Why Prentice took on the oil sands

Jim Prentice preaches responsibility regarding the oil sands

by Paul Wells on Friday, February 5, 2010 12:07pm - 112 Comments

Why Prentice took on the oil sands It wasn’t quite Daniel in the lions’ den, but it had a whiff of Nixon to China about it. Here was a senior Conservative cabinet minister putting the boots, at least rhetorically, to Alberta’s oil sands.

“It is no secret, and should be no surprise, that the general perception of the oil sands is profoundly negative,” Jim Prentice said the other day. “That is true both within Canada and internationally.” The environment minister was speaking to members of the University of Alberta Calgary schools of public policy and business. Right there in Calgary. The belly of the beast. Well, it was the Palliser Hotel, so it was the fanciest part of the belly of the beast, but still.

In his next sentence, Prentice seemed uncertain where to put either blame for the oil sands’ image or hope for its improvement. “We need to continue the positive work of industry, with investments in environmental technologies that will show the world how environmental responsibility and excellence can be taken to new levels,” he said.

But then: “Absent this kind of Canadian leadership, we will be cast as a global poster child for environmentally unsound resource development. Canadians expect and deserve more than that.”

A bit of a mixed message, then, but in the end it was Angry Jim who tipped the balance. “For those of you who doubt that the government of Canada lacks either the willingness or the authority to protect our national interests as a ‘clean energy superpower,’ think again,” he warned darkly. “We do and we will. And in our efforts we will expect and we will secure the co-operation of those private interests which are developing the oil sands. Consider it a responsibility that accompanies the right to develop these valuable Canadian resources.”

It was unusually strong language coming from Prentice. Indeed it may even wind up meaning something significant. “Nobody should be under the illusion that every single industry won’t be asked to do its part,” a senior government source told me. (Which means everyone should expect that every industry will be asked. These complex constructions can be tricky.) “The oil sands industry is going to have to do their fair share.”

And if anyone can ever be expected to ask the oil sands to do their fair share, it’s an Albertan Conservative prime minister with an Albertan environment minister. The Liberals tried leaning on Alberta oil for national policy ends in the 1980s and it ended badly for them. Whereas Harper would have some credibility at home on the issue.

But the question that remains unanswered because I don’t think the Conservatives know the answer yet is: fair share of what? The only reason to require significant green constraints on the oil sands, which after all contribute only five per cent of Canada’s total greenhouse emissions, is if the Harper government makes a serious effort to reduce emissions anywhere. Here, Prentice was ambiguous at best.
The government “will implement the Copenhagen accord,” he said. But he added a jumbo red-white-and-blue caveat. “We have consistently said from the outset that we must harmonize our climate change strategy with that of our greatest trade partner because of the degree of economic integration between our two countries.” So no action unless the Americans get their act together? Absolutely. “We will only adopt a cap-and-trade regime if the United States signals that it wants to do the same. Our position on harmonization applies equally to regulation. Canada can go down either road—cap and trade or regulation—but we will go down neither road alone.”

This wasn’t a warning to the oil sands so much as a heads-up: the industry’s future will be determined in Washington. Two very different outcomes are possible. Harper will not move against the oil sands, or anything else, on principle alone. If the Obama administration and Congress can’t implement a serious climate change policy, the oil sands will have a carefree future.

But if Obama and Congress do get a meaningful cap-and-trade system running, then neither will Harper spare Alberta industry on principle. There are public relations benefits in seeming to be green. Regional political opportunities, too. The Conservatives have more seats to gain in Quebec and Ontario than in Alberta.

Most importantly, Harper has never believed a Canadian prime minister can legitimately disagree with an American president on something important. He sends Prentice out to attribute this to “the degree of economic integration,” but it’s really just his personal credo. We’re different from the Americans in all sorts of ways that could conceivably affect competitiveness—tax rates, infrastructure spending, health care system design. We could have our own carbon policy, too. Harper won’t hear of it.

Well, he does show some independence. You can reach carbon targets by penalizing emissions or by investing in new technology. The Obama administration is outspending Harper’s government on renewable energy by about 14 to 1. Per capita. Which means if he does ever lower the boom on the oil sands, Harper will have to be that much more punitive. That’s the price of failing to match Obama in action while Harper hopes to match him in inaction.

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  • Jack

    Why isn't Canada stepping up with investments in new technology? Batteries, nuclear, wind, solar, etc ??

    • Holly Stick

      That is a good question. Maybe the answer is: Because the Government of Harper has emasculated itself over the environment

    • Holly Stick

      That is a good question. Maybe the answer is: Because the Government of Harper has emasculated itself over the environment

    • kcm

      Why subsidize the competition when the oil sands is a cheap and environmentally sound alter…sigh!

  • Dot

    Here we go with the NEP b.s. again. Say Peter, do yourself a favour and watch this Ralph Klein video I put together a couple of years ago. It does get tiring hearing these unsubstantiated claims. Are you too old to remember what really happened? Can you differentiate reality from the spin anymore?

    [youtube Op6XLJCXagk http://www.youtube.com/watch?v=Op6XLJCXagk youtube]

    • peter

      Dot, do yourself a favor, talk to some of the thousands who were wiped out financially. Talk to some of the speculators who had cash and were buying houses for a buck plus the mortgage. Reflect on who was president of the US and why interest rates spiked. Recall that Iran's oil was all but taken off the world market. Look at the forex rates, pay close attention to what happened to Mexico and recall the nascent NAFTA negotiations and the original Free Trade with the US. Sheelagh is far better at talking about books than incisive poilitcal interviews,,,was Ralph selling a book in the interview? Putting a happy face on the disaster that was calgary at the time?

      • Dot

        Peter, do yourself a favour and talk to someone who was hired along with many others in many oil and gas companies a couple of years AFTER the NEP came into effect. Oh wait, you are.

        I can recall doing evaluations on O&G properties where the internal forecast for oil prices extrapolated out to $100/barrel, in 1980's dollars. Everyone was using similar forecasts, joint venture companies, banks, gov'ts (provincial and feds as well). THAT is why there was a huge bubble that burst. NOT the NEP. And there was a world wide recession, btw, the deepest for quite some time before, and since. I don't discount the dfact that there were financial troubles – I sew the layoffs myself around 1986 that continued into the early to mid 90's until world oil prices recovered.

        • Dot

          Btw, one thing that is markedly different today from the 1980s is that demand for oil and supply is more closely in balance. The OPEC cartel no longer can just open the spigot and flood the market with cheaply produced light crude as it could in the 80s and 90s. Increasing demand from China, India, Brazil etc in combination of production capacity constraints (some adhere to the peak oil theory) has taken OPEC's price manipulation capability away from them. And therefore, the downside of any price runup/collapse as experienced in the 70s/80s is diminished, notwithstanding political uncertainty in key oil producing areas, and speculation.

          • phelgason@shaw.ca

            Opec's price fixing capacity has been overtaken by the commodities exchange in Chicago and it is twice as crooked as it ever was under opec, the downward push in oil prices throughout the eighties was greatly influenced by US ambitions to impoverish iran, then being attacked in a proxy US war by Iraq….in fact a good part of the certainty of Saddam's WMD was the fact that Rumsfeld et al had sold them to him.

            BTW supply and demand don't balance, they arrive at an equilibrium based on PRICE.

          • Dot

            Yeah, ok on the balance thing. But supply was artificially manipulated (as cartels are oft to do). So the equilibrium point was as well.

          • phelgason@shaw.ca

            Well, not really. After Iran/Iraq sort of petered out due to mutual exhaustion, the mechanism was in place for the full court press on Saddam as he had suddenly become a threat. Kuwait and other Gulf states began a massive over production to drive the world price down (in Kuwaits case with Iraq's own oil they were stealing with slant drilling on the disputed border) and then began a relentless series of demands for repayment of the money lent to Iraq during hostilities with Iran. In fact this was the EXACT cause of Gulf war 1. Meanwhile the Israelis and the US had set up an arms re-supply delivery system to the former Shah' s US bought military, the profits of which were used to buy dope, which the CIA and its assets dumped into the US urban market to buy guns for the Nicaraguan Contras (and sadly this is all one hundred per cent true and "on the record".)

          • Dot

            Well, you rare obviously better versed in geopolitics than I am. I checked with a site I have used in the past to highlight two tiered price for oil preceded efforts in Canada by the Republican White House early 70's. The later events more closely follows your recollection. Interesting (and I did btw see that 60 Minutes show where it suggested directional drilling across borders).

            http://www.wtrg.com/prices.htm

  • Neil from Calgary

    Um…I don't know if anyone else has mentioned this, Paul, but I think this week's copy of Macleans will feature a misprint. You see, while the University of Alberta is a venerable institution, the Environment Minister was actually speaking this week at an event hosted by the University of CALGARY's School of Public Policy. C'mon, man. Edmonton got the U of A, and Calgary has the U of C.

    For anyone interested in Prentice's speech, visit http://www.youtube.com/policyschool

    An otherwise good column yet again, nonetheless.

    • http://intensedebate.com/people/Inkless Inkless

      I'm really embarrassed about this. I've visited both schools several times. I actually do know the difference, or would have thought I did. Sorry to all concerned.

      • http://intensedebate.com/people/PhilCP PhilCP

        Therefore the poster on the wall of your office that is sometimes visible in the C vs W clips?

      • http://intensedebate.com/people/PhilCP PhilCP

        Therefore the poster on the wall of your office that is sometimes visible in the C vs W clips?

  • Stan Wright

    It's not just 'perceptions' of the oil sands that suck; the 'reality' is every bit as bad. This is the dirtiest oil in the world.

    • Dean

      Well Stan why don,t you go buy your gas from a nice place. Oh let,s say iran or Syria.

  • burlivespipe

    Somehow, the fact that Harper's so eager to turn over the publicly owned nuclear biz also seems to be a curious and curious hidden string to this fiasco… Wonder what Big Oil would do if they found some money behind their couch cushions?

  • Mike

    If we make developing the oil sands too expensive then companies will just go elsewhere to develop oil. Other countries have much lower environmental standards and large multinational oil companies don’t care where they make their money. I have seen it already where big companies are scaling back their oil sands development and going to other world locations that have less environmental regulation. If that happens we all lose. We lose the jobs here and 3rd world countries lose because of the increased pollution in their areas.

    • Dot

      A lot of the scaling back that you may have witnessed (postponing investment more than likely) in the oil sands developments has a lot to do with out of control costs – principly the labour but also inputs like steel etc. The industry appears to be taking a more measured approach with suspended projects reanounced with dramatically lower capital cost estimates. If the market heats up again to similar levels of projects all trying to build simultaneously, expect costs to inflate accordingly.

      • Martin Levenson

        "The industry appears to be taking a more measured approach with suspended projects reanounced with dramatically lower capital cost estimates. If the market heats up again to similar levels of projects all trying to build simultaneously, expect costs to inflate accordingly."

        This is exactly why the Alberta Tories can be justifiably criticized for mis-management of the economy. By approving oilsands development without reservation, they "created" (through omission of sound economic practices) a boom where the costs of inputs skyrocketed to the point where development was no longer financially sustainable. A better response would have been to allow sequential, rather than concurrent development.

        Admittedly, this may have provided an advantage to those who came later and were able to take advantage of more recent technological innovation, and thus may have provided a disincentive for the first developers of the oilsands. However, the Alberta government was more than generous with their "royalty holidays" which severly reduced royalty payments until development costs had been recovered.

        • Dot

          I don't disgree.

      • Martin Levenson

        I've always thought that the Alberta Tory's claims to "prudent financial management" were overstated; any party in power at the time would have reaped the financial and political benefits of the boom. It's like saying that Glen Sather was a "great" coach of the early 80's Oilers; any team with Gretzky, Coffey, Kurri, Messier, Anderson, Lowe et al would be expected to do well.

        • Dot

          They were prudent in the mid to late 90s. They lost it after that time.

          • Holly Stick

            There was a bumper sticker saying "Please Lord, send us another boom – I promise not to piss it away this time." Unfortunately we had another boom and we let Ralph piss it away.

          • Holly Stick

            There was a bumper sticker saying "Please Lord, send us another boom – I promise not to piss it away this time." Unfortunately we had another boom and we let Ralph piss it away.

  • Michele227

    Is it election time yet?

    What about now?

    I'd really like to vote Harper out of office before he does more damage to the environment.

    • Simon Says

      You really need to look in the mirror to see who is damaging the environment. Much easier to point fingers and feel good about it than actually doing some yourself.

      As far as an election goes at this point in time we have the leader we need.

      Have a good day and please do some more reading.

      Proud Canadian

  • Holly Stick

    Oh look, the Government of Harper is going to hire adnother American advisor. Who will it be this time – Inhofe?
    http://www.thestar.com/news/canada/article/761750…

  • Holly Stick

    "…But polls show that Canadians are tired of watching other countries lead the clean energy economy, and want those clean energy jobs to be created right here. Sooner or later, one of our federal politicians will tap into this mood, and propose policies to pull Canada out of its funk and throw ourselves into leading the next industrial revolution.

    Whoever does that well could ride the sense of relief right into a majority government…"

    http://www.environmentaldefence.ca/pressroom/view…

  • Holly Stick

    "…A search of Canada's Lobbyists Registry revealed that Environment Minister Jim Prentice met with some nine times as often with lobbyists from the oil, energy and other industry sectors than with environmental interest groups…"

    http://www.hilltimes.com/page/view/prentice-02-01…

  • Springer

    Meanwhile, this AGW mother-of-all-scams continues to blow apart at every seam, threatening to even take down its priesthood at the IPCC…and I could post umpteen dozen links to prove it.

    What really intrigues me is, why is it that the vast majority of Canada’s MSM, and journalists employed therein, apparently seem to think that there’s no story here? By far for the most part, it’s demonstrated an attitude implying, “Nothing to see here, folks. Now move along…”

    In Britain, the large dailies are finally starting to dig their teeth into this, reporting just today that the MET is now accused of blocking FOI requests regarding AGW. And an investigation into BBC bias toward AGW continues and threatens to get seriously interesting…

    Can anyone in Canada even begin to imagine the CBC coming under investigation for bias? Hell, for anything???

    Frankly, I’m just thankful beyond words to express that it’s not Libs, backed up by Dippers, who are at the helm in Ottawa and setting Canada’s environmental policies right now! What an unmitigated disaster that would be!!!

  • keith c

    Wells throws this in offhandedly near the end and it's quite the accusation:
    "Most importantly, Harper has never believed a Canadian prime minister can legitimately disagree with an American president on something important."
    Surely at this week's G7 Canada is taking quite a different take to the USA and europe on bank regulation / banker pay, for instance. I'm curious how Wells backs up this sudden lash-out in his column. Are we still talking about Harper's support of the Iraq war in 2002-3?

  • nic

    WOW you people are so disconnected from your country, from your forests. its sad, really.

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