Aspiring assassins miss their target
Those noted market analysts, Elizabeth May of the Green party and Yves- François Blanchet of the Bloc Québécois, whose parties won the votes of one in seven Canadians and one in 35 Albertans last fall, have decided on behalf of all Canadians, including Albertans, that the country’s oil and gas sector is dead and therefore not deserving of further support from Ottawa or any other government. “Oil is dead,” declared May on Wednesday. Blanchet then chimed in, saying that “oil is never coming back” and that “putting any more money in that business is a very bad idea.”
They didn’t say, as John Cleese might have, that, “This sector is no more. It’s kicked the bucket. It’s shuffled off its mortal coil, run down the curtain and joined the bleedin’ choir invisible. It is an ex-sector!” But they were clear and emphatic that oil and gas is not coming back and therefore has no claim to public support.
In some people a peculiar side- effect of the COVID-19 pandemic is an overwhelming belief in their own clairvoyance. May and Blanchet clearly have succumbed. By contrast, people unaffected by this syndrome might reasonably wonder what the future holds for the oil and gas sector, given the current lockdown- turndown and, on top of that, the knife fight between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman over who will rule the world oil market.
The sector has been through tough times before and has always bounced back. Today’s times may be the hardest yet so perhaps it really is doomed. But if its demise is brought about by world oil prices descending to levels ( in inflation-adjusted terms) not seen since 1973, that hardly suggests imminent global weaning from this extremely useful and now also extremely cheap fuel/ industrial input — which means there may yet be a market for supplies from a country less given to sudden policy swerves than Russia or Saudi Arabia. In a springtime of unprecedented uncertainty, waitand- see therefore seems a more sensible diagnosis than a certain declaration of death.
For all of May and Blanchet’s gloominess, it would be wrong to ignore what is in fact very good news embedded in their remarks’ implicit logic. For they both seem to be saying that if the market decides an industry is defunct, that industry should not be deemed deserving of financial or presumably any other kind of support from government. ( Except perhaps emotional support: May said, “My heart bleeds for people who believe the sector is going to come back.” For what that is worth to them.)
If this formulation were to become a governing principle of Canadian public policy — that if markets determine an industry has no future, governments should let economic processes run their course — our country’s economic prospects would improve markedly. Healthy industries no longer would be taxed to keep moribund industries on permanent life support. If private capital wants to keep its money in the oil and gas sector or even put more money in, fine, let it. But if private capital doesn’t see a future in it, then expropriated funds — for taxation is a form of expropriation — shouldn’t be sent in to take its place.
To give but one example, for years the market has been telling everyone with ears to hear that
Quebec’s shipbuilding industry is uneconomic. The sector has gone through one government-arranged and - financed takeover after another, decade upon decade. I hope we will soon see a press conference in which May and Blanchet jointly declare that, “This industry is dead. Our hearts bleed for people who believe this sector is coming back. But putting any more money in this business would be a very bad idea.”
Of course, one difference between the short- term downturn in the oil and gas industry and the decades-long downturn in Quebec shipbuilding is that politicians have not consciously conspired against shipbuilding. By contrast, May and Blanchet’s analysis of the oil and gas sector is more like Lady Macbeth’s and her feckless husband’s analysis of the state of health of poor King Duncan: “His Majesty is looking poorly. You don’t suppose it could it have anything to do with the poison we have poured in his ear?” When May and Blanchet say the oil and gas industry is dead, what they really mean is that they and their activist friends, after many years of demonizing its output and strangling its access to markets, have now managed to beat the life out of what was and probably still could be a perfectly healthy economic agglomeration. When May says her “heart bleeds” for people in the industry, understand that it bleeds crocodile blood.
No mortal knows how the world will evolve. Perhaps, over time, as non- fossil fuel technologies improve and enviro- guilt becomes universal, even in developing countries, people ostentatiously practising fossil-distancing will eventually reduce world demand for oil and gas. If so, markets will see to it that marginal producers go out of business and resources once dedicated to fossil fuel production move on to other pursuits, including, in the case of many workers, retirement.
Until that time, reports of fossil fuel’s death are premature, even from its would-be assassins.
understand that (May’s heart) bleeds crocodile blood.