The Alberta Grasshoppers And The Norway Ants

An open letter to all the recent Albertan open letters on pipelines out east, and the Albertan grasshoppers who wrote them.

This is not about Ottawa. It is not about Saudi oil being ‘less ethical’ than Albertan oil. It is not even about climate change.

It is about the effect of cheap shale oil and cheap electric cars on the long term value of Alberta heavy crude. And it is about the carefree Albertan grasshopper and the plan ahead ants from Alaska and Norway.

The harsh reality is that electric cars and renewable energy power plants are becoming cheaper than oil, fast. Car manufacturers worldwide are planning to switch in about five years to a predominately electric lineup; that is when they think electric cars will be cheaper to both build and run. In about ten years, oil demand will peak, then sharply fall off, because people will switch to the cheaper, cleaner energy source. And Alberta is not yet ready for this incredibly predictable event.

We all knew the Oil Boom days would eventually end. I remember the bumper stickers in the 80’s saying “Please God, let there be another oil boom. I promise not to piss it all away again.” And yet we did.

“Oil is great!” said the Albertan grasshopper, “and people will always need it!”
“But sooner or later” said the ants, “things will change, so let’s all save some money for then.”

Even though Loughheed set up the Heritage Fund in the 70’s, it was quickly gutted, by Alberta conservatives, to keep taxes low and spending high. If we had followed Norway’s model, or even the more conservative Alaskan model, we could laugh at the current oil price crunch. That’s One Trillion dollars that the Norway ants saved up, and Sixty Billion dollars for the Alaskan ants. The Albertan grasshopper has $16 billion.

If we had invested in renewables, we could be Canada’s leader in the next wave of energy. If we had invested in carbon sequestration technology, we could have stretched out the appeal of oil further. Instead, we doubled down on the oil sands, let corporations extract billions in profits and basically pretended the boom days would last forever.

So who’s to blame? Ottawa didn’t cause the shale revolution that flooded US pipelines with better, cheaper oil than our heavy crude. Ottawa didn’t cause people to protest new pipelines in the USA or Canada. If you voted for the conservative policies of lower taxes and lower savings, you caused the problem. If you opted for oil as Alberta’s only economic base, and let oil companies leave with billions of dollars, you caused the problem. If your anger really forces you to leave Canada, then remember you’ll still have to get Canada’s buyin on a pipeline to either coast, so I’m not sure what your plan is here?

The fact is that the tens of billions of dollars and five or more years to create a pipeline out east and a refinery to process oil sands just doesn’t make business sense for a product that peaks in ten years. And the biggest refinery out east has already said they’d keep buying Saudi oil; it is cheaper to buy, cheaper to process, and doesn’t require billions in refinery upgrades.

If your goal is really about getting more oil to the world market, please give up the Saudi argument and be honest about it. Then check the world market for heavy crude. Asia prefers Venezuela oil as it is simply cheaper. The US is drinking the success of shale, and has only limited interest in heavy crude. Europe is going renewable energy faster than anyone. The reason the BC Kitimat Clean pipeline/refinery/tankers project is now seeking a federal handout is that no business wants to invest in something so risky with such a short-term return on investment.

So what to do about it? Oil is so useful it will have a long lifetime past peak demand, but primarily in long-haul transit and derivatives, and cars will take a long time to age out everywhere. Plan around that: lower sulfur emissions and stretch out the maritime oil market. Lower the cost of oil sand processing.

But really, this time, start prepping for the end of the oil boom. Diversify the economy. Please.

And if you really have to get angry at someone, look in the mirror.

One last note. Climate change. It doesn’t matter if you believe in it, but the fact is most non-oil people now do; over 60% of Americans are now concerned. This means more restrictions globally on oil, coming soon to a market near you. So myth or not, plan for a harsher world view of Alberta oil, which has the heaviest carbon footprint of all oil.

And a side note to the marketing agency coordinating this fraud of an “open letter” campaign. Have your shills do less copy&paste; it is way too easy to tell these letters are all coming from a single source.

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