Friday, 30 December 2011

Canada - The World's Energy Superpauper

I'm not going to bore you with the usual tiresome end of year rundown, best and worst, the year that was crap you're probably reading right now out of most quarters. Most of these are probably devoting the bulk of their time between rehashed political headlines and celebrity gossip chronicles to how "Occupy" changed the conversation about inequality and this will change the way things go next year. I'm dubious. I've realized that if governments and central banks have been able to lurch from day to day, week to week, and crisis to crisis printing money, printing bonds, and subsidizing the standards of living of most from the most decrepit housing projects to the poshest of neighbourhoods through their labyrinths of loopholes, write offs and entitlements, there's nothing that's going to stop them now. The numbers became outlandish and absurd long ago. Those of us who like to live in the real world and predict the end of this fantasy week after week are proved wrong week after week. Ultimately, when the day comes that we all have to admit that the debts can never be paid, the bonds can never be made good on, and the GDP can never grow again, we will start over, I think, without too much disruption. It's just a matter of actually performing some real accounting; and when that happens, we will just end the game of jenga we've been playing with the liabilities column but people, at least here in Canada, will stay in their homes, do their errands, go to the supermarket, take their kids to school etc.

There is one area, however, where we can't cheat accounting and where the chickens will come home to roost some day in the near future. The energy sector. Nobody knows when that day is, so any attempt at determining it is written off as false prophecy. This is probably how idiots like Daniel Yelgin in the Wall Street journal with their "We're just getting started" oil reserve forecasts make their living. But sooner or later, if you recognize the basic limitation of the planet supplying 90 million barrels a day of cheap oil to a growing population of 7 billion, the game is going to be up. And cheap energy, which all current and future economic activity and growth assumptions are predicated on, will become impossible to access.

In the meantime, there is a lot of money to be made and short term thinking rules the day. I hope Canada's Prime Minister lives to see the day of prophetic irony when he appears in history as the moron he is for declaring that Canada would become an "energy superpower". Because we are anything but. Canada is the only net-oil exporting nation that still imports almost 50% of its crude. And we can mock Saudi Arabia and Iran for subsidizing gasoline for their own citizens to the point where it costs pennies; there are not nearly as many people in those countries driving nearly as new cars (and cars are a very energy intensive product to manufacture) and commuting nearly the distances that we do.

These middle east backwaters, which the Prime Minister and Ezra Levant are insistent can only be avoided with "Ethical" oil from the oil sands even though we develop the oil sands and import oil from them simultaneously right now, will have to deal with the reckoning of their own short sightedness. We, however, have no such excuse for being so cavalier about our energy future. Canada is making money hand over fist from oil and gas but the profits are mostly going toward supporting suburban lifestyles in Alberta and Saskatchewan instead of high speed rail and bikeable major cities. Urban agriculture and non-petroleum reliant agriculture, meanwhile, are taking baby steps but will really need to become widespread in the wake of necessity, given the current stupor of cluelessness around this topic shows no signs of abating.

Boxing day, being the amped up annual spectacle of consumer carnage ten times that of the year before, was an indicator to me that society does not yet enjoy widespread awareness these challenges. I take comfort, however, knowing that there is constant growing awareness. Whether action will follow is anybody's guess

In the meantime, Canada will continue to behave like a department chair PhD making six figures, who owns a big suburban home and two vehicles and is in hock up to his eyeballs. For we have been operating in trade deficit for some years, which is crazy considering the amount of raw materials we export. The professor living high on the hog keeps up appearances, is arrogant because of his perceived success and academic achieveements, and gets on his high horse at parties, yet eventually has to sell the house and leave the neighbourhood because of his own vanity and recklessness. Such is an analogy that represents the way I feel my country is carrying itself at the end of 2011.

I wish you a great 2012! I will not be here on Lacking Credentials for awhile but trying to be successful on some other fronts - study, fiction writing, and work (Not to mention parenting). Someday I hope to have the luxury of coming back here and sharing my ruminations but for now its not a productive activity in terms of achieving these goals. Thanks for reading and see you sometime

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