Big Oil’s reign over Canada threatened by twin events

The Suncor Refinery outside of Fort McMurray with the Syncrude Refinery visible in the background. Greenpeace, Colin O'Connor.
The Suncor Refinery outside of Fort McMurray with the Syncrude Refinery visible in the background. Greenpeace, Colin O’Connor.

Big Oil revelled in its dominion over Canada in recent years. Pushing against the ever-open Harper government door, energy companies burnt billions of dollars in Alberta, with the promise of major payoffs. The reign, however, is under threat, thanks to a confluence of two world changing events.

The oil industry soaked the country with promises. We are going to triple oil production! We will bring jobs and prosperity! We heard it from the boosters in the media and from the ad campaigns, sometimes paid with our own money. Even at your local movie theater, oil companies filled the big screen with treacly descriptions of tar sand development.

But it’s getting harder to keep up a brave face in the Canadian oil patch. First, crude prices are cratering globally, squeezing returns in the massive tarry projects. Secondly, opposition to the expansion plans is mushrooming, part of a new global movement in which Canada is playing a key part.

“There is something happening
out there.”

The oil industry is facing not one but two perfect storms — a collapse in oil prices and surging opposition to what the industry wants to sell to the world. People are increasingly appalled by the tar sands on many levels:

- The ripping up of the local landscape;
- the risks of shipping a dangerous product across aquifers, streams and  mountains;
- the damage its doing to the overall climate by increasing greenhouse gas emissions.

People in Canada and globally don’t want to take it anymore. “There is something happening out there,” John Bennett, executive director of Sierra Club Canada told CopyCarbon, noting how opposition has been rising at the grassroots level, perhaps even, finally, emboldening politicians.

Keith Stewart, a campaigner at Greenpeace Canada, agrees environmental activism is growing across the country, thanks in part to the Harper government’s rewrite of environmental laws to a point where people don’t believe they have a voice. They are rebelling at the idea that government has become an industry cheerleader rather than its referee.

“I think people have never been more mobilized than they are today,” Stewart said in an interview.

And Canada’s awakening can be seen as part of a global movement called “Blockadia,” a phenomenon Naomi Klein explores in her well reported book, “This Changes Everything.”

”Blockadia is not a specific location on a map but rather a roving transnational conflict zone that is cropping up with increasing frequency and intensity wherever extractive projects are attempting to dig and drill, whether for open- pit mines, or gas fracking, or tar sands oil pipelines.”

A pipeline runs through it

Let’s look at why this has all come about.

Big Oil has been in a maniacal hunt for hydrocarbons in recent years, glorying in its feats of technological breakthroughs, wringing oil and gas out of reluctant reservoirs. In Alberta, the industry exploits the massive reserves by pissing away millions of gallons of water and fonts of natural gas.

Canadian Prime Minister Stephen Harper. Photo by Mark Blinch
Canadian Prime Minister Stephen Harper. Photo by Mark Blinch

Stephen Harper’s government is a big fan. Harper and Co. have rewritten the environmental review book, lobbied in capitals – especially in Washington — and even used the country’s spying apparatus to help the industry.

This is an industry that is not exactly helpless. They are making more money than anyone else in the history of money, to borrow a phrase from the trenchant greenie Bill McKibben. They gorged on heady prices with crude oil at more than $100 a barrel. Yet many of these projects are risky not only to the environment but to the bottom lines of the companies because most need sustained high prices to be profitable.

But as we know the industry is subject to boom and busts. Right now it’s looking like a bit of bust. The United States is awash in oil thanks advances in the drilling practice of fracking, which is putting downward pressure on prices.

There is also the inconvenience of a slowing world economy. China’s galloping economy has been feeding on hydrocarbons but now growth is slowing, in part because of concerns over pollution from fossil fuels. The outlook in Europe is dire after never really recovering from the Great Recession in 2008.

Oil prices have dropped a staggering 20 percent and the main benchmarks, Brent and WTI, are flirting with the $80 a barrel mark. Prices like that will render many fracking and tar sands projects uneconomic. It will trigger a slowdown in Alberta and there will be pain in the province for profits, housing prices and the provincial budget.

But what is new about that? We’ve seen this kind of cycle before. Oil prices surge and crash the economy. Prices fall and stimulate growth, pushing demand back up, along with prices.

As part of this mindset, oil companies want to boost output from the tar sands, believing world demand will always be there, despite the roller coast ride. The catch is they need more pipelines to get the product to ocean shores – to the US Gulf Coast and to Canada’s Atlantic and Pacific coasts.

The economist Jeff Rubin, however, believes things have changed dramatically and he predicts the oil will be stranded with or without the pipelines.

“We’re now in a different world,” he wrote recently in the Globe and Mail. “At the root of today’s problem is global demand that is no longer growing quickly enough to support the prices necessary to keep expanding expensive unconventional sources of supply such as the oil sands. Lower prices will effectively strand those reserves regardless of the transportation options that may become available.”

Will the people change?

But if world demand eventually recovers, will we simply climb back on the same fossil fuel hamster wheel?

Maybe not, thanks to a green movement that is finally taking root in Canada as well as globally. Not so long ago, it wouldn’t be an exaggeration to call Canada’s green movement a tad sedate. People didn’t march in the streets too often, nor get themselves arrested on Parliament Hill. The movement has exploded in the United States of late, with big protests against TransCanada’s Alberta to Texas Keystone pipeline.

Pipeline protest in Toronto. Photo by Mark Blinch
Pipeline protest in Toronto. Photo by Mark Blinch

Indigenous groups have been at the forefront of the protests in Canada, with the remarkable Idle No More movement providing strong opposition to Harper’s extreme resource exploitation. But opposition is spreading to people from all walks of life, especially in British Columbia and in eastern Canada.

Take the city of Burnaby, smack up against Vancouver in an area known for its mountain vistas and not normally in national headlines. The city, however, is in a David and Goliath like struggle against a Texas pipeline giant, Kinder Morgan, to stop a $5.4 billion pipeline expansion. The city doesn’t want Alberta tar sands crude running through its city.

The Vancouver Observer said the dispute “could decide if Canadian cities have a say over the pipeline transport of high pressure, explosive oil from Alberta though highly populated urban areas, or whether the federal Harper government has the final authority.”

Burnaby’s lawyer, Gregory McDade, told a recent National Energy Board panel: “In any rational planning exercise, this is probably the last place that one would think to put a pipeline through a very, very congested municipal area.”

Farther to the north in British Columbia people are outraged over Enbridge’s Northern Gateway pipeline, a project to ship Alberta crude across the Rockies, rivers and a whole inventory of natural treasures that can’t be replaced if ruined by a leak, which happens all too often with Big Oil’s infrastructure.

Nathan Cullen, an MP for the New Democratic Party, said the project is galvanizing opposition. “Out of this struggle, we’ve seen a remarkable joining together of people from all walks of life: native and non-native, young and old, conservative and progressive,” Cullen wrote recently in the Tyee news site.

In Quebec, a few thousand people marched in early October against TransCanada’s Energy East pipeline, the plan to ship tar sands crude to the Canadian east coast. They want their whales, not crude spills.

The Energy East project plan calls for a terminal on the St. Lawrence River at Cacouna, Quebec to load supertankers from the pipeline that will course with more than a million barrels a day of Alberta crude. But the terminal would be located in a habitat of Canada’s endangered beluga whale population.

“The weekend showed that it’s obvious that the project goes against the common good and all principles of sustainable development,” community newspaper editor Yvan Roy said, as quoted by the Montreal Gazette.

In New Brunswick, the Liberals were swept to power in the fall on a promise they would say no to the oil industry’s fracking plans. They want to know it’s safe. And a candidate from the Green Party, which usually sucks at the polls, trounced the previous Conservative’s government energy minister at the ballot box.

Does it have staying power?

At dawn , Greenpeace took to Parliament Hill, armed with hundreds of LED lights to spell “climate fail” across the front lawn. Canada has failed to meet its Kyoto commitments and opposes an extension of the agreement.  Eye In The Sky Photography/Greenpeace
At dawn , Greenpeace took to Parliament Hill, armed with hundreds of LED lights to spell “climate fail” across the front lawn. Canada has failed to meet its Kyoto commitments and opposes an extension of the agreement. Eye In The Sky Photography/Greenpeace

This level of activism, centered on the opposition to the tar sands, is unprecedented. But can it be sustained?

“It is increasingly obvious to the public that the industry expansion of the tar sands in Alberta has been reckless,” Adam Scott, Climate & Energy Program Manager at Environmental Defence, said via email. “Air pollution, water pollution, disturbance of boreal forest and species, all of which are encroaching on the health, traditional territory and way of life for First Nations is increasingly common knowledge.“

“Even more encouraging is the growing understanding that Canada cannot meet any meaningful climate change target if the tar sands are allowed to grow unchecked. We either tackle climate change, or we develop the tar sands – we are making it clear that we can’t do both.”

Alberta’s tar sands now threaten the backyards of everyday Canadians and they clearly believe the risks outweigh the benefits. Why risk the drinking water, the natural habitat and just about everything else for a product people increasingly don’t want?

“The oil industry hasn’t learned that this isn’t merely a PR exercise either,” said Scott. “They keep throwing millions at new advertising campaigns to convince Canadians they are responsible, when their actions show the opposite.”

With the oil industry under pressure, some may panic that the downturn will doom the Canadian economy. Not true. Lower oil prices will mean a lower dollar and that will stimulate Canadian manufacturing again in central Canada, according to Robert Kavcic, senior economist at BMO Capital Markets.

“The combination of stronger U.S. demand, a weaker loonie and now lower oil prices plays right into the hands of exports and manufacturing, and of the economy that has lagged so far this cycle,” Kavcic said in a statement. “Estimates suggest that a 10 per cent decline in the Canadian dollar can lift real GDP growth by half a percentage point per year over two years, though the impact might be somewhat smaller now given a declining manufacturing share and loss of capacity since the Great Recession.”

solar_cells_home_roof_219433As well we have shot at building more sustainable industries, based on renewable energy that is in high demand in Canada.

“It’s folly to rely too heavily on extracting and selling finite resources, especially those that cause pollution and contribute to climate change and other threats to the environment and human health and survival,” David Suzuki, the world renowned environmentalist said in a recent post. “Canada’s economic growth potential through clean energy is huge, but it needs to be given the same priority government gives other industries.”

The experts, the realists and the greenies know we are entering a brave new world. Oil prices are weak because of global economic problems that look to be with us for a while. The protest movement, call it radicalization or people just waking up, is growing from strength to strength. These twin events could be transforming the world and Canada has much to gain if it plays its part and finally stands up to Big Oil.

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