Thursday, February 21, 2013

An Insane Country, Or An Insane Government?

Albert Einstein famously defined insanity as doing the same thing over and over again and expecting different results. By that standard, we can perhaps infer that Canada is insane.

As we are reminded in a very interesting column by Thomas Walkom in this morning's Star, Canada has a long history of staking its economic well-being on the export of its resources. Citing political economist Harold Innis,

... Canada’s history was dominated by natural resource exports, which he called staples. That Canada has exported raw materials is hardly novel. What Innis grasped, however, was that these staple exports created a pattern of development, both political and economic, that over time was hard to escape. To use the language of one of his students, the Canada that Innis described kept enmeshing itself in a “staple trap.”

Whether the resource was wood or beaver pelts, the government would spend substantial sums building up the infrastructure to cultivate its exports, only, of course, to have any given staple ultimately fall out of favour. The same thing is happening today with our almost total dependency on the tarsands as the country's economic driver, to the exclusion of any real diversification or environmental oversight.

Walkom calls attention to a new study called The Bitumen Cliff which observes that our dirty oil requires vast quantities of money... not just to extract...but to transport it by rail, pipeline or ship.

There are other causalities of this insanity as well:

Again, other economic activities are given short shrift. In this case, the high dollar created by Canada’s soaring oil exports has eaten into the ability of manufacturers to compete abroad.

And again, the political system wraps itself around the staple, with Ottawa’s Conservative government gutting environmental laws for fear that they might interfere with pipelines and resource extraction. (For an example of the latter, take a look at this story about how the pipeline industry essentially dictated the changes to Navigable Waters Protection Act included in last year's omnibus bill which will result in far less protection than existed beforehand, all in the name of pipeline expediency.)

The folly of this approach is that, like our staples of the past, our oil will fall out of favour:

Suddenly, the politics of climate change have made Alberta’s carbon-emitting bitumen less welcome in the United States. More to the point, technological changes that favour the production of cheaper shale oil and gas, are transforming the U.S. from an energy pauper into one of the world’s big petroleum players.

To put it another way, Canada’s biggest export market no longer needs the tarsands quite as much as it did.

So the damage will have been done, and all we will be left with is a fractured economy and environmental despoliation, only to await the cycle to begin all over again.

Come to think of it, perhaps it is not our country that is insane, only our political 'visionaries'. Yet one more aspect of what will be Stephen Harper's sad and dishonourable legacy.


  1. With a long history of this kind of thing, you would think that Harper -- "the economist" -- would recognize a trap when he saw one, Lorne.

    But, then, that kind of analysis is beyond his ken.

  2. The Tar Sands are living on borrowed time. A few days ago the British commerce paper, the Financial Times, reported that investment analysts now recognize the dangerous Carbon Bubble that endangers world markets and are steering clients out of high-carbon assets.

    The commercial sector is now coming to grips with the reality that the world has a glut of fossil fuel reserves already logged into energy producers' balance sheets. Estimates range between one-third and one-fifth as the percentage of booked reserves that can be burned if we're to have any hope of a 2C warming. Somewhere between two-thirds and four-fifths of already known reserves will simply have to be left in the ground if civilization is to survive.

    Athabasca bitumen is the most carbon-intensive petroleum on the market. If it was really cheap to extract, refine and transport that would be one thing but it's not. It's incredibly costly to dig or boil out of the ground, to upgrade, to lace with dilutents so it can be loosened up enough to pump through pipelines so it can be shipped great distances to be refined into consumable petroleum products and then burned.

    Athabasca bitumen is therefore high-carbon and high-cost with a seriously bad EROI, energy return on investment. There's a reason Alberta is broke. When you then factor in grants, subsidies, laughable royalties and dodgy deferrals such as site remediation and those highly dangerous tailing ponds, you're looking at a looming economic calamity and it won't be possible to contain it to Alberta.

    We happen to have a prime minister who sees facts and reality as fetters. This guy who boasts about his credentials as an economist was taken completely by surprise with the country unprepared by the 2008 global meltdown. Afterward he claimed no one could have seen it coming.

    If he did that is there any reason to believe he wouldn't leave us just as vulnerable to a bursting Carbon Bubble? Of course not.

  3. It seems that the conservative mind really likes tradition, Owen, no matter how pernicious it may be.

  4. I guess, as you suggest, Mound, that Harper and his ilk never let facts get in the way of a simplistic ideology. The fact that all of us will have to pay for his folly, both economically and environmentally, is the true tragedy here.