Now, wait a minute here, but I thought that *rapid growth* was supposed to be bringing us increased prosperity, not making it harder to balance the budget? Shouldn't "rapid growth", as Alberta has been touting and promoting for the last decade as essential, be helping to work towards bringing down the budget deficit? Shouldn't it be helping to balance the books? If the oilsands are so valuable, and provide so much return on investment how could this be? Oh, we need schools and stuff? No shit. That's overhead for the needed workers, etc.
So is Alberta now implying that it needs slower growth to balance it's books? Because, slower growth has been the latest excuse as to why it can't balance it's books. Hmm, it seems to me that maybe what should be cited for the reason is the unviable cost of producing the oilsands in the first place. That's a hard sell though, isn't it? How exactly would you tell a province that for 30 years there really was no long term plan at all? That all of the decisions were made on the assumption that oil prices would rise exponentially forever and that now that all of the eggs are in one very weak and expensive basket there is really no way out other than to continue pretending that a sustained price of over $120 / barrel is possible in today's economic climate. Don't worry folks, it's coming - Alberta the self-proclaimed demi-gods of deficit slashing will make it so. As we all know it was Alberta's "conservative" policy making which put it in to a temporary surplus and not the oil in the ground combined with favorable market conditions. Thinking circumstance has lead to our situation would just be silly, wouldn't it?
The "cost of rapid growth" translates to "overhead". The overhead of developing the oilsands outweighs the return we get from them. This has always been the case, what masked this (as I have repeated on this blog at least 1000 times) was that the price of oil was rising quickly and exponentially. This played out in our little Albertan reality by hearing the government always raising it's target price for oil. When it was $40 that was expensive, but then not enough, we need $70. By the time $70 hit that was quite expensive, but not enough.. we need $90, and so on and so on. We've always needed a higher price because the return we get when the price of oil isn't constantly rising is complete shit in comparison to the amount of investment made.
The "labour shortage" is another aspect of this overhead. As a result of all this, here is Alberta's situation in a nutshell: Alberta is tearing up it's province with no collateral or proof it can be repaired, and the cost of repairing it is unknown, it may not even be possible. This destruction is being done in the name of jobs, but the jobs it's creating are for temporary foreign workers as Canadian workers are too expensive to pay when you look at the diminishing returns from the projects. These projects and jobs which are too expensive to fund are forcing Alberta to operate a power grid larger than any other grid in Canada and Alberta's power consumption due to the energy requirements for oilsands production are the highest in Canada resulting in an increasingly complex and unstable power grid. To counter the growing evidence these projects do not benefit Canadians in any way shape or form, more and more propaganda is pumped out to try and convince Canadians that the only way they can keep their heads above water in the future is to support them and that *eventually* they will pay off.
We've never been able to afford these projects of last resort, they don't produce a profit at all and can only be sustained temporarily and at a cost to the citizens. Now with oils steady rise over and done with, this is simply going to get more apparent by the day. So long as Alberta pursues the oilsands as a source of revenue, there will never be enough revenue to balance the budget from now on and it doesn't matter whether you like these projects or not, the fact of the matter is they are not in your best interest and never have been. The temporary benefits some Canadians have received from them were just that: 'temporary' - a function of the way the oil market was working at the time. Government officials through kickbacks and industry promises have put in a considerable effort to convince Canadians their concerns are being addressed and that these projects are in fact in their interest. Alberta's $25M "rebranding" is a great, albeit small, example of just how much of your money these politicians are willing to spend to convince you this is all in your best interest.
Lake effect 'smoking gun' in oilsands
"This study shows that we are seeing contaminants transported farther than people thought, and that needs to be considered in terms of the environmental impact."It's all just lies and misdirection, isn't it? The ones who will suffer the most is going to be Albertans themselves. THERE IS NO PROSPERITY AT THE END OF THE OILSANDS RAINBOW, NONE. Look folks, if you believe there is prosperity coming from these things then lets prove it: Stop all subsidies and gas writeoffs, enforce all environmental laws with strict repercussions and we'll see just how prosperous they really are. Sink or Swim? I bet sink.
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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading.