Thursday, October 16, 2014

The Folly of Harper's Economic Emphasis

While no reasonable person would suggest that Canada should immediately turn its back on it resources, the folly of self-described economist Stephen Harper is the undue weighting his regime has placed on that sector for fiscal health. Other countries have been looking toward the day when our dependence on fossil fuels will be diminished and are therefore diversifying, and a strong case can be made for the economic benefits of renewable and other green energy projects. However, our Prime Minister has continued in a full-court press as if the Alberta tarsands were the only game in town.

The folly of that approach now becomes evident with the precipitous decline in oil prices, largely due to a slowdown in growth worldwide that, ironically, may very well be the key to curbing climate change. However, even if this a temporary blip, the warning should be heeded.

An analysis by Don Pitt makes for some sobering reading:
About a year ago, I read a report forecasting this would happen. It wasn't exactly top secret, and hardly from a subversive group. Titled, The future of oil: Yesterday's fuel, it was published in the right-of-centre Economist magazine.

The Economist article suggests that this is not going to be just a blip but more of a sea change, as global oil demand plunges permanently. The article quotes a study by Citibank saying that oil use is already falling in rich countries. Most oil is burned to propel vehicles, and increasing fuel efficiency, including conversion to electric and hybrids, means we are using less for that.

It rejects the argument that growth in places like China will push oil use ever higher, saying emerging economies will see the advantage of leap-frogging to new technology and won't pass through the first world's gas-guzzling phase. In the year since that report, an explosion of solar in India, and an analysis by Lazard saying renewables had become as cheap as fossil fuels, only made the case stronger.

The implication for job losses in Canada goes well beyond employment in the oil patch.
“Canada’s economy is now very oil dominated,” economists Rory Johnston and Patricia Mohr at Scotiabank said a few months ago as the Northern Gateway project was being approved by Ottawa.

Businesses based across Canada that feed into the sector, like railroads, engineering firms, construction companies and equipment makers will also be sideswiped if the decline leads energy producers to pull back production. Twenty-five cents of every dollar invested in new business plans goes toward oil and gas projects, Scotia estimates.

If exports and investment in the energy sector take hits, experts suggest the broader economy will feel the chill and begin to slow.
It would be nice to think that these hints of things to come would have an impact on the monomania that the Harper regime is seized of. Unfortunately, past ideological performance suggests nothing will change under the current administration.


  1. If current reports are correct, Saudi Arabia does not intend to reduce its oil production this time around. This will mean that if oil prices continue to fall, the higher cost producers (e.g. the "ethical" tarsands) will clearly be squeezed.

    So how long before Harper declares a holy oil war against Saudi Arabia, or as some would say, Saudi America?

    I am sure that as a bonus Steve could also tell Canadians how barbaric the Saudis are, beheading about a hundred people just last year alone.

    Only one problem: the Saudis can whip out more and faster jets than Steve can, assuming he has any CF-18s left over after Iraq.

    1. No doubt, Anon, the Harper spin machine can handle many contingencies. However, that machine may become strained if, as some reports suggest, the declining revenues from the oil industry will require the regime to modify the largess promised via tax reductions intended to seduce the voters next year.

  2. Harper was yesterday's man when he came to office, Lorne. Nothing has changed in eight years.

    1. And we can only hope, Owen, that Canadians consign him to the dustbin of history next year.

  3. .. any basic research into 'Clean-Tech' and/or 'Green-Tech' regarding employment statistics, economic value, GDP etc reveals startling facts. This incredibly diverse and exploding sector is making oil/gas/energy look tired economically.. not to mention socially and within North American culture.

    Even the wild salmon and sport fishing industry of BC is larger economically if I am not mistaken. Add in tourism in general and you're left wondering what drugs Christy Clark and her 'Liberal' government are on, over fracking, pipelines etc

    1. Be careful, Salamander. Such talk will get you designated as an Enemy of the Harper State. ;)

  4. A few days ago the governor of the Bank of England, Mark Carney, came out urging investors to reconsider their commitments to fossil fuels. He pointed out the obvious: if we're to avoid catastrophic climate change, most of the known reserves would have to be left in the ground, unburned.

    What Carney was tacitly stating was that the world markets are awash in vastly overstated hydrocarbon assets. He did use the term "carbon bubble."

    If there is such a bubble, as there surely is, then buyers will have the option of simply going with low cost/low carbon energy - the cleanest and cheapest of the fossil fuel cornucopia. Not only is demand waning but it's highly likely that we will see a global, carbon pricing scheme in the next few years. The higher the carbon content the more you pay.

    Yes, Harper is driving Canada to the edge of an economic abyss. He does that because, unlike any genuine economist, he finds his reality in belief, not fact. This diabolical little shit simply chooses not to believe what's happening. It doesn't comport with his fantasy narrative and so is to be excluded.

    Seriously, Lorne, we're under the very authoritarian thumb of a guy who has significant mental issues.

    1. Agreed, Mound. While the writing is on the proverbial wall, Harper only looks in the mirror that reflects only his distorted worldview.