By David Yager
May 12, 2020
If you’re in the oilpatch and reading this article you’re either on the government dole or wish you were. The centrally planned and legislated COVID-19 economic disaster has crushed the oil industry. Many producers and service companies require public monetary support to avoid financial ruin. The human toll measured by lost jobs is in the thousands.
This is not unique to oil. All over the world the governments that shut down the economy and locked up its population for their own good are borrowing, spending and lending trillions to support the economy until it can return to what it was only three months ago.
Historically, government intervention to keep the boat afloat has been in response to external events. This time we’re dealing with a legislated economic disaster caused by a non-economic challenge, the COVID-19 virus.
Since governments mandated the economic collapse it is not unreasonable that they take the necessary steps to mitigate it. It is okay to have your hand out. The government took your wallet.
Except if you work in the oil business. Two federal political party leaders don’t believe you deserve the federal government’s support.
But if the oil industry collapses, Canada will be close behind.
In today’s touchy-feely world we are cautioned to avoid so-called “triggers”, unpleasant words or events that disrupt someone’s emotional comfort. That’s how Don Cherry was forced off national television. I was “triggered” last week by the most insensitive, regional, partisan, and economically delinquent comments imaginable by the leaders of the Green Party and Bloc Quebecois, Elizabeth May and Yves-Francois Blanchet.
Demonstrating their deep and unwavering commitment to those who put them in office, both said that federal government funding to help the oil industry survive this period of unprecedent financial difficulty was a bad idea.
May declared “oil is dead”, and that the pandemic was an “opportunity” to get the economy moving again by funding more renewable energy. She compared oil to Blockbuster Video, the movie rental outfit rendered obsolete by the internet. Petroleum will suffer the same fate because of climate change and alternative energy.
Blanchet, leader of Quebec’s separatist party and an outspoken opponent of oil sands and pipelines, added that the “tar sands” were “condemned”. Saying that oil is never coming back, he also opposed federal funds for Trans Mountain saying, “Putting more money into that business is a very bad idea.”
The CBC dutifully reported their every utterance. The May 6 headline read, “May and Blanchet declare the oilpatch ‘dead’, warn Ottawa against financial supports”. The first paragraph read, “Canada’s oil and gas sector is on the ropes as COVID-19 crushes demand and a global price war pushes domestic companies to the brink of bankruptcy – but two opposition leaders say Ottawa should simply let part of the industry wither and die.”
The public and media condemnation was harsh and swift. Both leaders soon realized the insensitivity of their remarks and immediately began to qualify their comments. May did her best to become a global oil expert. On TV with Brad Wall she said this was ultimately for western Canada’s own good. Blah blah blah. Prime Minister Trudeau offered that he didn’t share their view.
In response, the usual barrage of numbers was repeated yet again such as GDP, jobs, equalization payments, taxes, and royalties. The pair were reminded how we can’t live without petroleum fuel and products. Notwithstanding the current mess, global petroleum demand was strong and growing.
The hypocrisy was glaring. No MP flies further to Ottawa than May. Quebec’s oil consumption continues to grow. Shipping Alberta oil by tanker from Burnaby to New Brunswick via the Panama Canal highlighted the absurdity of regional Canadian politics.
But facts don’t matter when you are in sole possession of the moral high ground and absolute truth and delivering on your campaign promises to your equally fact-delinquent voter base. Extreme irritation aside, nobody should be surprised.
The truly troubling part is the polarization of Canadians. These two would never say such things if they were not confident somebody wanted to hear them. Who? Why? Where do they live? What are they thinking? How can you simultaneously need and despise oil? Is there no generosity left among our fellow Canadians at a time of economic crisis?
By definition, Canada is indeed a country. But in terms of purpose and vision, it is actually five distinct ethnic, regional and economic regions with different conceptions of what being Canadian means. They are the Atlantic provinces, Quebec, Ontario, the Prairie provinces and most of BC, and the so-called “Left Coast”, BC’s lower mainland and Vancouver Island.
Since 2015 three areas – Quebec, Ontario, and Pacific BC – have controlled the national agenda. May and Blanchet represent two. The Prairies, where most of the oil and gas is produced, has been on the outside looking in for nearly five years. Bad politically for the Prairies is that Quebec, Ontario, BC’s lower mainland and Vancouver Island account for 71% of the population but produce no fossil fuels.
Equally bad is that urban Canada is vote rich and resource poor. The 2016 census reported that nearly 23 million Canadians lived in urban centres of 50,000 or more. Only 5 million lived in the Atlantic and Prairie regions. In the 2019 election larger cities (200,000+) provided lots of seats for the PQ, Liberals, and NDP and very few for the pro-oil Conservatives.
When I wrote From Miracle to Menace – Alberta, A Carbon Story, I had to understand how climate change had superseded the economy as a major focus of our governments. For the past quarter century fossil fuels had been vilified as the primary cause of climate change. The consequences would be devastating. The public narrative reflected this. Producing fossil fuels was widely branded as immoral; greed-driven pursuit of profits today at the expense of the environment of tomorrow.
Like the virus pandemic, millions were very concerned even terrified.
Following the 2015 elections of the NDP in Edmonton and the Liberals in Ottawa, these new progressive governments introduced financially punitive programs and policies on oil to reduce carbon emissions, cancel or delay pipelines, and cap future production growth. The federal initiative was ostensibly so Canada could do its part in the international commitment at the Paris Climate Conference in 2015 to reduce emissions and limit future temperature increases.
It was not intuitive to me that having Canada economically punish its own oil industry would accomplish anything when the world’s largest oil producers – Saudi Arabia, Russia, and the US – had no intention of participating. Nor was there any evidence that global oil demand was materially impacted by the deep concern expressed by so many that this cheap, powerful, and plentiful energy source must be replaced.
How did it come to this? What had happened to the simple words in the British North America Act – “Peace, order and good government”? When and how did governments become responsible for running everything? How could tiny Canada save the world?
In the book I wrote;
In the early days when Canada was inhabited by proudly self-reliant First Nations and growing numbers of industrious immigrant settlers here to build something out of nothing, the role of government was very basic. It existed to ensure law and order, provide a system of currency and banking with which to conduct commerce, and assist with transportation infrastructure.
Early in its creation Canadians expected little from government and probably got less. In the 1983 book A Short History of Canada by historian Desmond Morton, the author wrote in the introduction, “Most people, of course, lived their lives within the limits of family and community. They looked to government not for social or economic programs but for bridges, wharves, the post office, and, quite rarely, for a place on the public payroll.”
The Depression was devastating. The economy shrank. Unemployment was over 20% as jobs evaporated. Morton concluded his chapter on the Depression with the suggestion that the solution to the failure of government to materially assist the economy in a period of contraction would be more and bigger government. “The Depression forced thoughtful Canadians to realize how a feeble central government and penniless provinces crippled any collective response to economic crisis. In time, Canada might have recovered. Instead, a worldwide tragedy became Canada’s salvation.”
The tragedy was the Second World War.
As World War II drew to a close, the concept of “progressive” politics captured the imagination of North America’s increasingly urban, university-educated populace. While industrialization was indeed lifting more people out of poverty and creating a growing middle class, the benefits were not evenly distributed enough to satisfy the increasing number of people who, thanks largely to the Industrial Revolution, had enough time and money to ponder such things. By the late 1960s and early 1970s, the frugality and selflessness essential to get through the Depression of the 1930s, while not forgotten, certainly didn’t appear to be required again any time soon. The Second World War had been over for nearly a quarter century.
The postwar period for Canada was one of growth. By now governments had introduced basic social programs primarily as income-levelling tools for those unable to work. This included unemployment insurance and old age pensions. Public investment in education grew, as did infrastructure such as more roads, more electrification through expansion of generating capacity and the grid and, for Alberta, oil and gas pipelines east, west, and south. However, government as an agent of massive social change was still not high on anyone’s political agenda, be they a voter or campaigning politician.
Canada’s first truly progressive prime minister, with an agenda far beyond paving roads and funding public education, was Liberal Leader Pierre Trudeau in 1968. Trudeau used the term “just society” to articulate his vision for the government and the country during the Liberal leadership race.
For the past 50 years all Canadian governments have expanded their mandates and policies to include various forms of social justice and societal improvement. Public expectations of what governments can and should do have exploded and political parties have adapted accordingly.
As for the economy, having central banks use fiscal levers such as interest rates and money supply to smooth out the ups and downs of the economy has gone from a radical idea to common and sound economic policy.
Canadians were once independent individuals with common aspirations of personal, economic, and religious freedom, sharing a country that gave them the opportunity to pursue their own lives. Settled by adventurers and refugees from all over the world, Canada was a place that promised the freedom and opportunity for people to do their own thing. The government was there primarily to provide essential shared services.
The growing progressive movement and bigger governments changed everything. As society became increasingly affluent, material needs were replaced by spiritual needs. “How do I survive?” became “How do I feel?” Politicians paid attention.
Regrettably, today’s Canadians are increasingly self-indulgent, self-righteous political and economic rent-seekers supporting politicians and governments that will give them what they want – physically and spiritually – with continuously diminishing regard for the economic cost and the future of our fellow citizens or the country as a whole.
As the governments of the world struggle to figure out how to undo the mess they have created in the last three months, the Canadian situation in unique. Canada is surely the only country that is having any sort of public debate about taking this opportunity to diminish one of our most valuable economic engines. Or suggest we’d be better off without it.
At a time when a real country would pull together with a collective approach to help all of its citizens as much as possible, in Canada regional and partisan divides remain and are tearing the country apart.
Why? Because progressives know better. Regional politics make it worse because the oil industry and western Canada are populated by people who don’t vote, think, and act the right way. Screw the oilpatch. Let it wither and die. Our desperate pleas to avoid economic annihilation are not as important as regional or partisan agendas.
Researching my book, I uncovered American economist James Buchanan who in 1986 won a Nobel Prize in Economics for articulating the Public Choice Theory, a combination of political science and economics.
Human behaviour in the form of self-interest is a key element of economics. Writing about Buchanan and the subject for the website Library of Economics and Liberty, economist Jane S. Shaw wrote, “Although most people base some of their actions on their concern for others, the dominant motive in people’s actions in the marketplace – whether they are employers, employees, or consumers – is concern for themselves. Public choice economists make the same assumption – that although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists or bureaucrats, is self-interest.”
Buchanan wrote about how the Public Choice Theory replaces the “romantic and illusory” concept that governments and politicians act for the greater good. In fact, Buchanan asserted that most people in the political process behave just like buyers and sellers in the rest of the world: self-interest.
Which explains the behavior of May and Blanchet. Unless called out by public outrage – as they were after their inflammatory advice went viral – they revert to their default behavior.
Which is assuring their tribe they can and will save the world and the individual and economic consequences are insignificant by comparison.
Never in Canadian history has one industry, one region of the country and this many fellow Canadians been singled out as undeserving of government assistance as they endure the worst economic collapse in history caused entirely by external forces.
The desires of individual voters and regions cannot supersede the economy and the needs and aspirations of the country as a whole.
Hundreds of thousands of jobs and entire regions cannot be sacrificed so others can sleep better at night.
How does a country survive this level of insensitivity, polarization, partisan pandering and economic ignorance?
David Yager is a Calgary oil service executive, energy policy analyst, writer and author. His 2019 book From Miracle to Menace- Alberta, A Carbon Story is available at www.miracletomenace.ca.