Without mentioning Tom Mulcair by name, Carney delivered a direct repudiation of the argument advanced by the leader of the Official Opposition, who has been pointing out that over-development of the Alberta sands is creating an unbalanced Canadian economy, and is not sustainable.
For Carney, development of the Alberta sands is positive, because "most fundamentally, higher commodity prices are unambiguously good for Canada." As well as ignoring the environmental consequences of resource extraction, strangely, Carney exhibited the same irrational exuberance as characterizes players in market booms.
The about $20 billion invested in the Alberta bitumen sands in 2008 surpassed planned investment in Canadian manufacturing in the same year. Statistics Canada pointed out that 10 years earlier, bitumen investment represented 10 per cent of money going into manufacturing ($1.4 billion versus $21.6 billion in 1998). Investment levels in the Alberta bitumen sands between $10 billion and $20 billion have been recorded in every year since 2006. The Alberta government is projecting $218 billion of new investment over the next 25 years.
Foreign owners control Alberta bitumen production; proposed huge new investments will increase foreign ownership levels dramatically. Foreign control of Canadian assets represents future outflows abroad of profits, dividends, and various fees for services decried by foreign owners. Currently, Canada has a large external deficit in services trade that outweighs the surplus in goods trade. Canada has to borrow back the money it needs to pay foreign owners. The more bitumen we export, the more we borrow to extract it for others to use.
When someone outside Canada owns the resource being exported from Canada, they get the profits, and the resource. All foreign investors expect to take more money out of Canada than they invest in Canada. Canadians can expect to keep the environmental destruction, and hope to gain employment. Under the Harper government, local employment is being filled by importing temporary workers -- over 40,000 in 2010 -- and the Conservatives have made the process of hiring temporary foreign workers easier. The entire oil and gas industry directly employs only 150,000 Albertans.
About 80 per cent of the world's petroleum reserves are controlled by state-owned enterprises (SOEs). For economist Jim Stanford that explains why the world's major oil companies want to buy into Alberta resources. In order to replace their oil reserves, they have to look at those places where reserves are not controlled by SOEs. The irony of course is that Alberta has not seen fit to put bitumen sands production under public ownership and control, which would be the only sure way to ensure sustainable development of the resource. Under the Canadian Constitution, natural resources are under provincial control. The citizens of Alberta are the beneficial owners of the resource. Yet, the financial benefits of the oil and gas industry have been left mostly to foreign owners.
The influx of large foreign investments over the period since 2007 helps explain why the Canadian dollar and the American dollar are now closer in value. But the impact on the Canadian exchange rate (or the Dutch disease argument) is not the main reason to decry over-investment in Alberta. The economic threat from over-investment is that investment booms are generally followed by investment busts.
If Alberta were a country it would be the largest emitter of greenhouse gases in the world. In order to promote continued rapid expansion of bitumen production, it helps to be a climate-change denier. Rapid exploitation of what has historically been known as the Athabasca Tar Sands -- a region equal in size to Florida -- creates huge tailing ponds of toxic wastes. The Pembina Institute calculates they increase daily by enough to fill the Toronto Sky Dome. Water use practices in bitumen production put the Athabasca River in jeopardy.
A staples trap awaits bitumen producers. If the pipelines proposed to send Alberta bitumen across British Columbia meet with enough public opposition, the B.C. government will deny access to constructers. The Keystone pipeline south to the U.S. may well go ahead. However, in marketing their product, Alberta bitumen producers face growing resistance from climate-change activists in the U.S. and around the world, not just in Canada.
Countries that can afford it are investing heavily in alternative energy resources. A post-carbon world represents the future, not more over-investment in bitumen production.
At one point, the Government of Alberta created a Heritage Fund to act as the custodian of petroleum wealth for future generations. While Alberta cashed in its fund rather than ask corporations to pay their fair share, other petroleum-rich jurisdictions created Sovereign Wealth Funds (SWFs).
SWFs and SOEs are major players in the world economy, including the bitumen patch in Alberta. The U.S. government is plotting to bring them under control through international trade deals like the Trans-Pacific Partnership. In Canada, we should be establishing our own public enterprises to develop resources sustainably, and manage resource wealth.
Original Article
Source: rabble.ca
Author: Duncan Cameron
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