a plaintive voice from the wilderness talks about our economy

[overthere]

Ok, its a bit whiny too, especially where he gratuitously mentions equalization.(It's a topic rarely heard or seen in Alberta media).

But he makes some good points.

Like it or not, commodities are our economic lifeblood. Our country enjoys a fat and very expensive social contract. Where is the money to continue that coming from in the future, assuming that the global economy is slowing and -not assuming- we have many competitors for those commodities? Oil- lots everywhere. Grain - cyclical and unreliable. Metals and minerals- lots everywhere(with the possible exception of uranium and potash). If not resources, what industry is on or just over the horizon that will ensure our comfy lives? How will we finance that universal day care program we'l surely see after the next election? We cannot rely on boomers to do anything except suck up public money well into their 80s. How are we going to pay?

EDMONTON - Canadians want it all, and we want it now. Just don’t ask us to help pay for it.

Like whiny toddlers, too many Canadians live in a fantasy world of self-entitlement, where our comfy 21st century lifestyle can be taken for granted. Well, it can’t, and unless those attitudes change, we’re in for a shock.

Like it or not, Canada is built on resource wealth. That’s our competitive advantage. It still is, no matter how much fawning coverage marginal sectors like movie production and video games attract.

Yet many Canadians are now fickle if not openly hostile toward further development of the very resources that made this country one of the wealthiest on the planet.

Even worse, many Canadian political leaders (including British Columbia Premier Christy Clark) have failed to recognize that the world is changing fast, requiring them to modify their views accordingly.

After making wild-eyed promises about erasing B.C.’s debt and creating a vast prosperity fund built on a world-class coastal liquefied natural gas (LNG) industry, Clark is now fighting to keep one of the sector’s key players — Malaysia’s Petronas — from bailing out entirely.

My guess is she’ll succeed — but only if she slashes her proposed LNG income tax from the proposed seven per cent to perhaps four or five per cent.

Even then, Petronas may simply bypass the province and its perennially toxic political culture by shipping natural gas by pipeline from its fields in northeast B.C. to a proposed new LNG terminal in Oregon.

Time will tell. But so far, there is little evidence to suggest that Clark understands that B.C. needs Petronas a whole lot more than Petronas needs B.C. The world will soon be awash in LNG, and B.C. is well behind the curve.

As for the antipathy that many Canadians now show toward the oilsands, new oil pipelines and the fracking (natural gas fracturing) revolution, that’s another head-scratcher.

The author is Gary Lamphier, a business writer for Postmedia based out of Edmonton.

http://www.edmontonjournal.com/Lamphier+Canada+short+options+other+than+resource+extraction+maintain+comfy+lifestyle/10274724/story.html

[Bonam]

If not resources, what industry is on or just over the horizon that will ensure our comfy lives?

Just as is the case in almost any other advanced nation, it is not any one industry that provides economic prosperity but a combination of thousands of different industries all contributing to the whole. Only a few nations are really propped up by just one or two major industries, mostly middle-eastern oil states, and those nations are not in good long-term positions. And we really should not be seeking to emulate them.

All you need is an educated workforce, a lack of draconian taxation or regulation, and functional infrastructure, and the industry that's needed to provide for a prosperous economy will take care of itself.

[overthere]

All you need is an educated workforce, a lack of draconian taxation or regulation, and functional infrastructure, and the industry that's needed to provide for a prosperous economy will take care of itself.

sounds wonderful.

There are some wrinkles though, as in how do we get there, and before that- where are we going and why.

If we transition our economy to manufacturing, what do we make and how do we annihilate our global competition?

If we transition to services like banking or IT development, how do we displace some very serious competition from those sectors?

If we stick with commodities/resources, how do we build the infrastructure? That is a serious question, for example we have major opportunities at hand in the oil business and simply cannot get anything moving except with rail cars that keep exploding. Ports and oil pipelines: paralysis. We have or had a major opportunity in LNG, and now it looks possible that BC gas will be shipped to Oregon via pipeline and then trans-Pacific.

We know where the market is, we know how to extract the product, and we simply cannot get the two together in any coherent way. While we are doing nothing, other global suppliers of the same products are having no difficulty serving those same markets and thereby collectively eating our lunch.

I think you are missing something important from your list of three. It's political will, and by that I mean a recognition by individuals , industry and government to work to common goals. It is sadly and increasingly missing in Canada. We are reducing ourselves to a nation of competing regions.

[PIK]

Just as is the case in almost any other advanced nation, it is not any one industry that provides economic prosperity but a combination of thousands of different industries all contributing to the whole. Only a few nations are really propped up by just one or two major industries, mostly middle-eastern oil states, and those nations are not in good long-term positions. And we really should not be seeking to emulate them.

All you need is an educated workforce, a lack of draconian taxation or regulation, and functional infrastructure, and the industry that's needed to provide for a prosperous economy will take care of itself.

Dream world and that thinking is going to kill this country. The utopia does not exist. Edited October 10, 2014 by PIK

[Bonam]

How is it a dream world? Any successful advanced economy works precisely in that way already, including Canada.

[dre]

Relying on commodities too much is dangerous. One of Canadas biggest recessions happened because of a collapse in commodities prices. Exporting oil is bad for the rest of the economy as well... our dollar is overvalued by about 10% as a result which puts almost every other business in the country at a disadvantage.

[overthere]

Relying on commodities too much is dangerous. One of Canadas biggest recessions happened because of a collapse in commodities prices. Exporting oil is bad for the rest of the economy as well... our dollar is overvalued by about 10% as a result which puts almost every other business in the country at a disadvantage.

Yes, we all understand that basing an economy solely on any single pillar is risky. For Canadas entire history the main pillar has been resources. It still is today.

What is your answer, what industries or initiatives can Canada undertake to ensure we continue to enjoy the high standard of living we have now, a standard that is at or near the top of the planet. How do you propose to maintain that for the next few generations? Wishing and hoping won't pay the bills. If oil is bad in your scenario, we stop producing oil and gas. What replaces that?

[dre]

Yes, we all understand that basing an economy solely on any single pillar is risky. For Canadas entire history the main pillar has been resources. It still is today.

What is your answer, what industries or initiatives can Canada undertake to ensure we continue to enjoy the high standard of living we have now, a standard that is at or near the top of the planet. How do you propose to maintain that for the next few generations? Wishing and hoping won't pay the bills. If oil is bad in your scenario, we stop producing oil and gas. What replaces that?

I dont necessarily think oil is bad, I just said that oil exports put upward pressure on our currency which harms some other industries. I would keep producing oil... but I would supply ourselves before I exported any... currently we import the bulk of what we consume from venezuela. If we did that exports would be much less, and we wouldnt be reliant on other countries for energy.

Edited October 14, 2014 by dre

[overthere]

I dont necessarily think oil is bad, I just said that oil exports put upward pressure on our currency which harms some other industries. I would keep producing oil... but I would supply ourselves before I exported any... currently we import the bulk of what we consume from venezuela. If we did that exports would be much less, and we wouldnt be reliant on other countries for energy.

Would you oblige the oil companies- who own the oil, not us- to sell their product domestically? At what price?

[dre]

Would you oblige the oil companies- who own the oil, not us- to sell their product domestically? At what price?

At whatever price the Nymex sets. Im not saying we should sieze it. I would approve a pipeline to our refineries in Ontario and get energy independant before I approved any pipelines for exports.

[PIK]

The only thing that will seriously hurt the economy is a win by the liberals or the NDP.

[cybercoma]

The only thing that will seriously hurt the economy is a win by the liberals or the NDP.

The economy has fared far worse under Conservative governments than the Liberals. And provincial NDP governments are far more fiscally responsible than the Liberals. You're just parroting partisan paranoia (alliteration for effect).

[PIK]

The economy has fared far worse under Conservative governments than the Liberals. And provincial NDP governments are far more fiscally responsible than the Liberals. You're just parroting partisan paranoia (alliteration for effect).

I lived thru a provincial NDP government, so don't tell me how good they are. ONT was always strong until the left got their hands on her.

[cybercoma]

I lived thru a provincial NDP government, so don't tell me how good they are. ONT was always strong until the left got their hands on her.

It's verifiable information, your personal anecdote notwithstanding. You look up NDP governments and see how many balanced budgets and surpluses they've had.

Edit: Here's a link for you, since I guess it's my responsibility to show you the numbers. http://www.progressive-economics.ca/2011/04/29/fiscal-record-of-canadian-political-parties/

Edited October 14, 2014 by cybercoma

[overthere]

At whatever price the Nymex sets. Im not saying we should sieze it. I would approve a pipeline to our refineries in Ontario and get energy independant before I approved any pipelines for exports.

They are not 'our' refineries, and once it comes out of the ground it is not our oil either. We don't get to pick whjere it is refined.

The oil in the big line perhaps heading east won't be refined in Ontario anyway, it will via to Montreal and New Brunswick. I have zero faith any of that will happen. Our usual practice will likely prevail: delay for years or decades, fight over pennies, fight over Quebec, partisan battles in Ottawa, Quite likely the people that pay for it(hint, not a CDN govt) will pack their bags with the capital and say.... later maybe.

[eyeball]

They are not 'our' refineries, and once it comes out of the ground it is not our oil either. We don't get to pick whjere it is refined.

Then we should leave it in the ground until we sort all this out.

[overthere]

Then we should leave it in the ground until we sort all this out.

You are enjoying the benefit of the current system right now, in a deluxe social contract.You can bury that next to the oil in the ground. Maybe you're sick of decent health care, educated children and rule of law, but count me out of that equation.

Life is full of hard choices, but I can promise you that choices get really limited and really ugly when you have no money. Of course, you probably have some good ideas on how to replace the cash. I have time to listen.

[PIK]

It's verifiable information, your personal anecdote notwithstanding. You look up NDP governments and see how many balanced budgets and surpluses they've had.

Edit: Here's a link for you, since I guess it's my responsibility to show you the numbers. http://www.progressive-economics.ca/2011/04/29/fiscal-record-of-canadian-political-parties/

I live in ONT, I know what they can do and I do not want to go thru it again. Lets look at the record for ONT.

[cybercoma]

I live in ONT, I know what they can do and I do not want to go thru it again. Lets look at the record for ONT.

Let's cherry pick data because the full picture shows you're wrong? No thanks.

[cannuck]

Leave the oil in the ground? We get most of our oil from Venezuela?? Geez, what planet did I land on?

As the OP and his link suggests, we live in a resource-driven economy. Always have, always will.

Oil is a finite resource, so when the rest of the world runs out of it, there won't be any technological market that we can service with our oil. We would be idiotic in the EXTREME not to cash in on the resource that we have while everyone else in the world is becoming addicted to its waste...er, I meant USE.

We do not buy any significant amount of oil from Venezuela, and we produce far, far more oil than Canada could ever need. Thing is, if we weren't exporting all of this oil, potash, uranium, nickel, gold, diamonds, etc. we really wouldn't have any internal need for "our" oil. What is very important to appreciate is that our largest oil deposit - that Athabasca Sands, is extremely capital and labour intensive to extract. That means instead of paying one pumper to check in on the well ever day or so for a few minutes, we need dozens of people using millions of dollars worth of equipment (much built in Canada) to extract that same amount of oil. What that really amounts to is a fair bit of value not "added" but "extracted" from every petro dollar that we receive for heavy oil exports.

Canada has a lot of oil and gas, but the real problem is we can't get it to market. To put it into perspective: the Athabasca Sands alone represent a body of hydrocarbons that is either larger than everything in the Persian Gulf (based on some proven recovery values from 15 years ago) to larger than the rest of the world's reserves COMBINED (the gross amount of oil that is in place). The reservoir that is driving the ND economy to absolutely crazy levels (the Bakken shales) are routhly 30% in ND, 20% in MT and 50% in SK. Goes on, and on.

The US has turned around its national decline curve and brought their traditional 10MM bbl/dy habit almost 7MM today vs. well under 5MM just two years ago of domestic production. That is wiping out the market for crude oil imports from Iran, Venezuela, Nigeria, MENA - but has hardly put a dent in the supply from the blue-eyed sheiks of AB. Only the politics of pipelines is screwing that up.

Speaking of which: it is not just the Dummycrats in Yankee land that are making a mockery out of pipeline utilities development. We have to remember that our recent largess of granting vast tracts of land and resources to Aboriginals pretty much deadlocks ANY pipeline being built to the West Coast through a new route.

Edited October 24, 2014 by cannuck