuses on the inevitable demand for oilsands energy.
Neil Young is probably no more, and no less, a moral coward than the next person. But he is a moral coward.Environmental negatives which must be mitigated. Except they're not being mitigated, they are being ignored or covered up and any "mitigation" is being done at the taxpayer's expense (such as carbon capture and storage). But perhaps his other observation is even more interesting: that demand for energy is a function of economic growth and that the IAEA predicts that global energy demand (and thus, economic growth) will largely come from the "emerging markets" coincidently where Canada is focusing on "opening market access".
That’s because – like most of the rest of us – he declines to face the logical consequences of his beliefs. He fails to extend. The failure to extend is endemic in the broadening debate about sources of energy, their cost and follow-on effects. It reduces this debate, for the most part, to hyperbolic babble, in which combatants trade volleys like medieval theologians arguing over whether angels have mass.
Does Young have the right to use his celebrity to stick it to Big Oil? Clearly he does. As Stephen Maher of Postmedia News has pointed out, this is a poet’s classic role — to act as goad, inciter and rabble-rouser. Artists are like Shakespearean court jesters. They get away with saying things no one else will or can, and they should. But let us, for a moment, talk turkey about the politics of oil, and energy, and the related moral choices that we each make.
As many have noted previously, fossil fuels are not going away, in our lifetime. The International Energy Agency predicted in its World Energy Outlook 2013 that global energy demand will grow by a third between now and 2035, with emerging economies accounting for 90 per cent of net new demand. China, India, Brazil and the Middle East are expected to be the loci of this growth. Though fossil fuels are projected to over time comprise a lessening share of the world’s total energy supply – from more than 80 per cent to about 75 per cent by 2035 – they will remain dominant in the mix. And this assumes rapid growth in electricity generation from renewables.
Of course, demand for energy is a function of economic growth. We know from experience – 2009, 2001, 1991, 1987 — that economic forecasting is a dark art, not a science. That being said, we can accept, via educated guesswork and the record of history, that the 173 billion barrels of oil embedded in the oilsands will be extracted. We can also accept that such extraction is on balance, despite environmental negatives that must be mitigated, a social good.
So I guess the question I have for Den Tandt is, why as Canadians do we care what emerging markets' energy demand is? Why should Canadians sacrifice their environment (and as we'll get to, their wealth) all so that emerging markets can continue to grow if our own growth and energy demand is slowing down? Why is it so important to sell off future generations' energy resources now at a discount when energy demand in the future will be so much higher (and thus in theory the price of such energy)? What exactly is "the social good" of selling Canada's future energy supply and fuelling another countries' economic growth for the majority of Canadians and not the bigwig shareholders of the oil companies, most of whom are themselves not even Canadian?
This is, of course, assuming such economic growth can continue unfettered at all. Growth predictions made by economists who clearly don't give a shit whether or not it's so smoggy and polluted that you have to watch the sunrise on TV or that drinking water which is essential to life ends up polluted. No, these are not factors in the projections of economic growth, and neither is affordability. The same "experts" making these predictions of growth rates are the same ones scratching their heads over "slow growth" and "low inflation" in the developed world even as clearly a ceiling has been hit on affordability. The only thing really "growing" is the stock market, and those daily new record highs are simply attributed to the stock market accounting for an expanding currency supply due to all of the liquidity injections. Nothing is really growing.
So what I'm getting at here is that Den Tandt isn't being very specific with his article's title: "Oilsands critics have yet to propose a credible alternative". What he means to say is "oilsands critics have yet to propose a credible alternative to fossil fuels that can fuel infinite growth". Of course the very credibility of "infinite growth" itself is largely in question. I have not seen any convincing and credible cases made by so-called oilsands proponents or economists on how exactly infinite exponential growth is going to continue in any case with or without oilsands development. All of them just seem to simply be regurgitating the assumption that "we can accept, via educated guesswork and the record of history, that the 173 billion barrels of oil embedded in the oilsands will be extracted" apparently regardless of water concerns, increasing disasters and the costs to mitigate those, or diminishing energy returned on energy investment ratios.
Going back to the Den Tandt article, now we get into the egregious mantra of the Albertan and Canadian governments.
That’s because, to perhaps state the obvious, energy and the work it allows us to do underpin our standard of living – not just in Canada but everywhere. More concretely, the oilsands create demand for labour and skills, which fuels private prosperity and funds public services. The numbers, as I have written before, are eye-popping; $100 billion invested in the past decade, with another $364 billion projected over the next two decades – with a sizeable chunk of that spinning out, eventually, into the public purse.Yes, the numbers are eye popping when it comes to private investment in the oilsands. When we talk about diminishing return on investment, it is this incredibly large investment number we are talking about. Having such a large number to produce such a small amount of oil isn't a good thing. It is not going to "eventually" make it's way into the public purse either.
This bears repeating: The Conference Board of Canada estimates the federal government’s take from the oilsands, between now and 2035, is just over $45 billion, from a total tax spinoff of $80 billion. That’s setting aside all the other economic benefits. It’s pure public money invested in government programs. To put this in context, total federal health spending transfers in 2011-2012 amounted to about $27 billion. So, if you follow the back-of-the-napkin arithmetic, two decades of oilsands investment equals nearly two years of total federal spending on health care, at 2012 rates.Now this is where Den Tandt goes off the deep end with the typical oilsands mantra. "pure public money invested in government programs"? Check this out:
One of the last things Klein did in office was admit he never had a plan to handle the province’s superheated growth. That lack of planning wasn’t just a problem for Albertans, it was a headache for other provinces that watched their workforce being sucked westward by the unfettered growth of the oilsands. It is a headache that has plagued Alberta ever since, too.Alberta is paying the price for it now, with a nearly empty "sustainability fund" and a growing mountain of debt for "building Alberta" (because Klein's solution to create the illusion of oilsand prosperity was to simply not invest in Alberta's infrastructure).
The good news for Alberta is economic growth and lots of good-paying jobs. But the other side of the coin includes environmental damage, wear and tear to our social fabric, stress to our seniors and missed opportunities for our youngsters.
We are spewing millions of tonnes of greenhouse gases into the atmosphere and creating lakes of chemical waste. Seniors on fixed incomes find it difficult to keep up with rising costs of living. High school students are dropping out at record rates, enticed by good-paying, but unskilled, jobs.
As a homeowner in Edmonton it’s heartening to see your house increase in value year after year. That’s great if you’re selling in Edmonton and moving to Moncton, but not so great if you’re selling in Moncton and moving to Edmonton.
We have a clash of money and priorities. Energy companies want their mega projects. Albertans want new schools and roads. Everybody is competing for labour and materials.
Klein’s solution: “Delay the projects. Put them on hold until they’re affordable.”
By projects, he meant roads and schools. He didn’t mean the oilsands.
The late premier Peter Lougheed had a two-word description of what Klein had left for his successors: “a mess.”
“The Alberta government has let the development get ahead of the infrastructure,” said Lougheed in a brutally frank interview with the Institute for Research on Public Policy in 2006. “When you have that happen, you are going to start to have to pay a price for it.”
Lougheed’s solution was the opposite of Klein’s. “What is the hurry?” asked Lougheed. “Why not build one (oilsands) plant at a time?”
Klein’s successor, Ed Stelmach, was in a hurry, too, refusing to put his foot “on the brake” to slow down oilsands expansion. Instead, he tried, unsuccessfully, to increase the amount of royalties paid to the provincial treasury to at least pay for the infrastructure projects Klein had ignored.
I don't know where Den Tandt gets the idea that the oilsands is providing any service at all, frankly. It seems to me the government is having to do a lot of deferring, borrowing, and public relations just to ensure the oilsands can continue operating. This is public investment into private enterprise, not the other way around. The total estimated to go into the coffers is pitiful. $45 billion? Or as Den Tandt puts it: "two decades of oilsands investment equals nearly two years of total federal spending on health care, at 2012 rates." - and that's a forward looking forecast! Putting that in context that is half of the U.S. Federal Reserves monthly cash injections. Nevermind all of the future Lac-Megantic style disasters waiting for us as cost and corner cutting becomes more and more necessary to maintain an illusion of growth.
Think of all the people that have died on highway 63 because the Alberta government wasn't willing to plan for the future "growth", and being such a rich province literally could not afford to expand the infrastructure that was operating the oilsands to even the minimum required standard. That is the type of "public service" they provide.
Back to the Den Tandt article:
There is just one existing source of energy that has the potential to shoulder fossil fuels aside in a massive way, while dramatically slashing carbon emissions, and that is nuclear. But nuclear power is mired in a symbolic political war all its own, scarcely less toxic than the one around oil. Thorium-based nuclear power could change all that. It hasn’t yet.I have an alternative question for Den Tandt: If the affordability and prosperity of the oilsands is proven to be a lie, or investment dries up in the very low quality asset we call bitumen (which is not oil), what would you have wished Canada had put all of it's wealth into instead of twinning highways to the middle of nowhere, and paying for public relations ads?
Thus, the question for Neil Young, perhaps best addressed to his publicist: If the oilsands are shuttered and Fort McMurray becomes a ghost town, what then? How does he provide for revenue to replace what is lost? Will it come, say, from income tax hikes? Or by seizing the assets of the wealthiest? Perhaps the shortfall could be made up via carbon tax? Or a surcharge on gas-guzzling SUVs and pickup trucks?
But we’ve been down that road. It was called the Green Shift. It was advanced in 2008 by a federal Liberal leader named Stephane Dion, who rapidly became a former federal Liberal leader. Dion’s plan was revenue neutral – all tax increases related to carbon emissions, in other words, were to be offset by tax reductions elsewhere. That episode showed the extent to which individual Canadians, when we get beyond the level of flicking an upraised Bic lighter at an outdoor concert, are prepared to sacrifice for the cause of mitigating global climate change.There is never going to be a "cost benefit" at least in modern economics terms of moving away from fossil fuels. This blog has covered this concept before and it's really not hard to understand when you realize there are no such thing as "alternatives" but rather all alternatives are in fact derivatives.
We aren’t – at least we weren’t in 2008, and probably aren’t yet — because the cost-benefit of moving away from fossil fuels has not yet been made explicit, to the point where it moves individual decisions in a massive way, despite some evident sacrifices. It really is that simple.
It is not nice, for us collectively, to think of ourselves in this way. But it is the truth.
However, that being said there is a real long term "cost benefit" to the people which I am sure they would easily see if it was explained to them properly. The problem of course is that it's not being explained to them properly. Instead you have article's like Den Tandt's here which would have you believe we are not already paying through the nose and in lives just for the privilege of having these projects operate in our backyard.
Oilsands prosperity is a lie, and this is just going to get more apparent by the day. When it comes to oilsands developments this is I believe the number one message Canadians need to hear as it is the false lies of prosperity which is keeping what little support they have amongst the population. Proponents of oilsands developments have not put forward a credible case that infinite growth is possible and change is optional. I'm waiting.
Alberta Diary has put out some great commentary on an article by the Edmonton Journal on Albertan doctors and labs refusing to treat patients, or process test results for fear they may lead to the oil industry as the cause. Really puts Den Tandt's "2 years of federal spending on health care" in a whole new light. Looks like we're not spending the minimum required amounts on health care either!
The cruel irony is that despite unchecked growth, the big revenues have not materialized. The war on pipelines threatens persistent low prices and even shut-in production.Hear that? It sounded like the truth.
Now there’s a surprising voice for some of these issues — Brian Jean, the former Conservative MP for Fort McMurray, who has just resigned from the Harper government.
Redford won’t want him as a tour guide.
Freed from the caucus discipline, Jean says he can now “concentrate on the things my constituents have told me are important to them.”
And what concerns them, he says, is deteriorating quality of life because of rapid development.
“It seems like we are trying to get every bit (of oil) out of the ground right away, but the oil isn’t going anywhere,” he told the Edmonton Journal.
“Do we need to do it at the cost of people’s lives?”
Jean said what everybody up there knows; the community is jammed, with services for far fewer residents than the current population of 77,000.
It’s time, finally, to follow the late Lougheed’s advice.
There should be a pause on approval of new projects until the province can catch up with problems stemming from development and rising emissions.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for eQube gaming systems.
Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.