written Aug 16 – 31, 2021
There are really, only two possible results with minor variations, a Liberal minority government or a Conservative minority. If you are looking for things to change, there is very small probability the N.D.P. and the Green party will achieve a minority government.
Whether or not the change I am talking about is positive or negative depends on your perspective. If you have a vested interest in oil sands production, the change I am proposing will affect you negatively. Everyone else will find the change positive.
Sadly, however, Canadians have set decades worth of precedence where continually choosing the same options has led to the same outcome, a high standard of living. Why would I say: “Sadly”? I am an inheritor of these decisions which has led us into this weird mix of fear and complacency, an attitude that will certainly fail us as change occurs. It is this fear and complacency that encourages us to return to our historically proven ways of governing so let’s have a brief look at why the old methods are not an option (and should have been eliminated a long time ago).
Okay, let’s talk a little bit about contemporary history and economics for a moment.
- In the early 1990s the oil industry was able to kill the electric car[1] and maintain their monopoly.
- In 2021, the electric car is here to stay as most (if not all) automobile manufacturers are now producing them.
- New combustion engines will eventually disappear, and modern alternatives will take their place because they are superior in every sense.
- The foreseeable rise of electric motors and eventual phasing out of combustion engines will inescapably impact the demand for crude oil. (“Yeah, so what?”)
- As seen in the 2020 chart[2], the last time demand for crude dropped, the price of oil plummeted (as one would expect), and the province of Alberta suffered; after it was clear that demand would recover, so did prices (with a little help from OPEC[3]).
- Decline in demand for crude is inevitable: this is not a hope (or a perception), it is GUARANTEED to happen. (My former clients would often attempt to have me give them a guarantee and I would never give them one)
- This time it will be different though. It is very likely that OPEC will not curb production, they may even increase it! “Why,” you ask?
- In 2020, hundreds of crude [4] producers in the US went bankrupt following the price collapse.
- What is the difference now? This time demand will not rebound; and what would you do with a near monopoly (like OPEC) when the pie gets smaller? That’s right…try to protect profits and force out competitors
- Canada’s average cost per barrel is around $US 27.00[5]
- Russia’s average cost per barrel is around $US 19.00
- Many Middle Eastern producers average cost per barrel is around $US 10.00
- Therefore, the future price of crude oil is likely to fluctuate between $US 8.00 and $US 25.00.
How long will Canadian’s be willing to support a dead industry?
Using the Asbestos[6] industry as an example, close to 50 years.
How long will our worldly neighbors be willing to accept Canadian hypocrisy? Due to inherit market mechanisms, the US carbon emissions will decrease long before Canadian emissions decrease on an aggregate scale (not to mention one based per capita).
Canadians’ willingness to help each is well known and evident through actions such as social supports. I suggest that we do not have to support Canadians. All Canadians can live an exceptional life, help others, heal the planet, and to prosper while doing it. Doing the same thing will yield the same results, but for how long? As noted above, the way we use energy is changing – whether you like it or not. We can adapt now and prosper from being proactive, or play catch up (if we can) and suffer environmentally and economically.
It is my hope to transition while the probability of profits[7] are greatest and the
risk in doing it is near 0.
Be seeing you!
[1] Who Killed The Electric Car?
[2] https://www.admis.com/quotes-charts-news/futures-charts/?bcpage=chart&sym=CLV21&domain=adm&display_ice=1&enabled_ice_exchanges=&document_write_alternative=&noform=true&op=y&studies=Volume%3B%3B&cancelstudy=&a=W&density=H
[3] https://www.opec.org/opec_web/en/press_room/5891.htm
[4] https://www.msn.com/en-us/money/markets/over-100-oil-and-gas-companies-went-bankrupt-in-2020/ar-BB1cVIG8
[5] https://knoema.com/nolsgce/cost-of-crude-oil-production-by-country-and-crude-oil-prices
[6] https://canadianlabour.ca/uncategorized/asbestos-canada-timeline/
[7] Economically, environmentally, socially, mentally, physically
