Oiling the path to growth

I find it interesting, read that as curious, that Mark Carney has chosen the week that the US has announced a likely resolution to the Ukraine/Russia war to for his own announcement on the curtailing of hostilities between Ottawa and Alberta. The twwo issues are very much tied together as is the third interesting development that happened last week. That was when the real leader of Saudi Arabia came to meet with the US President and formalize even greater strategic partnership between the countries.

It might be easy to see the how the US Saudi partnership and the Alberta situation might have similarities given the oil of the Saudi’s and Albertans. But why the cession of the Russian war signifies more than anything is a return to normalization of Russian oil in the market. Ultimately the two big players in the oil market are the United States and China. The United States both as a producer and consumer of oil, China predominately as an ever growing consumer.

The 20th century is a story of mobility. The early twentieth century was a time of transition in western countries. We were changing from literal horse power to horsepower of a kind generated in an engine by the combustion of fuels, mostly diesel and gasoline. Here in North America that change was dramatic. The freedom this mobility provided unprecedented, allowing for exponential growth as labour was no longer confined to hyper local businesses. The flights of labour to employment have redistributed populations both in Canada and the United States.

These redistributions have led to growth. I remember the early eighties when the older brothers of my friends were being wooed by the energy giants while they were at university. The recruitment at Waterloo for chemical engineers and engineers of all types was incredible. The oil centres in Alberta, Colorado and Texas sent representatives to fly prospective grads to their facilities showing off what could possibly be their new homes. They were not showing them the factory towns of the 19th century, they were introducing them to the upscale neighbourhoods and cultural scene that these communities had to offer. All easily accessible due to gasoline and the automobile.

The relative ease which our society transitions new technologies and the resources necessary for them is predicated on our ability to get labour to the resources and that is dependent on oil. Getting the resources to market is dependent on oil. Putting the finished products into the hands of the consumer, once again dependent on oil. Transportation of any kind is dependent on oil.

With the development of the oil culture was the strategic power of the Western Alliance. The US, UK, France, Holland, Norway and Canada all became the power brokers of the oil world led by the US. Countries who needed oil to grow the economies needed the support of the US or at least the tacit approval of their state department to gain access. Russia had enormous reserves but was restricted from the club to a great extent. They and countries looking to break the wests energy hold came up with an alternative. Electricity, and with it a reason to change, an existential threat to humanity, global warming.

Enter China and the electrification of mobility. Through their belt and road initiative and the willful blindness of the west, China rapidly garnered a monopoly on the minerals of electrification. They used their abundance of labour to create an ecosystem of cheap goods which the west became ever more dependent of while all the while using the wests money to develop a manufacturing base for the electrification of the worlds transportation. The magnets for the motors and the batteries to power these vehicles all monopolized by the Chinese.

Technologies in the vehicles developed by China also contain all the necessities of control a totalitarian government need. Self driving tech also mean that when you go somewhere you should not, the vehicle can turn around and take you where you should be according to the government. Of course this technology is not exclusive to electric vehicles, but imagine if we have fleets of Chinese electric cars that on a dime or whim of the Chinese government can be turned off or driven to a designated area of their choosing, that havoc that could create.

So I look at what is going on in the world. And I read what our fearless leader has written and how electrocentric he is, how anti US he is and how he is strategizing shifting Canada from the US sphere to China’s. And what with the industrial carbon taxes, anti-pipeline legislation, the restriction on oil shipping from the west coast, the acquiesence to Quebec in their refusal to allow pipelines accross their province to the still in force mandates to have electric vehicles in every drive by 2035 and wonder just how limited our liberties will be soon.

I also do not believe that any announcement later today regarding a new pipeline will result in one being built. The rhetoric coming from Ottawa these past few months has been about the lack of a business model to build a new pipeline to tidewater for our resources. While at the same time putting the governments seal of approval on more and more projects that support electrification in one way or another. Certainly a new hydro project in the far north makes great theater, but a natural gas pipeline across the territories would provide greater economic certainty and mobility as conversion from gasoline to natural gas for vehicles is not difficult. Building a natural gas fired electric plant is much easier than building a hydro plant. And more environmentally friendly.

A great northern pipeline would allow for development at an unprecidented scale in our far north. Bringing natural gas to the north would have far greater impact to our nation than a single small hydro facility. A twinned pipeline with oil as well would accelerate the norths development exponentially. Alas such dreams will never materialize. Development of the north will never be a priority of Ottawa.

And the soon to be current environment with Russian oil returning to market and the Saudis playing ball with the US as far as energy markets go ensures an oversupply of oil and NG for many years to come meaning cheap energy and a return to the dominance of the US petro dollar. Sadly the brief window that Canada had to win approval of the powers that be to build pipeline approvals is likely past. The only decision left it seems is which sphere we will remain in. I am not betting on the US sphere at this point.