Climate change deniers are in a state of flux. The evidence of environmental upheaval today is so overwhelming that even oil billionaire Charles Koch has recently softened his denier stance in a recent interview to an ‘admit but deny it’s a problem’ approach: “You can plausibly say that CO2 has contributed” to the planet’s warming, but he sees “no evidence” to support “this theory that it’s going to be catastrophic.”
The political upheaval in Alberta this month that swapped a 44-year era of conservative governments for an NDP majority (almost half of which are women for the first time in Canadian politics, btw) is further evidence of tectonic shifts afoot in the world of energy.
Unfortunately, the time to prepare for a massive drop in one’s revenue is before it happens, and sadly Alberta (and Canada) did not see its rainy day coming. See more on what Alberta should have done (but didn’t) to build up its coffers and diversify its economy during the bubble boom times here in a comparison to Norway (that did). A period of insanely inflated revenue is a horrible thing to waste. Yet failing to appreciate that lucky streaks don’t last, most do waste it:
Alberta’s Heritage Savings Trust Fund was created almost 40 years ago by former premier Peter Lougheed with a one-time investment of $1.5 billion. Since then, the fund has dwindled in priority. At last count, it held $17.4 billion in oil and gas revenue. That’s less than two per cent of the amount in Norway’s savings account. [which is $1 trillion]…
Getting trapped in the saving vs. spending debate is a red herring, argues Mitchell Anderson for The Tyee: “What is missing from these arguments is that you can’t save what you don’t have. Alberta has done such a wretched job of capturing public wealth from a globally significant public resource that arguing about savings versus government spending is an exercise in red-herring hair-splitting.”
He also breaks down which place is doing a better job of capturing public value from a public resource.
“Dividing resource revenues by production reveals some shocking figures. Norway realized revenues of $87.69 per barrel in 2013. Alaska managed $38.54. And Alberta? Just $4.38 — one-twentieth what our Norwegian cousins managed to rake in,” Anderson writes.
Back in Alberta, that money has flowed into corporate coffers instead of into the public bank account.
The writing has been on the wall about the end of the oil era for years now. Only the most stubborn, status quo thinkers couldn’t see this coming.
In 2009 Former CIBC Economist Jeff Rubin wrote a book called Why Your World Is About to Get a Whole Lot Smaller. His thesis was that oil prices would soar to $225 a barrel by 2012, and that this would make it prohibitively expensive forcing a shift to alternative energies and efficiency along with the impetus to consume less and reorder consumer behavior to a more thrifty, local focus. Rubin was dead wrong on the price of oil. But he was right that the world would shift away from fossil fuels–he just got the reason wrong.
It wasn’t escalating prices (oil prices peaked in the early summer of 2008 and have fallen since) that would drive the consumption change, but the stifling weight of the debt bubble, reduced cash flow and an urgent need to cut global carbon emissions. Jeff seems to have reshaped his message to the right catalysts now. He explains the reasons in the below interview clip, along with the downside for an unprepared Canadian economy and its oil and finance heavy stock market.
Maybe this downturn, Canada will learn to be more proactive, innovative and fiscally conservative. With the commodities boom now behind us for another decade or two, it seems we have no choice.
Author Jeff Rubin joins Report on Business Editor Paul Waldie to discuss his new book, ‘The Carbon Bubble: What Happens to us When it Bursts’. Here is a direct video link.
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