Oil, a commodity that nurtures dependency, has so coddled the Alberta mind that it has fostered a provincial culture of victimization as poisonous as the identity politics unsettling university campuses.
If oil were a young university student, Alberta’s politicians would now play the role of paranoid helicopter parents or politically correct campus administrators.
Every day the province’s oil-obsessed politicos warn Albertans that Canada is a dangerous place full of self-righteous climate activists (and some are indeed self-righteous), anti-pipeline protestors, dumb courts, stubborn First Nations, and nasty liberals.
Moreover the province’s potential for offence-taking has become as grand as Justin Trudeau’s vindictive Liberal Party of Canada. It can’t tolerate any truth-telling either.
The province’s allergy to criticism has grown so formidable that United Conservative Party leader Jason Kenney proposes to set up a Saudi-like war room in the energy ministry to respond to any micro-aggressions and offensive material. Should it be called Snowflake Central?
Albertans have become such a fragile, oil-reliant people, reasons Kenney, that the province now needs the equivalent of university Bias Response Teams, in this case to foster “a safe and inclusive environment” for its petroleum exporters who have now claimed Alberta’s identity as their own.
(The rulers of Venezuela, Saudi Arabia and Russia, we should remember, don’t much like oil critics, either. The political records show that oil relishes conflict and breeds political aggression like no other commodity, except cocaine.)
Kenney, a belligerent proponent of oil-safetyism, would much rather play the blame game than accept the truth that the rapid development of bitumen mining in Fort McMurray violated two fundamental principles of risk mitigation: go slow and save the money.
Over many years, Alberta’s Tories repeatedly gambled that the price of bitumen, a garbage crude that requires upgrading and complex refining, could only go higher, and they bet wrong.
So did the NDP, another oil-coddled entity. (And yes, Albertans should be very angry about the gross mismanagement of their gas and oil resources by their elected politicians.)
According to former Encana CEO Gwyn Morgan, another whiner of the highest order, Alberta’s most important industry has been stomped on by bad people.
(As every adherent of identity politics knows, life is a constant battle between good and evil people. God forbid that Canadians see each other as brothers and sisters.)
Morgan, who chaired SNC-Lavalin during the Libya scandal and boldly took no responsibility for that fiasco, recently argued in the Financial Post that the “drastic decline” of Canada’s oil industry is due to “a combination of ideological antagonism to fossil fuels and tunnel vision.”
Apparently, ideology caused oil prices to crash in 2014, and the overproduction of bitumen and tight oil had nothing to do with that bitter event, which left 40,000 Albertans jobless.
Art Berman, a respected Houston oil analyst and no greenie, has a much higher respect for the truth.
He recently documented how combined Canadian and U.S. unconventional oil production from the tar sands and Permian Basin “surged in 2014 and caused oil prices to collapse.” As prices fell, producers — including OPEC — rejected any production cuts.
Yet to this day you’ll never hear an Alberta or federal politician, let alone Morgan, acknowledge how Canadian oilsands production helped precipitate the global oil price crash of 2014. (Delusion appears to be a reliable Canadian political trait for both the left and the right.)
Alberta’s political elites would never let the facts spoil the celebration of Alberta’s victimhood or the province’s politically correct view of petroleum as the Walt Disney of resources.
In Morgan’s pity analysis, 44 years of one-party rule in Alberta by the Tories played no role in Alberta’s current predicament.
But the facts show that the Conservative governments foolishly eschewed any value-added policy for the province’s junk crude, and instead promoted a low royalty regime, which encouraged the export of raw bitumen — a dismal strategy that has enriched U.S. refineries and the Koch brothers.
No matter. Those damn oil-hating and U.S.-funded tar sands campaigners are to blame for Alberta’s bad oil rap, argues Mark Scholz, president of the Canadian Association of Oilwell Drilling Contractors in the Calgary Herald.
According to Scholz, a bunch of celebrities and “a glorious campaign of Houdini-like misdirection” are somehow responsible for the cancelling of two bitumen export pipelines, carbon taxes, and everything else that has gone wrong in Alberta.
Of course the high carbon content of bitumen and its extreme price volatility have nothing to do with declining investment in the oil sands.
The facts also tell a different story about the two cancelled pipelines. A federal court cancelled Northern Gateway’s permit (and the Harper government choose not to revive that proposal) while market conditions claimed the Energy East pipeline.
Although proponents of Energy East claimed it would end the import of Saudi oil into eastern Canada, David Hughes, a well-known Canadian energy analyst notes that eastern refineries in New Brunswick aren’t designed to process much heavy oil.
So an Energy East pipeline, if ever built, could not really put a dent in U.S. or Saudi oil imports.
Tim McMillan, president of the Canadian Association of Petroleum Producers, the industry’s powerful lobby group, also claims victimhood. “We have been the victims of a very well-orchestrated, well-planned foreign-funded attack on Canadian infrastructure,” he recently tweeted.
But Hughes notes oil sands production has grown by 376 per cent since 2000. If there was a “foreign-funded attack” it’s been grossly ineffective, he says.
Hughes adds that “the reason that there is a pipeline bottleneck is that the industry has been so successful in growing production.”
NDP Premier Rachel Notley also presents Alberta as fragile player unfairly dumped upon by bad actors in British Columbia and elsewhere.
Her vocabulary consists of pipelines, pipelines and pipelines.
Alberta can’t get full value for its bitumen “because we can’t move the product to market.”
And dastardly environmentalists have created a situation where “we are leaving world oil markets — and in some cases Eastern Canadian markets — to the Russians and the Saudis — countries that don’t care a whit about climate change or the environment.”
Yet research done for Alberta Innovates, a taxpayer-funded nonprofit, revealed that no real price advantage for bitumen exists in Asia.
The best and most lucrative market remains U.S. Gulf Coast refineries because they can handle complex heavy oil.
And what oil-exporting nation, other than Norway, truly gives a damn about climate change or the environment? They simply don’t exist.
Coddling a mind is a terrible thing, but coddling a province is a social disaster.
In the current election campaign, no politician wants to pony up and tell the truth.
It wasn’t foreigners or bad actors who created Alberta’s failings; it was Albertans and their damn greed and lack of strategic planning.
Albertans share the blame for the 2014 oil price collapse with U.S. tight oil producers (price discounts and lack of pipelines clobbered Permian producers too), and Albertans share blame for the province’s collective failure to add value to bitumen. (The more value you add, the fewer pipelines you need.)
Albertans, and only Albertans, share the blame for not collecting their fair share and saving for a rainy day.
So stop your whining and end the blame game. Cowboy up and own your oil-based problems, and recognize that the Alberta government has not responded competently to structural changes in oil and gas markets.
Recognize you’ve got both revenue and spending problems that could be a death spiral for the province.
Admit that exporting carbon-rich oil comes with high risks and that exporting more oil and building more pipelines will increase those risks.
And stop pretending that business as usual will dig Alberta out of the hole it has dug for itself.
Morgan, Kenney, Notley and the rest of Alberta-Is-Only-Oil gang might want to start with some cognitive behavioural therapy, or better still, sit down and read Butcher’s Crossing.
It’s a great novel about a buffalo hunt by the Texas writer John Williams. Some say it is probably the best western ever written — even better than True Grit — and I agree.
It tells the story of a couple of buffalo hunters who journey to Colorado for a grand slaughter with visions of prosperity.
But once the hunters locate their prey, they grow so obsessed with greed and bloodletting that winter overtakes them and traps them in the mountains.
The killers emerge from a gruelling snowy ordeal months later, only to discover that the markets for buffalo hides have crashed.
A dejected hide-buyer explains the ruinous facts. “The bottom’s dropped out of the whole market. The hide business is finished. For good.”
Oil is not finished yet, and the prospects for heavy oil remain solid in the U.S. Gulf Coast. The oil sands will shrink, but they will not disappear for decades.
But Alberta’s twisted identity politics uphold the politically correct illusion that there are more buffalo to kill, and the future doesn’t matter.
And that is an unforgiving road to ruin.
The author drew inspiration for this column from the U.S. bestseller The Coddling of the American Mind, by Greg Lukianoff and Jonathan Haidt.
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