The Neo Liberal Instinct

Charlie Pierce calls them "death funnels" and he's exactly right. He's referring to pipelines designed to transport Alberta Tar Sand, the dirtiest fuel on the planet, to refineries or ports to refineries that can turn it into technically more usable types of oil. It never gets very good, more the type you can lubricate heavy machinery with or burn in a particularly wasteful in the smoggy toxic sense power plant, barely better than coal.

It's basically asphalt, suitable for paving and not much else and it makes as much economic sense as tearing up roads or taking used tires to achieve the same effect, which is to say none at all in the current market where solar and wind are dirt cheap, batteries are getting less expensive by the hour, and fracked oil and natural gas are driving Saudi Arabia into bankruptcy. In fact the only way you don't operate at a loss simply from mining and refinery costs is if the price of crude is well over $70 a barrel. Which it isn't.

But Big Oil has all these sunk costs based on the notion of $100+ Oil and unlike a smart gambler it doesn't understand that the money you've put in the pot isn't yours anymore, it exists in a quantum state only determined at the reveal.

Too metaphorical? The point is that their product (tar sand) is very, very low margin and one of the few places they can cut corners and save some money is transportation, thus the lust for pipelines- the cheapest way to get their 3rd rate, shoddy, and low priced goods to market.

Now Alberta is a nowhere place that used to be pretty because it was nowhere and you could hunt and fish and get carried off by mosquitoes the size of an eagle. Now it's a steaming industrial moonscape and they are understandably eager to see some return on that unfortunate investment. British Columbia on the other hand is not at all anxious to see their still pretty places literally paved over with the inevitable spills and the First People Nations have treaties (taken much more seriously in Canada than here) that say you can't just take the little land you've left us.

As a result the Trans Mountain pipeline expansion to Vancouver (where the toxic cargo will be loaded onto ships for passage through some of the most treacherous and environmentally sensitive waters in the world) has been blocked.

To the rescue rides Justin Trudeau to save the investors of Kinder Morgan (a Texas company), with Canadian taxpayer dollars (they're Canadian eh?, so they're just not as good as U.S. taxpayer dollars but they'll do).
 
Trudeau vows to push ahead with pipeline plans in spite of protests
by Ashifa Kassam, The Guardian
Mon 16 Apr 2018

Justin Trudeau has said Canada’s government is prepared to use taxpayer dollars to push forward plans for a controversial pipeline expansion, despite protests and efforts by a provincial government to halt the project on environmental grounds.

For months, the provinces of Alberta and British Columbia have been locked in a standoff over plans, spearheaded by Texas-based Kinder Morgan, to expand an existing pipeline and lay nearly 1,000km of new pipe from Alberta’s oil sands to the Pacific coast.

While the project could allow Alberta to get its landlocked bitumen to markets in Asia and reduce its reliance on the US market, it has encountered opposition in British Columbia over the potential for oil spills and the impact that a dramatic rise in tanker traffic could have on the region’s southern resident killer whales, a population already on the knife edge of extinction.

The political stalemate over the C$7.4bn project catapulted into the national conversation last week after Kinder Morgan Canada announced it would walk away from the project unless it saw a clear path to completion by the end of May.

Their project has now become a crucial test for Trudeau and his Liberal government, who swept into office in 2015 on promises of striking a balance between economic growth, environmental concerns and repairing the country’s fraught relationship with indigenous peoples. “While governments grant permits for resource development, only communities can grant permission,” noted the Liberal party’s 2015 platform.

The pipeline expansion has put this sentiment to the test, with Vancouver and nearby Burnaby launching court actions against the project along with several First Nations communities. After taking power in 2017, the provincial government of British Columbia – a left-leaning coalition which relies on support from the Green Party – vowed to use all the tools available to them to halt the project.

Recent weeks have seen indigenous-led protests against the project heat up, sending thousands into the streets. About 200 people have been arrested for blocking the entrance of facility belonging to Trans Mountain, including two federal MPs.

On Sunday, Trudeau interrupted a foreign trip to meet the premiers of Alberta and British Columbia, reiterating his government’s determination to see the project completed. “The Trans Mountain expansion is a vital strategic interest to Canada − it will be built,” he told reporters after the meeting.

The prime minister said the project – which would nearly triple the flow of Alberta’s bitumen to the west coast – is in the national interest. “It means good jobs in Alberta, they’ve suffered tough times. It means good jobs in BC, thousands of them as the pipeline is built.”

The uncertainty looming over trade relations between Canada and the US as well as waning investor confidence in Canada’s ability to complete big projects reinforce why this expansion needs to go forward, he added.

Trudeau said his government would launch formal financial discussions with Kinder Morgan and potentially use taxpayer dollars to ensure the project goes forward. As interprovincial pipelines are the federal government’s jurisdiction, his government may also pursue legislation to assert Ottawa’s authority over the project, he said.

 
The problem with that course of action is that it benefits Alberta, which has never voted Liberal, at the expense of British Columbia, which is a swing Province. Not only that, but Quebec, which has 40 Liberal MPs, is intensely interested in whether Ottawa (oh, by the way, that's Canada's Capital) overrules Provincial Autonomy because of their special Francophone arrangements.

(Of course it's cross published at DocuDharma and The Stars Hollow Gazette)

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Comments

My advice? Don't go 'All In' on every pot.

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dkmich's picture

what will they do with all of that oil? I know, have the taxpayers bail them all out.

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@dkmich

I'd envisage a vast slippery orgy except crude is toxic and everyone would die.

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Wink's picture

I worked at an oil-fired power plant. Very up close and personal with the fossil fuel, spending much of that time cleaning up spills. And, before that I worked at a Nuke plant. I'll take the Nuke plant over the dino fuel plant any day of the week and twice on Sunday!
You're absolutely correct, of course, about the $h!t they pump out of the ground in a Fracking operation. It essentially is asphalt, and "they" would be better off marketing it as such. Asphalt Does Not flow thru piping very well, no matter how big the piping. In order for asphalt to "flow" it needs to be heated to melt it. So, Frackers are spending 99¢ to get it out of the ground so they can make a penny on the dollar. Well, they prolly make more than a penny on a dollar, but whatever it is the ratio isn't very good (or is very expensive for the consumer) and neither is the -ahem- "quality" of the product. So, somebody is paying Big Bucks to trash the environment to obtain the $h!ttiest grade of "oil" anywhere for the purpose of... (mystery. I have no idea)? It makes Zero economic or Environmental sense, but Big Oil or somebody has decided it's easier to Frack than go looking for new oil. The answer, of course, is to Go Green and start building a new Green Grid with renewable energy. And, since that isn't happening a few small towns are starting to DIY it themselves. Sucks to be us.

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the little things you can do often are more valuable than the giant things you can't! - @thanatokephaloides. On Twitter @wink1radio. (-1.9) All about building progressive media.

@Wink

They are financial and economic geniuses because they have a lot of money.

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Wink's picture

@ek hornbeck

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the little things you can do often are more valuable than the giant things you can't! - @thanatokephaloides. On Twitter @wink1radio. (-1.9) All about building progressive media.

Radical Reformer's picture

Great essay. As Jeremy Rifkin and others point out, despite further extraction potential, the amount of oil per capita is still declining as world population increases. And the world economy is totally dependent on the price of oil. In fact, Rifkin credits the oil price spike to $147/barrel in July 2008 with being the real underlying cause of the financial collapse that followed. For both environmental and economic reasons, we need to make the transformation from a fossil fuels to renewables.

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@Radical Reformer

Not familiar with that observation of Rifkin's. I'll have to look it up.

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Song of the lark's picture

@ek hornbeck that high oil prices cause recessions. Also Fracked oil (tight oil) is not tar sands which is mostly bitumen. Fracked oil tends to be highly flamable because of often accompanied by Natural Gas Liquids,

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Pluto's Republic's picture

...every last drop of oil out of the earth that we can get out hands on, and burn it. Here's why: One out of every four global investment dollars is invested in oil extraction. Factor in that 85 percent of the world's existing oil is nationalized. Most of it is extracted by state-owned, non-profit oil companies. When that oil is sold in the commodities market, those profits belong to the people, presumably.

That means that one-quarter of the invested wealth of the world is speculating on just 15 percent of the world's oil. (This is the oil of former and current colonies and plantations like the US, where the people were permanently stripped of their natural resources long ago by the corporate elite.)

And, that means the corporatists have got to get it out of the ground fast — and burn it even faster. There's just too much public oil out there that can create a surplus and depress the commodity price. Plus the oil speculators are on track to collide with the disruptive forces of cheap alternate energy. No one is properly hedged for that.

Ek, you make a very good argument about the final big play on oil being stuck in the quantum box with Shrodingers cat.

But Big Oil has all these sunk costs based on the notion of $100+ Oil and unlike a smart gambler it doesn't understand that the money you've put in the pot isn't yours anymore, it exists in a quantum state only determined at the reveal.

It looks to me like we are arriving at the end game with the PetroDollar, too, for different reasons. The entanglement of the quantum state is causing all sorts of overlap. The fact is, China calls the shots on oil from now on. They are everybody's biggest customer and they are using the gold-backed PetroYuan, exclusively, for purchases. China is a nation that has the luxury of making long term plans. (I'm told making plans is a communist thing.) China is racing to see if new technologies will allow the nations of the African continent to reach full social and commercial development without relying on oil the way that China had to. If those Big Oil investors were counting on exploiting the vast new markets in Africa to profit from their oil glut investment, that could be a problem.

Perhaps they should have put their Big investment in renewables instead of oil extraction and junk science. As you said, "Don't go 'All In' on every pot."

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@Pluto's Republic

I had no idea it was that high.

I'm not changing my forecast yet- haircut. Too much notional value anyway.

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Song of the lark's picture

@Pluto's Republic but we will fry long before we get every last drop out of the ground. Global oil use went up again for several decades now hit a new record of 100 million barrels a day in 2017. Furthermore China is a fiat currency debt based economy. A Red Ponzi. True they are making strides in trashing the planet with all their debt based projects. Africa being high on the list. The Petro Yuan actually makes the global financial system more stable (what Nassim Taleb would call antifragile.) All the major currencies have been trying to DEVALUE in recent years. Dollar, Euro, Yuan, Yen, even the Swiss Franc.

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of British Columbia – a left-leaning coalition which relies on support from the Green Party – vowed to use all the tools available to them to halt the project."

We are out of tools. These governments and businesses are completely out of control and there seems to be no way to stop them.

Maybe BC should threaten to break away from Canada.

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dfarrah

orlbucfan's picture

Rec'd!!

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Some yahoos make me want to change species!