Saturday, May 26, 2018

Canada what the hell are you doing?

An oil (and gas) company has many parts. It is a very complex operation that brings a drop of oil or a puff of gas from microscopically small holes (pores) in rock sometimes several 1000s of meters below earth’s surface to a gas tank near you. Very few companies are sufficiently integrated to encompass the entire operation; companies like Shell and ExxonMobil. The long term thinking and scale of these companies are required to execute large projects such as offshore drilling or development in the Arctic.

Canada’s oil patch is not of this scale. Neither Suncor nor Canadian Natural Resources nor Encana are of sufficient size to even come close to these behemoths.  But size is not all, and the Shells and ExxonMobils of this world are also the bureaucracies and leaders in political correctness that would spell nightmare for the many Canadian oil patch workers that are used to companies producing 3000 barrels of oil per day or less. We consider a company large when it produces 100,000 to 200,000 barrels per day, such as Vermillion or Whitecap. We consider companies such as Canadian Natural enormous and they are producing nearly 1 million barrels per day.

How much again is the U.S. producing?  O yeah, close to 10 million barrels per day. And the world consumes now close to 100 million barrels per day.  So, let’s not under estimate the importance of Canada, Canadian Natural, or Suncor for that matter. We are big players and one of the few that is environmentally responsible, and we are a democracy. In many ways, we have what most people on this planet can only dream of.  We are a resource world power, especially when you also include mining and agriculture (approx. 38% of our exports). That with barely 37 million people. Does anyone still think that Canada’s automobile industry (14% of exports) or Bombardier are our country’s main economic drivers?   Wake up to reality.

Yet, the bulk of Canada’s oil patch are small, nearly mom-and-pop operations. Often started by someone who is your neighbor. We have literally hundreds of little oil companies and when trading on the stock market, these outfits are at the mercy of speculative investors who are in-and-out for the quick buck. This makes many of those companies fly-by-night operations that are likely to go broke in the next downturn whose assets are then picked up by another ‘group of friends’.  A small group of people backed by some pension fund, another source of capital, or just financed by the remortgaged homes of these people.  It is the dream of many geologists, engineers and landmen to have their own little oil company – numerous bite the dust. This is what, in many ways, forms the basis for Alberta’s entrepreneurial spirit. During downturns in Alberta you see many small business start-ups – often not oil and gas, but technology or just coffee shops and whatever you can think of. The ashes of the last boom are the foundation of the next upturn and THIS does create a more diversified economy rather than big bureaucratic government subsidies. 

The problem is, we don’t have a large population and thus the market is not large enough to also have a large manufacturing base. If you think that 37 million people doesn’t amount to much, then what about Alberta’s 4.5 million in an area that covers most of Western Europe? We cannot also be the manufacturing hub of North America.  Yet we supply an enormous per capita economic output. The passion of Alberta’s people to achieve their entrepreneurial dreams is unrivaled - demographically we are the youngest in the country if not on the continent. And spiritually, I sometimes think we are even younger yet. People from everywhere in the world are betting on us.

But now, it seems that we have lost our way. We got infected by the malaise that many older demographic areas have. Because we are thinking that we need governments to take care of us. That it is no longer ‘Us the People served by the government’ but ‘Us the people serving the government’.  Not only Alberta but Canada copies more and more the malaise creating government policies of Europe.  We create regulations for everything and make it nearly impossible for someone to do things on their own. Calgary’s bureaucracy demands familiarity with its ever more intricate rules for home construction that only larger developers can afford. There is no longer room for the builder that does 1 or 2 construction projects per decade. You must hire ex-City Hall workers to get you through the paper work.

The financial and regulatory paperwork to get an oil or gas well drilled is enormous and it paralyzes our entrepreneurial spirit. It will destroy the small operator. It will prevent us to start our own basement enterprises because everything needs to be checked and approved by the ever-larger bureaucratic machine. This will sap the energy out of us all. High-Tech, is one of the few areas left with some room for entrepreneurial spirit.  What is your chance to start your own coffee shop and compete against Star Bucks?  Where is the innovation coming from?  Where is the opportunity to try your own ideas without being trapped in this paralyzing network of rules and procedures? 

Are we consumers in need of so much coddling; can we no longer look after our own finances that the Federal Government invents such restraining policies that nobody can qualify for a mortgage?   That these rules, intended to protect the buyers in Vancouver and Toronto damage the real estate markets in the rest of the country?  And the enthusiasts who bought at the peak of the markets in those cities (Toronto and Vancouver) have lost their home equity and more because of those same regulations that were supposed to have protected them. The unintended consequences of these sweeping regulations and stultifying bureaucracies is sucking the life out of the citizens that our government claims to defend while the pork barrellers eat greedily at a bottomless public through. Canada went from virtually balanced budgets and even surpluses to a $19 billion annual deficit in less than 4 years! Not counting Alberta's.

We created such an amorphous set of rules that, projects such as the McKenzie Pipeline, Keystone, Canada East and Northern Gateway prove that it is nearly impossible to build anything of scale in this country.  I think, if we would even try to build Canada’s Pacific Rail Way today, the nimbies would never allow it! And if it weren’t the nimbies it would be ‘First Nations’ or it would be the reactionary environmental crowd. We are now in such dire straits with Trans Mountain that something that was to be funded with private equity is about to be nationalized for the ‘good of this country’.

Canada can’t you see what is going on?  Can’t you see how you are poisoning yourself? Why do you think that so many first-generation millionaires are libertarians?  Because they know how stifling this society has become. How angst-driven and risk-averse our country has become.  The danger of the Deep State is much greater than globalization. Look no further than the absurdities of our inter-provincial trade barriers. Canada do you really think that the Deep State only exists in the U.S.?  Our swamp of pork barrelling bureaucrats and politicians makes up an even larger proportion of our economy. Do you even know how much of every dollar you earn goes into the bottomless government coffers? And it goes towards those that create this endless maze of rules and political correctness.

Today’s Canada is not the Canada of free entrepreneurial enthusiasm that so attracted me in the early 1980s.  I now see a stifled and repressed society that needs to apologize for every wrong in its history. Yes, sexual harassment and assault are reprehensible but what about the public ‘internet lynching’ of people whose guilt has not even been proven yet? One wrong word and your reputation is destroyed in the name of ‘social justice’.  Canada learn to trust again in the human decency of your neighborhood; learn to love again the entrepreneurial spirit of risk taking; self-reliance and self-accountability. End this nightmare of stifling bureaucracy and exaggerated polutical correctness.

Tell your government that enough is enough. We don’t want to live in blissful lack of accountability for our own actions in a Big-Brother 1984 Orwellian nightmare including New Speak.  Merry Winter Season?  Or Winter Solstice?  What about: Merry Christmas? Oh… the fearsome and loathsome associations that inappropriate word has!  And we all know that elves are just an adaptation of the Dutch St Nicolas and his servant Black Peter.  So racistsand insulting! Let’s get rid of Silent Night Holy Night while were at it – such an insult towards Muslims; not to think of Buddhists and of….  Canada Wake Up and see what is really going on!

1 comment:

  1. Today the Federal Government announced that it indeed will nationalize the Trans Mountain Pipeline. After years of contorted and unworkable policies, they and the provincial governments pushed themselves in the corner and need to bail themselves out at tax payers expensive. I guess, Our governments keep pushing private enterprise further and further away and interfere ever more into the private lives and endeavors of its citizens. Well, at least we have now a tidewater pipeline by 2020 or so.