Monday, April 23, 2012

Some final pre-result thoughts on the Alberta Election

It looks like the Wildrose Alliance is poised for a majority win, although I must plead with you Alberta that a minority is probably the best form of government to face the uncertainty of the future to prevent ideological rule and allow serious discussion on policy. The last thing Alberta needs right now is policy for policy's sake.

At this point I don't think the Wildrose party as a whole understands or is ready to deal with the problems peak oil will create; both for the industry and for the consumer even though the concept of peak oil almost receives daily mentions now in mainstream news.
Crude oil prices reflect the cost of production, which has become more challenging as easy-to-access reserves dwindle.
"Oil companies are turning to increasingly costly-to-produce oil," says Michael T. Klare, author of The Race For What's Left: The Global Scramble for the World's Last Resources. He points to tar sands in Canada, deepwater reserves off Brazil or so-called tight oil that's extracted from shale formations by hydraulic fracturing in the U.S.
These countries worry the oil industry, even though they're not major oil producers, because there's limited global cushion to cover a loss in production should their conflicts spread or deepen.
 This problem receives no mention from the political parties running in today's election but will likely taint every decision making process as budget's are re-worked and projections re-made while confusion reigns as the standard cost of production goes up and up. It's key to understand that oilsand production is subsidized indirectly by cheaper energy forms such as natural gas and conventional oil.

The cost of energy is high, and therefore the cost of everything will be high. From education to health, transportation and beyond a partial reason government spending has ballooned in the last decade is due to the cost of energy. The financial requirements to provide the same level (or slightly worse level) of service are going up. Of course there is corruption, the private interest for the IMF's banks, and simple waste but those expenses are compounded by the exponential cost of energy too. Waste becomes bigger waste, etc.

The road Alberta is on right now is a slow and steady decline and unless the nature of Alberta's economic growth is addressed this decline will continue. The quality of service we receive today will never return as costs escalate and even more cutbacks are made.

Balancing the budget is important, on this I agree with the Wildrose 100%. But balancing the budget using the growth record from the 70s until now as a basis of what to expect growth to look like in the future is foolish. We can only produce a balanced, foreword looking budget if the cause & effect of the price of oil and Alberta's over-reliance on it are weighed fully and truthfully and for this I believe only serious political debate between the 4 political parties can yield any hope of a government lead solution to the problem.

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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 CenturyLink

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.

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