Former oil executive, Ross Belot, has a message of Canada's prime minister concerning the Tar Sands. The party's over.
The oilsands have become, politically, the gift that keeps on taking. Prime Minister Justin Trudeau’s brand has been badly tarnished by his pro-pipeline stance even as evidence mounts that new pipeline capacity isn’t needed. Alberta Premier Rachel Notley continues to pretend pipelines will bring back the glory days for the province’s energy sector — even as crude prices languish in the mid $40s due to cheaper U.S. shale oil, and even as OPEC and Russia hold back their own production to shore up prices.
Headlines like this one don’t bode well for future investment: ‘Suncor wins favour by ignoring core business of oil sands’. RBN Energy also reported recently that the differential for Western Canadian Select between Cushing and Edmonton isn’t enough even to pay for the pipeline tariff, indicating surplus capacity headed in that direction must be being sold at a discount. Yet we’re still seeing headlines talking about growing production being transported by rail in future, with no reference to what is actually going on today.
Want more proof? Look at this recent Wall Street Journal article: ‘A New Problem for Keystone XL: Oil Companies Don’t Want It’. The WSJ reports that Transcanada can’t generate enough interest from industry to take on the guarantees necessary to move the line ahead.
The party’s over. It was over some time ago and the only ones still reluctant to bin the leftovers and turn out the lights are politicians. Trudeau seems especially loathe to confront reality, but energy sector corporations are in the business of making money, not shaping perceptions; they know the world is changing and they have to change with it.
It's easy to understand why bitumen bounty is so enticing to Trudeau, Notley and Wall. It's low-hanging fruit. Issue a couple of licenses, a tax dodge or two here and there, and just wait as the royalties fill the federal and state treasuries. What's better is that the books are so easily cooked. Costly environmental consequences can be kicked down the road, left to future governments and future taxpayers. The hangover always comes after the Mardi Gras celebration. Besides he's already bought all those strings of beads. What's he going to do with them if he calls off the party?
57 years ago I attended college in an old mining town, one that had a large abandoned mine nearby. When I discovered that there was still lots of good quality ore down below I asked why the mine shut down. The answer stuck with me all these years; the price of copper dropped below the cost of bringing it up, crushing and smelting it and shipping it to customers. That's the key to all mining. If there is no profit to be had the mining stops.
ReplyDeleteI have a strong suspicion that if governments stopped subsidizing (by any means) oil and gas producers that many of them would cease production. The tar sands companies would be the first to go.
ReplyDeleteI expect that's true enough, Toby. With subsidies, grants, deferrals and waivers the books are easily cooked.
twas a painful education via Stephen Harper, Ray Novak & Laureen..
ReplyDeleteYou know.. the vaunted 'Energy Superpower' fable..
and if young middle aged Justin wants to suck on that dry hind teat
well.. amen.. and maybe embrace Tom Flanagan while sucking
Personally, I would like partisan political animals
our so called 'vpublic servants'..
to protect our marginal & expensive energy resources
for future generations in Canada.. as we wean ourselves off Big Energy
and the partisan political highly unstable dynamite inherent thereof
ReplyDeleteThere's a myriad of vital uses for that bitumen, Sal. Everything from asphalt to plastics. Yet they want to ship it abroad to be turned into greenhouse gas emissions.
It was a game called, "Who's left holding the hot potato?" Keep kicking it down the road, singing its praises, hoping your successor would be the one caught holding it when time's up.
ReplyDeleteTrudeau and Notley lost this round. Ain't anymore rounds to be played, either.
Instead of being bold when they had the opportunity, and getting a head start on switching Alberta's economy over to anything else other than Tar Sands, they tried to keep it on life support, and showcase just how robust it all was.
It was a strange spectacle, in hindsight.
Now, it's all about containing the fallout from all this in Alberta. Make sure the rest of the country isn't too effected by it all.
It's easy to understand why bitumen bounty is so enticing to Trudeau, Notley and Wall. It's low-hanging fruit. Issue a couple of licenses, a tax dodge or two here and there, and just wait as the royalties fill the federal and state treasuries.
ReplyDeleteI'm pretty sure the feds don't see a dime of oil and gas royalties - something to do with s. 92A of the Constitution if I remember rightly.
I strongly suspect the federal Liberal strategy was to take credit in Alberta for approving the pipelines knowing it's unlikely that they'll ever be operational. I frankly don't know why they bothered - Albertans would sooner eat bitumen than give the Libs credit for anything.
Cap
My thoughts exactly. It was easy to look like JT was supporting Alberta, knowing the pipelines would never be built and avoiding the blame PET got stuck with.
DeleteNotley has no choice but to try, Albertans demand it of her, but Trudeau is screwed.
ReplyDeleteNotley has no choice but to try, Albertans demand it of her, but Trudeau is screwed.
ReplyDeleteCons ....Lieberals...turn them upside down and they look like sisters.
ReplyDeleteNothing has changed except the color of the party screwing us.
I wish I could believe the NDP would have been different, Anon. I don't. We're a petro-state. Ours is a petro-parliament on both sides of the aisle.The NDP demonstrated what they were willing to do in the name of opportunism when Layton and Mulcair abandoned the Left.
ReplyDeleteHorgan seems to have found religion in BC but his party's record isn't very pretty and his big sister next door is singing a very different tune. A lot of my fellow Greens harbour deep suspicions about Horgan's trustworthiness on his deal with Weaver.
So, please, spare us the Dipper sanctimony.