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.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.
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.
