Western Alienation

[bush_cheney2004]

....Oil will come back in time, but likely not to peak levels we have seen for many years. Enough to stay steady, employ base levels of people and pay taxes. Without a pipeline we will simply be limited by what the US will buy and so ultimately dictating to Canada what we can produce.

But this has always been true...pipeline or not...70% of Canadian oil production is foreign owned and the Americans (e.g. Texans) have poured many billions into Alberta investment with favourable royalty schemes and access to the U.S. market (transport, refining, distribution). Until Canada decides to get more skin in the game, it will always be subject to foreign decisions.

[waldo]

...70% of Canadian oil production is foreign owned

no - that's the oft quoted figure for the tar-sands, not the 'at-large' ownership figure.

at the broader 'energy sector' level: May 31, 2015 --- Finance Canada economists suggest that between 40 per cent and 50 per cent of the energy sector is in non-Canadian hands.

.

[69cat]

That cbc article switches its criteria. First says 37% of oil and gas extraction then says 40 to 50% energy sector is foreign owned.

I have no issue at all with shareholders being from outside Canada. I would expect Ontario would not turn away a manufacturing operation if it was 100% foreign owned.

But that is how it goes. Canada needs massive entities with enough financial power in order to see a greater chance of Canadian ownership establishing dominant roles but they will still have some degree of foreign shareholder component to it. But we tend to have a hatred for large entities and prefer to see them taxed or otherwise restricted. This can be argued as acceptable during boom times as small companies have opportunities to start up and grow but in the bust periods it is typically the very large entities that survive and so continue to employ and pay taxes.

[BC_chick]

The truth was that Alberta allowed its economy to become too dependent on a single volatile economy and didn't use the good times to diversify. And we paid the price when the inevitable downturn hit. In other words, exactly the same situation as now.

I have several friends who either live in Alberta or who used to work out there and the denial runs deep. They blame Obama for their predicament when it was Alberta's own fault for thinking the fossil-fuel party will last forever.

And if anyone wants to drag government into it, the Harper government would be good starting point instead of Obama.

[Accountability Now]

I have several friends who either live in Alberta or who used to work out there and the denial runs deep. They blame Obama for their predicament when it was Alberta's own fault for thinking the fossil-fuel party will last forever. .

Interesting....I live in Alberta, have almost all my family in Alberta, many friends and colleagues in Alberta and I don't know ANY that blame Obama for this predicament. But I'm sure the couple you know speak for all of Alberta!

With that said, everyone I know looks at this predicament as a temporary thing as we all know that fossil fuels will be around for a long time still

[BC_chick]

Interesting....I live in Alberta, have almost all my family in Alberta, many friends and colleagues in Alberta and I don't know ANY that blame Obama for this predicament. But I'm sure the couple you know speak for all of Alberta!

When did I say they speak for anyone but themselves??

[Accountability Now]

When did I say they speak for anyone but themselves??

Oh...the denial runs deep in Alberta part certainly implies it. That's why showing you that I know many who dont agree with what you said should show you that your argument is highly anecdotal.

I know a few people in BC that are unemployed right now. Laziness runs deep out there. See how that doesn't work?

[BC_chick]

Oh wow, here is my post again. You need to read more clearly, "they" is clearly a reference to "my friends":

I have several friends who either live in Alberta or who used to work out there and the denial runs deep. They blame Obama for their predicament when it was Alberta's own fault for thinking the fossil-fuel party will last forever.

Edited February 13, 2016 by BC_chick

[Accountability Now]

Oh wow, here is my post again. You need to read more clearly, "they" is clearly a reference to "my friends":

Your point is either useless as your telling an anecdotal story about a few people when we are discussing a province or perhaps the western mentality. Or it's is implying that your few friends are representative of Alberta and my previous claim stands. Which is it?

[BC_chick]

Your point is either useless as your telling an anecdotal story about a few people when we are discussing a province or perhaps the western mentality. Or it's is implying that your few friends are representative of Alberta and my previous claim stands. Which is it?

I was discussing my agreement with ReeferMadness's quote which I referenced and sharing my personal experience about how far I've seen some Albertans go (blaming Obama) instead of addressing the real issue (Alberta's own short-sightedness and unwilling to learn from previous mistakes).

Hope this is helpful.

Edited February 13, 2016 by BC_chick

[BC_chick]

Key word: *some*

[Accountability Now]

I was discussing my agreement with ReeferMadness's quote which I referenced and sharing my personal experience about how far I've seen some Albertans go (blaming Obama) instead of addressing the real issue (Alberta's own short-sightedness and unwilling to learn from previous mistakes).

Hope this is helpful.

Reefer's comments were also generalizations about Alberta and you used a single, anecdotal and embellished story to enforce a different generalization.

So no...it doesn't help but I do like how you're now adding 'some' as I trust you probably are starting to realize it's not wise to characterize a province of 4 million people based on a few people you may or may not have met

[BC_chick]

I never claimed to speak for people I never met. I shared my personal experience with how ridiculous I've seen the denial run (ie blaming Obama), but I am in no way saying this is representative of all Albertans.

I've clarified my position for the last time.

[Accountability Now]

I never claimed to speak for people I never met. I shared my personal experience with how ridiculous I've seen the denial run (ie blaming Obama), but I am in no way saying this is representative of all Albertans.

I've clarified my position for the last time.

So your point is useless as it in no way speaks for even a large percentage of the people in Alberta. The vast majority of people blame the current predicament on thr price of oil, the NDP or the past PC governments...but not Obama. That's just ridiculous.

[ReeferMadness]

It certainly seems like a mess when you've been riding high for so long. However are we really? As of January 2016 Alberta's unemployment is at 7.4% which is 0.2% above the national average. We're still below every Atlantic province and Quebec. Of course, just wait until the remaining migrant workers return from Alberta to their home provinces and drive their numbers even more. Things are certainly bad in Alberta....in relation to how GOOD they have been.

I agree that the numbers in Alberta aren't that bad compared to other areas - yet. Check again at the end of the year if the price of oil isn't over $40.

But that's not the mess I was referring to. I meant the fact that the Alberta economy is a house of cards built on a single volatile commodity. Who in Alberta has a plan besides "let's sit back and wait for the price of oil to recover"?

Of course looking only at the unemployment metric may be misleading. In these same January 2016 numbers, Alberta leads the country in both Participation % and Employment Rate at 72.7 and 67.3 respectively. The national average for these two metrics are 65.9 and 61.2 which shows we are well above the average. Now...you live in BC...right? The unemployment rate there is below the national average however so are your participation and employment rates.

BC is a destination for retirees and families of wealthy immigrants. So comparing participation rates is misleading.

The fact is that things will probably get worse for Alberta but at this point I still think its bringing Alberta back to normal....back to national standards which isn't a bad thing. If that is what you consider a mess....then I guess Canada is a mess!

When the pendulum swings, it doesn't necessarily stop where you'd like it to. Maybe it brings Alberta to national standards, maybe Alberta starts to look like Newfoundland did a few years ago. There is no telling at the moment.

Guys coming out of high school were being paid $40-50 per hour to push a broom on some drilling sites. If you wanted to live away from home and work on these sites you could make great money. Even if you didn't, Tim Hortons was still paying ~$16 per hour to start compared to ~$10 per hour elsewhere. The middle class guys....they were making great money when the boom was happening and if they didn't save for the bust, well....that's on them. The rich....yes.....they will probably be fine however a lot of the cuts made so far have been the top cheese guys so not sure how they're doing right now per se.

Given the level of angst that has been generated by the downturn, I have to guess that these guys didn't save a lot of the big bucks they were making. There's still a lot of money sloshing around in Alberta and it would take time for it to drain away. All depends on the price of oil.

Good point. I agree that other sectors benefit from the energy sector but exactly how much. I would certainly be interested in seeing that. Unlike you, I don't see oil going away all together nor do I see the oil sands withering away to nothing and I think its also a good point to note that the manufacturing industries that were brought into service the oil industry are also bringing in work from outside that sector and outside our province.

But for fun....lets look at GDP. Assuming the % by sector have not changed from 2013 to 2014, we can look at the following link for easy info (https://en.wikipedia.org/wiki/List_of_Canadian_provinces_and_territories_by_gross_domestic_product). Alberta's GDP in 2014 was about $375B...if you got rid of the 24.6% (92.25B) in the energy sector and say 10% of the remaining GDP due to oil related losses then you'd have a resulting GDP of $254B which is still higher than BC. Even if you got rid of 25% of the related GDP (instead of 10%) you would still be at a GDP per capita of ~$51,000 which is similar to BC and Ontario. Of course, these numbers are very speculative as the percentage could go higher but one fact for sure is the GDP from the energy sector will never be zero.

Here are some tidbits that help show this:

If you think 10% - 25% of the remainder is worst case, I think you're dreaming. Alberta has little in the way of manufacturing of finished goods so you need to import them. The only way you can do that is to export something. And look at what you export. The top 3 are all oil or its derivatives. In the absence of oil, what, exactly is the basis of the Alberta economy?

If oil stays at $30 for an extended period of time, Alberta's #1 export is going to be people. Fort McMurray will become the world's biggest ghost town and Calgary will start to resemble Detroit. That's not likely but it isn't impossible.

That depends on what you consider smart. Based on your past posts I would assume that complete socialism would be the only method, so by that standard I would say no...Alberta will not be smart enough. But by the current standard I would like to think that common sense would come into play. We have to start using national averages or payscales of similar provinces when dealing with our public sector with the understanding of a sliding scale bonus to compensate for booms. No government in this country would turn its back on the huge economic resource that oil will bring but it would be nice to have some sore of long range plan knowing that it will be boom and bust.

What I consider smart is not to base your economic future on one commodity. And when you have a commodity that's non-renewable, get maximum value from it. And save some of it to cushion yourself when the inevitable bust happens.

[ReeferMadness]

I have several friends who either live in Alberta or who used to work out there and the denial runs deep. They blame Obama for their predicament when it was Alberta's own fault for thinking the fossil-fuel party will last forever.

And if anyone wants to drag government into it, the Harper government would be good starting point instead of Obama.

They're completely in denial. If they were being honest about things, there would be some reflection on how they've blown their oil wealth and how they've allowed themselves to become utterly dependent on a non-renewable resource that is becoming increasingly seen as a major world problem. But I've not heard any of that from prominent Albertans like Naheed Nenshi. They're too busy pointing fingers at Montreal.

Look at the statements that have been made about Energy East. It's as if approving Energy East is going to offer some way out of today's problems. If Energy East were approved today, it wouldn't be done for another 10 years! Unless the price of oil jumps, it will never be completed - there won't be enough of an oil industry left.

As near as I can tell, Alberta's only plan is to try and stay busy until the price of oil comes back. What if it doesn't? Where is plan B? There isn't one. Nobody is pouring billions of dollars into sludge mining unless they're confident the price of oil is at least double its current price.

Edited February 13, 2016 by ReeferMadness

[ReeferMadness]

Oh, I haven't forgotten the Venezuelans. They are one of the winners in this chain of events. The oil companies spent billions to build upgraders at their Texas refineries to handle Canadian heavy oil expected through Keystone XL. But no matter, now they will just upgrade tankers full of Venezuelan heavy oil. Mexico is also a customer, since they too now are in export mode.

USA taken care of itself. Check.

Venezuela. Check.

Australia. Check.

Russia. Check

and so on.

Big loser in this play? Canada. Primary cause for being big loser?. Canada.

You think Canada should be more like Venezuela and Russia? Check out how they're economies are doing right now and get back to me.

[msj]

You think Canada should be more like Venezuela and Russia? Check out how they're economies are doing right now and get back to me.

But but but just think how many tourists we could lure to Canada if the exchange rate was 45 cents to the USD ( you know, similar to the ruble's depreciation)?

Or .004 cents to the USD if we were like Venezuela (black market - ie the real rate).

Yeah, neither of those economies should be used as a basis to justify any policy in Canada. They are basket cases.

[eyeball]

BC is a destination for retirees and families of wealthy immigrants. So comparing participation rates is misleading.

So too is the warm fuzzy glow surrounding B.C.'s performance given the crappy wages associated with being a destination.

[Accountability Now]

I agree that the numbers in Alberta aren't that bad compared to other areas - yet. Check again at the end of the year if the price of oil isn't over $40.

Fair enough....but again the price of oil has many times been below $40 for long periods of time and guess what...Alberta didn't vanish. As I said before, if oil stays low for long enough then salaries and other costs will have to restructure. Just last month, all public servants had their wages frozen. That's a first step but a better step will be a claw back in wages like most oil companies are doing.

BC is a destination for retirees and families of wealthy immigrants. So comparing participation rates is misleading.

I guess you missed or chose to gloss over the part where Alberta's participation rate and employment rates are the highest in the country....not just above BC. So what excuse do you want to provide for each of the other provinces?

When the pendulum swings, it doesn't necessarily stop where you'd like it to. Maybe it brings Alberta to national standards, maybe Alberta starts to look like Newfoundland did a few years ago. There is no telling at the moment.

Yes...the pendulum should also bring the costs inline with numbers that are more conducive to a sustainable industry. Of course the largest difference here is that the Cod literally went away....oil will not.

Alberta has little in the way of manufacturing of finished goods so you need to import them. The only way you can do that is to export something. And look at what you export. The top 3 are all oil or its derivatives. In the absence of oil, what, exactly is the basis of the Alberta economy?

I always love it when the people I debate post links that prove what I am talking about. Look at the numbers in Chart 2. Out of $121.4B in exports, Crude and Gas is 90.1B which means the remaining industries are 31.3B. Take away the 1.6B for reminded petroleum products if you want and we're still just below $30B. Do you know what the complete export numbers are for BC....35B. Of course, if we are removing fossil fuels from the picture then I guess we would get rid of BC's coal and NG exports which is 17% (~6B)....so the correct total would be around 29B. HMMMMM....the same as Alberta.

http://www.bcbc.com/content/1602/A%20Primer%20on%20BC%20Exports.pdf

The way I view it is like the Oilers of the old days....sure we had Gretzky who was a legendary all star however we also had a team full of other really good players who were able to carry the team when Gretzky left. Of course oil will never get upright and leave the way Gretzky did.

If you think 10% - 25% of the remainder is worst case, I think you're dreaming.

I gave up the ENTIRE oil industry in that calculation. You don't think that's far fetched enough so now you're coming after a few extra percentage points. Fine take 30-40%. Still not horrible. The fact is there is life here other than oil.

If oil stays at $30 for an extended period of time, Alberta's #1 export is going to be people. Fort McMurray will become the world's biggest ghost town and Calgary will start to resemble Detroit. That's not likely but it isn't impossible.

Again...oil has been at $30 for long periods of time before. Its possible if prices start to adjust to reflect the new price reality. Everyone was still charging 'oilfield' rates up until recently. I have seen prices and wages started to drop but it will take more time. If oil goes back up....well then that will restart the whole thing all over.

What I consider smart is not to base your economic future on one commodity. And when you have a commodity that's non-renewable, get maximum value from it. And save some of it to cushion yourself when the inevitable bust happens.

Just because one of our commodities provides an export value almost three times as much as all of BC's export value, that does not mean that we have no other commodities. Again...please look at the numbers before you make such statements.

[Accountability Now]

If they were being honest about things, there would be some reflection on how they've blown their oil wealth and how they've allowed themselves to become utterly dependent on a non-renewable resource

Blown wealth? No...the wealth is in the hands of Albertans. No sales tax, low corporate tax, low personal income tax, etc. Up until recently we had no debt and a 12B trust fund but Redford decided she wanted to maintain her seat as Premier so she bought the unions and put us on an unsustainable budget.

Look at the statements that have been made about Energy East. It's as if approving Energy East is going to offer some way out of today's problems. If Energy East were approved today, it wouldn't be done for another 10 years! Unless the price of oil jumps, it will never be completed - there won't be enough of an oil industry left.

No...the discussion about Energy East or should I say 'pipelines' is not TODAY's problem at all. The idea of Pipelines (Keystone, NG, etc) has been in discussion for a while now however it seem to be a bit more emotional now that the oil industry is hurting and we now have a Mayor from a province that is a continual taker from a national program but doesn't seem to want to contribute to this national item.

Nobody is pouring billions of dollars into sludge mining unless they're confident the price of oil is at least double its current price.

That's weird. Suncor just spent BILLIONS on the takeover of Canadian Oil Sands. Man....they must be stupid hey? They even paid 12% more than the original offer.

http://www.bloomberg.com/news/articles/2016-01-18/suncor-and-canadian-oil-sands-to-combine-in-4-6-billion-deal

[eyeball]

Blown wealth? No...the wealth is in the hands of Albertans. No sales tax, low corporate tax, low personal income tax, etc. Up until recently we had no debt and a 12B trust fund but Redford decided she wanted to maintain her seat as Premier so she bought the unions and put us on an unsustainable budget.

So why does Alberta need a bailout from Trudeau's Government? Shouldn't you people be bringing your tax revenue into line with other provinces first?

[Big Guy]

Looks like the feds might decide to send more bailout money to Bombardier:

http://news.nationalpost.com/full-comment/andrew-coyne-bombardier-bailout-just-more-of-the-same-old

The Quebec government has recently given $1.3 billion to Bombardier to keep it functioning. It appears that it may need more. If the feds send that kind of money then the folks in Alberta may feel that they too deserve some help.

[Accountability Now]

So why does Alberta need a bailout from Trudeau's Government

Which bailout are you referring to?

[ReeferMadness]

Fair enough....but again the price of oil has many times been below $40 for long periods of time and guess what...Alberta didn't vanish. As I said before, if oil stays low for long enough then salaries and other costs will have to restructure. Just last month, all public servants had their wages frozen. That's a first step but a better step will be a claw back in wages like most oil companies are doing.

The price of oil was around $20 per barrel (inflation adjusted dollars) for decades and the oil companies did just fine. So, what happened? As with any resource extraction, the cheapest and most valuable resources are extracted first, leaving the most expensive, least valuable resources in the ground. Technology improvements help but inevitably, the cost of extracting resources grows over time. The real problem with oil production is that the EREOI (energy returned on energy invested) inevitably sinks over time. I don't know of any peer reviewed numbers but I have seen figures for bitumen EREOI as low as 3:1. As you approach 1:1, you reach a point at which production will become uneconomical at any price.

Slashing wages to protect your economy is a lot like staying warm by ripping boards off you house and burning them. You're just cannibalizing one part of your economy to save another.

I guess you missed or chose to gloss over the part where Alberta's participation rate and employment rates are the highest in the country....not just above BC. So what excuse do you want to provide for each of the other provinces?

I didn't speak to the rest of Canada because I don't know enough to speak to it. I would say that Alberta has (over the last 20 years) attracted younger economic migrants, which would also drive the participation rate up.

Yes...the pendulum should also bring the costs inline with numbers that are more conducive to a sustainable industry. Of course the largest difference here is that the Cod literally went away....oil will not.

I think you have that backwards. Cod are renewable - unless they become extinct. Oil is not.

I always love it when the people I debate post links that prove what I am talking about. Look at the numbers in Chart 2. Out of $121.4B in exports, Crude and Gas is 90.1B which means the remaining industries are 31.3B. Take away the 1.6B for reminded petroleum products if you want and we're still just below $30B. Do you know what the complete export numbers are for BC....35B. Of course, if we are removing fossil fuels from the picture then I guess we would get rid of BC's coal and NG exports which is 17% (~6B)....so the correct total would be around 29B. HMMMMM....the same as Alberta.

http://www.bcbc.com/content/1602/A%20Primer%20on%20BC%20Exports.pdf

Again, I ask. What will these exports be? I lived in Edmonton and I know that a LOT of 'non-energy' economic activity is just spin-offs from the oil industry. Atco trailers for rig pigs. Nisku. Refinery Row. What would REALLY be left without oil? Agriculture. Some softwood. Edmonton has a small biotech industry.

BC has a diverse economy. And in addition to exporting stuff, it imports money. In the form of retirees, immigrants, the film industry, tourism.

And no, you can't deduct coal. Most of the coal mined in BC is metallurgical coal.

The way I view it is like the Oilers of the old days....sure we had Gretzky who was a legendary all star however we also had a team full of other really good players who were able to carry the team when Gretzky left. Of course oil will never get upright and leave the way Gretzky did.

I gave up the ENTIRE oil industry in that calculation. You don't think that's far fetched enough so now you're coming after a few extra percentage points. Fine take 30-40%. Still not horrible. The fact is there is life here other than oil.

lol. You want to use the Gretzky example? lmao. I used to be an Oilers fan - the Gretzky sale was one of the things that soured me on the game. It became all too apparent that the game was less about sport than about money. So, now I only watch when the Oilers make the playoffs.

I don't watch a lot of hockey.

Again...oil has been at $30 for long periods of time before. Its possible if prices start to adjust to reflect the new price reality. Everyone was still charging 'oilfield' rates up until recently. I have seen prices and wages started to drop but it will take more time. If oil goes back up....well then that will restart the whole thing all over.

Just because you could produce oil for $30 30 years ago, doesn't mean you can do it today. The real new reality is that the oil you have left is less valuable and more expensive than the oil you had. And that's a trend that will continue.

Just because one of our commodities provides an export value almost three times as much as all of BC's export value, that does not mean that we have no other commodities. Again...please look at the numbers before you make such statements.

And I keep asking what those other commodities are.