We Need Control Over Everything to Protect You From The Imaginary Hobgoblin We Have Created


       Do not think about, write about or deal with  human behavior without determining the effects of incentives. It’s not their money, of course they’ll waste it.

“The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” H. L. Mencken

     They say zealous, I say hysterical.

Peter Forster
National Post – (Latest Edition)

If wind and solar were uneconomic when oil was $100 a barrel, they are wildly uneconomic now


   The real hysteria occurred when oil was $140/barrel. Scenarios were presented where the last capitalists, who are responsible for every wrong, ever, gathered around the last barrel of oil, bidding for it with the last of their ill-gotten lucre.  Naturally, wind and solar would have saved us.

Adecade ago, Houston investment banker Matt Simmons (since deceased) received a too-respectful hearing from a bunch of Harvard alumni in Toronto for his theories about “peak oil.” His take, outlined in his book “Twilight in the Desert,” was that the Saudis, the world’s largest producers, had been lying about their reserves, which were on the point of catastrophic decline. He predicted oil prices would hit $200 a barrel by 2010 (all prices in US$). His “solution” was Soviet levels of control of people’s lives. Simmons confirmed that peaksters neither understand nor like markets, which he described as a “500-pound wrecking ball.”


    This is the typical Elite position. “Only We know how bad it is. Only We can save you. Trust Us.”

Canada acquired its own peak fanatic in the shape of Jeff Rubin, sometime chief economist at CIBC, who provided further proof that anti-consumerist moralism could quickly drain all traces of Economics 101 from even a professional’s noggin. In the fall of 2007, Rubin predicted $100-per-barrel oil, and sure enough, oil soon hit $100. In January of 2008 he was predicting $150 oil within five years. It almost reached that level within a few months. On a roll, he predicted oil at $200 by 2012. Oops. Given Rubin’s prediction record, it takes some gall to suggest, as he did this week in a jointly authored article with David Suzuki (who once described economics as a form of brain damage), that Stephen Harper had been guilty of overestimating the potential of the oil sands, and was thus personally responsible for the Alberta boom that has now gone into very sharp reverse.

“For almost a decade,” declare Rubin and Suzuki, “Canadians have been told massive expansion of Alberta’s oil sands would be the engine of economic growth as the country rode a wave of soaring oil prices during the government’s early years.” But hang on, who projected a “wave of soaring oil prices”? Oh right. It was Jeff Rubin. Nor did the PM put the Canadian economy’s eggs in one basket (as Justin Trudeau also likes to claim). The economy has lots of baskets. The contents of the oil basket are just looking a bit scrambled at the moment.


    The hidden conceit behind all of this is that the government knows and can control which “baskets”  of the economy deserve attention and that the government can put eggs in them.

Rubin and Suzuki’s main target is Harper’s climate apostasy. They castigate him for pulling out of Kyoto (rather than meeting its targets and destroying the economy), muzzling scientists etc. etc. Their most flat-out hilarious line is that “Science forfeits all credibility when it is filtered through ideological lenses.”

Their assessment that the expansion of the oil sands is in severe doubt, along with the need for new pipelines, is hardly insightful, but the implications of the oil glut are even more deadly for their own green fantasies than for the oil patch. And they raise more serious questions for opposition leaders in the run up to the federal election than they do for Stephen Harper.

Certainly, a slumping oil price has ramifications for budget balance, but oil revenue constraint is going to be a problem for whoever wins in October. The problem becomes potentially catastrophic if the oil industry is viewed as a carbon cash cow when it is on life support.

The perversities of such an approach are already unfolding in Rachel Notley’s Alberta. As the Fraser Institute’s Ken Green pointed out on this page on Wednesday, Notley’s “vision,” as laid out in her government’s Climate Leadership Discussion Document, is short on references to the oil sands even as it seems to expect them to provide the funds for a “transition to a knowledge-based, lower-carbon economy.”


     Notley is a new-elected statist who has decided that her jurisdiction, Alberta, “needs” a new kind of economy. This will result in government support of all kinds of silly, unproductive enterprises as the interventionists decide what will be useful. Watch for the waste.

This is fantasy. Oil sands producers are being crushed by a discount below slumping West Texas Intermediate prices that are themselves the lowest in six years. Western Canadian Select is selling for an average of $24 a barrel, nowhere near covering production costs for many producers, as a report this week from TD Economics made clear.

Companies are being forced to slash budgets, cut staff, renegotiate loans and sell assets. It is widely reported that some big oil sands companies may be “vulnerable” to takeover. The question is: who wants to buy a big oil sands producer if we are in for an extended period of low oil prices?

Looking at the bigger picture, however, none of this is bad news for the oil-fuelled global economy. Indeed, it is great news. Which makes it very bad news for the climate industry and its pet technologies, not to mention the climate conference due to take place in Paris at the end of this year.

Not enough people seem to have noticed that if wind and solar were uneconomic when oil was $100 a barrel, they are wildly uneconomic now. To try to force manufacturers off oil and gas at current prices is suicidal. To try to force developing countries off fossil fuels is positively immoral.

As noted, the off-oil visions of Notley and co. depend on oil knitting the rope for its own extinction via higher corporate and carbon taxes. But what’s an extra 20 per cent of nothing, or a doubled carbon levy if it represents the last fiscal straw?

At the root of the oil price collapse, apart from the stumble of China and the U.S. tight oil boom, is the decision by the Saudis – you remember, those guys who were meant to be in their twilight years – to open the spigots.

Many suggestions have been put forward for their motivations, including a desire to take on the U.S. tight oil producers and retain “market share.” In this scenario the oil sands are a subsidiary target. But retaining market share is nonsensical if it reduces overall longterm revenue. The Saudis obviously expect the price to rise again, and they have the ability to bring that about. The question is when.

So here’s another not-entirely paranoid suggestion about Saudi motivations. The Saudis are obviously none too keen on a “carbonconstrained” future, so, by opening the oil taps, they are further undermining the already stumbling climate juggernaut. Their real target is not the oil sands, it’s Paris: Twilight over COP 21.


    COP 21 is the forthcoming Paris conference where the Elite will hammer out a program to deal with an imaginary hobgoblin, Global Warming. There’ll be lots of fine dining on the taxpayer’s dime. Goose liver is brain food, don’cha know.

Fort McMurray thus represents collateral damage. According to Rubin and Suzuki “Mr. Harper’s carbon-fuelled energy agenda hasn’t worked out and that’s put the Canadian economy in precarious shape.” But Harper didn’t force development, and the oil industry has remarkable powers of survival. Meanwhile deep green Rubinomics, Suzukinomics and Notleynomics – which is also embraced by both Tom Mulcair and Justin Trudeau – all threaten to bend the Canadian economy entirely out of shape. And if a revenue shortfall should emerge before the election, don’t blame Joe Oliver or Stephen Harper, blame Riyadh. Also, the Conservatives know what to do when revenue declines, and it’s not to increase spending.


    The gap between what politicians think they can do and what they accomplish is so wide it defies description.

Government Job or Respect–Which’ll It Be?
Cheerio and ttfn,
Grant Coulson, Ph.D.
Author, “Days of Songs and Mirrors: A Jacobite in the ‘45.
Cui Bono–Cherchez les Contingencies


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