That's not good news for self-styled 'energy superpowers,' i.e. Canada. Richard Fantin of Canadian Trends has an insightful report of what's in store for his province, Alberta, and it makes for grim reading.
Remember when then Liberal leader, Michael Ignatieff, proclaimed Athabasca the "beating heart of the Canadian economy for the 21st century"? Remember, "Iggy"? Oh, you would rather forget? I see.
That's the problem with betting the farm on the idea of flogging the world's highest-carbon and costliest oil. It's like eating too many of those Pringles with Olestra. Something bad is bound to happen in your pants.
Poor Stephen Harper. He's devoted his entire premiership to
They knew it was a race and that time might not be on their side. Harper even brought in a repeat offender jailbird to be his envoy to the Oil Patch, brought the guy right into the PMO (which, judging by recent revelations, must have felt like a second home to Bruce Carson).
At one point Harper's then natural resources minister, Joe "Leatherback" Oliver, let slip the urgency of getting bitumen to "tidewater" and into the holds of supertankers. Oliver, perhaps imprudently, noted that if these pipelines weren't brought online and soon, Canada was at risk of bitumen becoming a "stranded asset."
The world is moving toward carbon pricing (no, it's not the idea of the opposition leaders) and even Harper is going to be hard pressed not to follow suit. It could be a "perfect storm" - low oil prices, high-cost/high-carbon oil, carbon taxes. As Richard Fantin noted, the squeeze is already causing Big Oil to 'cut corners' on its operations and that usually translates into shoddy maintenance, monitoring and, eventually, more oil spills.
If we're to have any hope of avoiding the worst climate change outcome, runaway global warming, the world is going to have to decarbonize very soon. The first fossil fuels to be abandoned will be the high-cost and the high-carbon. Coal, while relatively cheap, is very high-carbon and there's no shortage of US coal companies going bankrupt these days. Bitumen, while not as high-carbon as coal, is the highest carbon fossil oil and, unlike coal, it's also costly to produce.
Harper gambled everything on bitumen, including Canada's reputation abroad. He and his government have brainwashed Canadians into believing the Tar Sands are indispensable to our economy whereas bitumen revenues really only represent 2% of Canada's GDP. Two per cent doesn't sound like much but it's Heaven and Earth to the province of Alberta where royalties are treated as general revenue to fund essential services.
Albertans have a term for it. During boom times they "piss it all away" and when boom turns to bust in the oil patch the province dives headlong into recession. They've institutionalized a bubble economy. If you organized your household finances that way people, especially your creditors, would heap scorn and derision on you. In no time you would find yourself in a very ugly place.
There's more than schadenfreude to this. I don't live in Alberta. I live in British Columbia, coastal British Columbia. Out here the collapse in world oil prices may be enough to halt Stephen Harper's pipeline/supertanker obsession. Let us pray.