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.
Peak oil is a lark. There's hundreds of years at current consumption rates and present reserves - not to mention all of the additional reserves not yet discovered, like in the artcic and antarctic.
ReplyDeletePeople were worried we'd run out of past staple fuels like coal and whale oil - until we found something else. After the oil is gone, we go more to nuclear and liquid natural gas.
Good post. I have been long concerned that we do not have a sufficient long term going forward strategy and Alberta policy to date seems stale (mixed with blame others and old ghosts like NEP).
ReplyDeleteWhen I ask myself why this is I keep returning to the conclusion that until the present government changes we are going to have the same old stuff in terms of GOA policy and daily impact, but in different packaging.
One good decision however was when Stelmach put the high speed train idea on hold and told regions to get their act together and start working on integrated regional transportation plans—we are going to need this integrated transportation when we can’t afford to fill up even our smart cars anymore.
You did not cover this in your post but peek oil might also force the GOA to move to a super city structure and forcefully amalgamate municipalities to save on costs and create efficiencies in planning, development, basic services, etc. Could I suggest Ken that you study the Ontario experience in this area and possibly discuss its applicability to Alberta ? We have already started with the super board for Health which I think is clue of the conceptual thinking of the GOA of the day so any analysis on this could be helpful.
Keep up the good work Ken.
Very good post, Ken. I agree with your general perspective that the current GOA is not in tune with world trends, and I fear that we will be left behind as both economics and policy elsewhere set a course we are not prepared for.
ReplyDeleteAside from that general perspective, I apprciate your idea that any company that is in default of its reclamation obligations ought not to be granted new rights to minerals. It's no different than withholding goods from a customer who has not paid their past bills.
The only thing "left" or "left behind" is this extremist left wing blog. Anyone old enough to remember how poor this province was before the oil strike?
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