Sunday, May 17, 2009

Jeff Rubin's New Book Will be a Warning and a Wakeup Call for Albertans

Economics Jeff Rubins left the CIBC last March and has written a book to be released in a week or so. Entitled "Why Your World is About to Get a Whole Lot Smaller." It is as a consequence of peak oil that he says will drive prices up over $200 a barrel in 2012 and the "inevitable carbon tax" resulting in "very high transportation costs" which will "throw the machinery of globalization into reverse."

This is good and bad news for Alberta. We are using taxpayer dollars and foregone royalties to subsidize conventional oil and gas exploration in the face of mature basins which means diminishing supplies but at high development costs.

We will have renewed and accelerated pressures once again on oil sands development, upgrading, pipelines. Plus we will have more public infrastructure needs to meet the growth demands on us due to the energy shortfall from facts or fears of peak oil happening around the world.

Alberta needs to get real and responsible about planning and preparing for all of this now and not wait for the next boom to mess us up like the last two have done. Part of proper preparation is for our government to stop giving the resources away to energy companies by subsidies and ridiculously low royalty rates. Also start collecting and accounting for the cash Albertans are owed instead of letting the tenants defer and delay payment without penalty.

While we are at it, we better insist on constant updating of new technology for environmental reasons. Lets not grant any new leases to any companies who are laggards in reclamation of old sites, roads and seismic lines. If you have old ignored well sites, put your people to work to clean them up and reclaim them as is your legal responsibility and central to your social license duty. I am talking real reclamation back to forest with tree replanting for habitat restoration, not just a bit of grass seed scattered on the ground and forget it.

We have to break the back of the default mindset that says the energy industry in Alberta are the de facto governors who run the province and not our elected and somewhat insipid politicians. The energy industry has become Alberta's sacred economic cow. It can wander at will in the marketplace without concern or consideration for the damaged they do nor for the long term well being for rest of us.

In all fairness, some of the oil sands operators are getting it and show a growing concern for deserving their social license to operate. That is partly because they have large site specific capital investments so they have to be good neighbours, not just passing through the neighbourhood like the conventional exploration companies. Oil sands operators are miners, not drillers. They take a long term more integrated view of the impact and implications of what they do with land, water, air, habitat and local cultures. They are starting to behave more like a quality forestry companies. Foresters have a long term reclamation and restoration corporate culture. This partly because they are operating in a renewable resource sector but they have lots to teach the energy sector about good corporate social responsibility.

Albertans have to get serious, start acting like the resource owners and insist the energy industry be more responsible as our tenants who we grant access to exploit our assets for a fair mutual benefit.

If Jeff Rubins is right about the economic and social impacts coming due to peak oil, Alberta is going to be saddled once again with a blessing and a burden of a boom. If we Albertans, as owners, truly want ecological integrity and sustainability in the development of our fossil fuel natural resources we have to get overt and active now. We have to show, in no uncertain terms, both the energy industry and our politicians, that lax enforcement of environmental laws and a lazy tax collection culture plus the past predatory operational practices in the energy sector are no longer going to be tolerated. It is time for Alberta to develop its fossil fuel resources the right way, not just rapidly.