How The Internet Wrecked Alberta’s Oil Industry – David Yager

By David Yager

Of all the stakeholders directly affected by the emergence of climate change as the menace to the future of the world, the prize for figuring out the root of the problem dead last goes to Alberta’s oil and gas industry. All the “fossils” in fossil fuels are clearly not dead plants and animals.

However, as providers of the fuels and products that power civilization and the modern world, executives can be forgiven for not paying closer attention to the behavior of their customers. Because it is the same people who depend upon these products who vilify them. Normal methods of measuring consumer satisfaction – high sales volumes and outstanding customer loyalty – would indicate people love coal, oil and gas. Yet a growing number of customers demand the end of the same products they refuse to consider living without.

So as oilpatch executives stuck to their business and kept the world’s economy functioning, a phenomenon that would change everything expanded relentlessly. It was called the internet. Everybody knows its impact on society has been huge. But few have connected the dots between the World Wide Web and the current mess in Canada’s oil and gas industry.

This obvious contradiction of being despised in public yet consistently supported at the cash register caused great confusion among the captains of industry. The initial reaction was ridicule. How could opponents maintain a straight face as they flew on an airplane or drove their cars to an oil sands or pipeline protest? Wasn’t that smartphone on which they got their information and directions to the next public demonstration made of plastic? Didn’t the electricity powering their homes and computers come from gas or coal-fired electricity generation?

This was so blatantly hypocritical it couldn’t possibly last.

As more headlines appeared about the perils of fossil fuels, the initial response was to shoot the messenger. The newspapers were biased, journalists were lefties and the media in all forms were suckers for a socialist plot.

But as media content changed, what people didn’t notice was how much the medium had changed. Oil people regularly complained about what they read in the newspaper. What newspaper? That ever-shrinking combination of paper and ink? It has taken years but the newspaper everybody over 40 grew up reading no longer exists. The once powerful, proud and profitable print media has been decimated.

Your local newspaper once had an entire section of classified ads where everyone found everything from jobs to houses to cars to golf clubs. Gone. The advertising that supported the news department has been crushed by the internet and its proliferation of on-line sites that supply more information from more sources at a fraction of the cost.

As the newspaper shrank, so did number of reporters and columnists. Read all three PostMedia newspapers in Calgary or Edmonton today – Calgary Herald and/or Edmonton Journal, Calgary Sun and/or Edmonton Sun, National Post – and you’ll find the same articles written the same people. Because PostMedia owns all three. Less ads, less pages, less news, less reporters, less columnists, less research, less content.

Magazines have been clobbered. Publications that once specialized in the “deep dive” – investigative research into the story behind the story – have gone broke, changed hands or are struggling to find a formula that works. After 70 years Newsweek published its last print edition in 2012. U.S. News and World Report, founded in 1933 and distributed to students for decades, abandoned its print edition in 2010. Time Inc., which publishes Time magazine that famously featured the “Person of the Year”, now streams a TV show titled, “Paws and Claws” featuring “viral videos of animals.”

More than the advertising and content is shrinking. Getting the facts right used to be a badge of honor. Every self-respecting media participant had trained journalists, experienced editors, researchers and “fact checkers”, people whose sole purpose was to assure accuracy.

Diminished editorial staff means the media is increasingly dependent upon third party sources, networks like Reuters, Bloomberg and Canadian Press which create and mass distribute content. This provides economies of scale whereby a single reporter can feed stories to dozens if not hundreds of media outlets. Reporters no longer had to do interviews, phone anybody, conduct research or even leave their desks. But if the news bureau feed was wrong, the world got it wrong.

Others quickly figured out how information could be spread far and wide at a very low cost. This included environmental non-government organizations (ENGOs), political parties, governments, research organizations, trade associations and charities. Once received, there were few criteria for distribution. The first was that the information appeared interesting and topical. The second was that the source appeared credible so if it wasn’t correct, blame could be assigned.

The third, and tragically the last, was that the information was true. Because the final distributors lacked the resources to verify the content.

An analysis in 2017 by the Reuters Institute for the Study of Journalism analysed where people got their news in the age of the internet. Of those aged 18 to 24, 64% got it online including social media. Thirty-three percent of this age group got its information exclusively from social media. Only 5% read the printed word in newspapers or magazines, while 24% watched television.

For those 55 and older it was the exact opposite. Only 28% got their news online, 7% from social media while print news was more than double that of the youngest generation at 11%. Of this group 51% watched their news on TV.

Most meaningful is 20 years ago, when the world was significantly more predictable, nobody got their information from on-line sources. While social media does indeed carry mainstream news stories from the above names, the viewer no longer has to read them like the front page of a newspaper in the pre-internet era.

As the media shrank and restructured, the news business has become more competitive with massive growth of online sources from blogs to networks. No printing presses, no paper, no distribution networks, no physical delivery. All replaced by electrons. This was a fantastic financial advantage.

The new online media was also completely unregulated. It could write and distribute whatever it wanted. While fraudulent or defamatory information remained illegal, the only recourse was through the courts. With print media you could punish the publisher by cancelling a subscription or refusing to buy the product at a newsstand. A reputable news organization would be tarnished by a lawsuit. This kept news outlets on their toes.

Except for litigation, it is almost impossible to financially penalize a media outlet that distributes its product for free.

As attacks on the fossil fuel industry grew, increasingly intense opposition finally created measurable financial damage as pipelines were delayed or obstructed. Only then did the carbon industries begin to accept there was growing public support for the climate change issue, however irrational it may be. While demands to end the carbon era grew, nobody actually imagined a world without cars, trucks, trains, boats, airplanes and the myriad of consumer products like plastics and chemicals.

Confused? You should be!

An illuminating presentation on the impact of the internet came from the guest speaker at the AGM dinner of the Petroleum Services Association of Canada in Calgary a few years ago.  He said that it wasn’t that young people were reading less or didn’t read. In fact they were reading more. But they got to choose what they wanted to view, listen to or read. Studies say people spend 2 or 3 hours a day on their phones reading something.

The newspapers of old never got this much attention. Pre-internet, media content was set by owners, publishers and editors of newspapers, magazines, TV or radio stations. There was great responsibility associated with delivering a cross section of information including politics, government, taxes, spending, business, politics and economics. Consumers got a bit of everything, whether they wanted it or not.

With the internet and a full functioning computer in everybody’s pocket, the individual became the sole judge of acceptable information. People could pick and choose among thousands of media streams ranging from sports scores to famous musicians to social trends to the activities of their close friends and acquaintances. What matters to the business community is most often of no interest to anybody else.

Be assured Kim Kardashian did not go from obscurity to fame and fortune because of talent, intelligence or some worthy contribution to the future of civilization. She is a product of the internet and has millions of followers.

As an increasing number of people changed the channel, what industry responded with was websites explaining all the wonderful things made of plastic. Or how much it paid in taxes, gargantuan numbers in the billions that are incomprehensible to most.

A great book that delves deep into history to explain how powerful the internet has become in shaping the world was written in 2017 by Niall Ferguson and titled The Square and the Tower – Networks and Power from the Freemasons to Facebook. The definition of a network is the size and structure of an interacting group of people with common interests, common causes, and the ability to communicate with each other either directly and share information.

Ferguson writes about how humans are social creatures and are influenced by, and prefer to associate with, people who feel the same way a they do. This would include religions, political parties, societies, and family dynasties. The last section of the book is dedicated to the biggest and most powerful network in human history, the internet. Its reach and power renders churches or even governments insignificant by comparison. Ferguson focuses on Facebook, the social media website that has become one of the most valuable companies in the world and has recently been accused/credited/identified as helping shape the outcome of the 2016 U.S. election and the Brexit vote in Britain.

Ferguson writes, “Facebook did not invent social networks. As we have seen, they are as old as Homo sapiens as a species. What Facebook did, by creating a service that was free to the user and unconstrained by geography or language, was to create the largest ever social network.”

Today’s Facebook has 2.27 billion active users, nearly one-third of the world’s population. Other social media outlets include Twitter, YouTube, Snapchat, LinkedIn, Reddit and WhatsApp. Twitter – founded in March 2006 – has unprecedented influence. U.S. President Donald Trump appears to be running the most powerful country in the world 280 characters at a time using only his smartphone.

While oil companies have long been accused of collusion, price-fixing, profiteering and shameless exploitation of the common man, the real money today is in the modern digital industry. Six of the 12 richest people in the world are the modern practitioners of the internet economy or digital information business with products like Facebook, Microsoft, Amazon, Google, Bloomberg News and Oracle.

One point Donald Trump has made since being elected that is only beginning to resonate with the public is the proliferation of “fake news”. Anybody can write anything, put it on social media, and somebody will read it. If it reflects the views of the reader – the essence of social networks – it sticks and is accepted as factual.

Only now is the mainstream media conducting surveys into the public’s understanding of how much of the news is fake. The public is catching on but don’t know what to do about it. On June 19, 2018 The Toronto Star carried a story titled, “7 in 10 Canadians say the government should regulate fake news, polls say”. It explained a Nanos Research study commissioned by Canadian Journalists for Free Expression “found a strong majority of Canadians – more than eight in 10 – say false information that looks legitimate is making it harder to find out what’s real. To help prevent the spread of fake news, seven out of 10 Canadians think the government should step in.”

Oh dear. There cannot be a more prolific source of fake news in the 21^st century than our governments. It is amazing the degree to which Canadians continue to trust politicians considering their track record.

Social media and instant communications are increasingly used to organize and expedite major political upheaval. Ferguson writes about an article published in 2010 by Eric Schmidt and Jared Cohen at Google and observed, “…they argued that governments would ‘be caught off-guard when large numbers of their citizens, armed with virtually nothing but cell phones, take part in mini-rebellions that challenge their authority’.” This is how people organize giants protests and disrupt governments in places like Cairo and Paris.  Eric Schmidt is the executive chairman of Google. Jared Cohen is the founder and director of Google Ideas.

At a conference at Tufts University in Boston in October 2017, Google’s Schmidt and Cohen discussed The New Digital Age: Transforming Nations, Businesses and Our Lives which they co-authored. The campus newspaper reported, “The new technology has created ‘a massive shift in power to individuals’ Schmidt said. He predicted that 3 billion more people getting smartphones over the next five years ‘is a one-time way of changing the power structure, with enormous implications, most of which are positive – but not all.’”

“Technology will change world politics, the Google executives argued. ‘In the future, revolutions will be easier to start and happen faster, but will be much harder to finish’, said Cohen. ‘What we’ve seen from the Arab Spring, the Ukraine and various other examples is that it’s very easy for people to organize in virtual town squares around the common idea of ‘We don’t like this particular dictator. Let’s get him out of power’. But that’s the only thing people agree on, and after the dictator is unseated, the expectation that change and transformation will happen just as quickly is not met.’”

Which explains how the internet wrecked Alberta. It was an integral component of how the concerns about climate change has progressed from scientific research to a growing global political movement, the main means of dissemination of the now legendary “Tar Sands Campaign”.

But, as Schmidt and Cohen observed, “the massive shift in power to individuals”, isn’t necessarily rational. It is much easier to complain about what is wrong than explain how to fix it. Governments have indeed been overthrown but are often replaced with chaos, not a new or improved government. Yes, we must stop using fossil fuels tomorrow. That there are no substitutes is never mentioned, nor is the question ever asked.

That’s the internet. It is history’s most prolific and easily accessible supplier of information, and thankfully much of it accurate. But it also allows people who think alike to find each other and share ideas. Because it is only a search engine for information that already exists, it cannot answer questions without answers. Like a replacement government for the one that was just overthrown, or a substitute for jet fuel. If it doesn’t exist, the internet can’t find it.

The internet is a powerful tool to organize those who want an end to carbon energy to save the climate. But it is useless to explain what fossil fuels will be replaced with. All it does it quote the comments of vested interests about the incredible opportunities in renewables like the massive US$30 trillion global opportunity in “clean-tech”. Details to follow. And how carbon taxes and subsidies for wind and solar will solve all problems.

Oil sands developers know all about fake news.

In February 2012 a group of American ENGOs released an important looking document titled, Tar Sands Pipelines Safety Risk. It opens with, “Tar sands crude oil pipeline companies may be putting America’s public safety at risk. Increasingly, pipelines supporting tar sands crude oil in the United States are carrying diluted bitumen or “DilBit” – a highly corrosive, acidic and potentially unstable blend of thick raw bitumen and volatile natural gas liquid condensate – raising risks of spills and damage to communities along their paths. There are many indications that DilBit is significantly more corrosive to pipeline systems than conventional crude.”

This allegation was dutifully carried by multiple news outlets and resulted in the industry having to perform extensive research to refute the report.

A preposterous accusation involved the frequency of tanker oil spills emerged during the Trans Mountain expansion hearings. In 2012 a Vancouver-based online media outlet wrote, “The Aframax tankers now using Vancouver Harbor carry up to 700,000 barrels of bitumen, the deadliest crude on Earth…Consider a 500,000-barrel bitumen oil spill in Burrard Inlet, 70% of an Aframax tanker. Globally, there has been a spill of this size about every 18 months worldwide for the last 40 years.”

There is no evidence anywhere that oil spills of this magnitude have happened even once in the past 16 years let alone 18 months. According to data from the International Tanker Owners Pollution Federation, the worst year for oil spills in recent times was in 2002, about 60,000 tonnes or 410,000 barrels. That was every event in the world, not a single spill. From 2003 to 2016 the worst year was about 10,000 tonnes in 2007, 68,000 barrels. The other years were lower.

Opposition to Trans Mountain opposition was reinforced by the allegation that more tanker traffic would harm killer whales. Only later did all the information come out that the biggest sources of boat activity were BC ferries, cruise ships, freighters, recreational boats and whale watching tour operators. Combined, they dwarfed any increased tanker traffic. A major cause of decreasing whale populations was less salmon for food. A contributor to that was effluent dumped into the Fraser River from Vancouver and surrounding communities.

Another “fact” regarding bitumen is that is sinks in water and therefore cannot be cleaned up using traditional surface oil spill containment methods. Research later revealed that bitumen actually did float.

When the Trans Mountain decision was overturned it had nothing to do with bitumen corroding pipelines, tankers spilling oil or the difficult cleanup of “the deadliest crude on Earth”. The NEB pointed out that if boat traffic affected killer whales, ferries and whale watching tours needed more stringent regulation.

The internet has allowed climate change alarmists to broadly disseminate enormous misinformation about what is wrong with fossil fuels, expand opposition to pipelines, galvanize the blame on carbon resource providers and not consumers, and vastly overstate the usefulness of renewables.

But if the internet can help overthrow a government a pipeline is, by comparison, helpless. History has proven, and executives at Google have admitted, that the internet is infinitely better at publicizing problems – real or imagined – than solving them.

Which validates industry confusion about how people can simultaneously vilify and depend upon fossil fuels.

Fossil fuel opponents repeat the mantra that the only thing impeding the prevention of the looming climate catastrophe is morally corrupt coal, oil and gas producers and their omnipotent political influence. The world’s billions of hapless carbon resource consumers remain blameless.

How did it come to this? Look no further than the internet.

David Yager is the author of From Miracle to Menace – Alberta, A Carbon Story. The foregoing is adapted from Section 2 Chapter 9, titled, “Modern Media and Climate Change – Rise and Role of the Internet”. More about the book at www.miracletomenace.ca

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