The Great Oil War [Chapter 2] : Iran

In chapter 1 of what now may be considered the beginnings of a World-War III we discussed what was then the active military action against Libya. We covered economic hitmen and the typical approach taken by western nations to overthrow or at least get nations to play along with their game.

Of course there are many other skirmishes going on, such as Syria but for me it is Iran which gets a "chapter 2" due to the clear escalation it represents. Back in 2005 Michael Ruppert described exactly the scene we are seeing play out with Iran today:

I know it is 2 hours long but please do take the time to watch as it is extremely important material. As you can see there are no mentions of nuclear weapons in this video and clearly what is happening now has been building for a long time far longer than this "sudden" nuclear media spotlight threat from Iran. Iran of course is simply going to be another theatre war as was described in "Project for a New American Century"'s report titled "Rebuilding America's defenses". The nuclear threat is the same WMD bullshit we were fed with Iraq.

Understanding the concept of "theatre" here is very important. It is theatre for your consumption, like a hollywood movie. If you have been watching the republican debates, one you might find quite interesting is the debate specifically oriented around national security. First of all, to begin: why national security? Why not the economy? It seems to me that national security really only comes up when the mass media exadurates the threats coming from countries with resources, or drugs. Then notice that for some reason all of the questioning is about Iran. You'd think with multiple wars going on, North Korea's leader near death, and China quickly gobling up global energy resources that some of the topics might have also made the list of "national security"; but instead it's a full 2 hours of essentially descriptions of theoretical scenarios involving Iran and how the candidates would respond to them. And respond they did, my most memorable response was Newt Gingrich talking on public TV about how he would use covert operations. Let me ask you, if Iran was such an imminent threat to their national security then why would they publically be discussing tactics they've yet to deploy? Why antagonize a nation you are not yet at war with by talking as though you are? Why give them the heads up? You see it was all for you, dear reader. It was a big scary show put on to promote a war with Iran and to scare the viewers with all of the scary theoretical scenarios the media (government?) could dream up.

I'd like to show you an interesting contrast. Here is some lovely theatre fluff for your consumption put out by ethicaloil.org to promote the ethical oil brand at the expense of Iran, and on the back of 10 years of propaganda and lies. It doesn't hold back at all even mentioning 9/11. It's 100% advertisement.

Here is an objective article put out by Zero Hedge about the dangers of Iran and oil price. See the difference? One provides facts and the other? Well the other tells you all about how great ethical oil is because you know.. war sucks. Sorry.. "conflict" sucks. The HuffPost article is so incredibly filled with shit I'm surprised Huffington even published it. Let's disect this sucker!!!!

Not everyone cares about the conflict footprint that comes with oil from Iran's loathsome regime. Plenty of countries are content to patronize a government that not only brutally tramples basic human rights, degrades women, and persecutes gays, but also uses the currency it collects from oil sales to build nuclear weapons so it can threaten and potentially attack its neighbors.

This is a real gem of a paragraph, let's look past the obvious and skip the demonization introduction. I'm not a fan of Iran but that sentence is clearly there to set your mood for this article. Tacked on to the end after the first three crimes get you all angry is this: "uses the currency it collects from oil sales to build nuclear weapons so it can threaten and potentially attack its neighbors". Obviously the author is hoping that the introduction has numbed your critical thinking here as this sentence is clear propaganda. The mention of using "oil money to build nuclear weapons" is interesting. First of all: I wasn't aware that ethicaloil.org had access to Iran's financials and second: that's a lot of oil money they've spent to not yet have a nuke, don't you think? It's an assumption on speculation presented as fact. Finally the author insults your intelligence by implying Iran has been threatening to attack it's neighbors with nuclear weapons when they re in reality denying these weapons exist at all. Moving on.

When France's president, Nicolas Sarkozy, recently floated the idea of slapping an embargo on Iranian oil to pressure the mullahs to stop their dangerous and illegal nuclear arms race, he won support from Britain, but the rest of the European Union wasn't hot on the idea. They're just fine punishing ethical Canadian oil, but debated over punishing Iran's conflict oil.

Again, let's ignore obvious points such as the fact that there is a large ocean between us and Europe and the infrastructure to heavily douse Europe in Canadian oil doesn't exist anyway. What I find really interesting here is the idea implanted by the author that oil consumption at the moment is some sort of choice by these countries. For those who read this blog I shouldn't have to remind you that we only pump just under 2million barrels of ethical oil a day and I think it is safe to say that with the U.S.'s oil demand, and China.. Europe isn't getting any. Europe is demonizing our oil because it makes economic sense. They don't rely on our oil and they must appease those pesky environmental activists somehow. So they campaign against a product that doesn't impact them to gain popular support, just as ethical oil does against Saudi oil for popular support here. China is a brutal regime too, but we have no problem inviting them in and allowing them to use foreign temporary workers for staff.

But supporting conflict oil doesn't just mean promoting terror, persecution, murder, and war -- though it certainly does mean all those things. It also means promoting instability and risk. That's what the Europeans, and other importers of Iranian oil, are discovering right now. That's because the Iranian autocrats have declared that if the world continues to bring pressure to bear on them over their illegal nuclear program, they'll choke off world oil supplies by closing off the Strait of Hormuz.

The author doesn't know what "supporting terror" is, this is supporting terror with a direct result. Like I said, it is theatre for your consumption, dear reader.

In short, that could be disastrous to a world economy that's already perilously fragile. The Strait of Hormuz is the main channel through which Middle Eastern tankers transport oil for export from Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq. In addition, about 15.5 million barrels -- or a third of all ocean-transported oil and liquefied gas worldwide -- moves through the six kilometre-wide strait. Even for those countries, like the U.S. and Canada, who aren't clients of the Shariah oil state, the spike in oil prices that would be caused by such a major disruption of supply could be devastating.
This is what a world at the mercy of conflict oil looks like. It's a hostage situation. We either directly support the horrendous rule of the worst dictators on earth and, if we don't, they can cause the entire world great economic pain and, potentially, even spark warfare. As the National Post reports, Iran's decision could very well "trigger military conflict with economies dependent on Gulf oil."

This paragraph is almost true, if you remove one word "conflict". It should read: "This is what a world at the mercy of oil looks like". Somehow the ethicaloil.org author has determined that Canada's ethical oil production will have no problem reaching the combined oil output of "conflict oil" countries. Considering that Saudi alone produces around 9million barrels / day I don't think I need to tell you why this assertion is a slap in the face to your intelligence.

Most of the time the difference is psychological: It's about values and the fate of persecuted people in foreign lands. Once in awhile the cost of choosing conflict oil becomes very palpable and very direct; 9/11 was one of those times, when Saudi oil money was linked to Al Qaeda.

Here's the kicker... 9/11!!!! Mixed in with the last three paragraphs of ethical oil promotional lines.

I guess the author hasn't heard that a lot of American money was "linked" too:

To conclude, the momentum behind this war has been building for years. It's no surprise that ethical oil would take advantage of this situation but seriously HuffPost, WTF? The Iran situation is certainly dangerous, it is something we should all be paying close attention to. Last year I predicted that oil prices would bounce between $80 and $100 for the remainder of 2010 (turned out true, no?). This year with the Iranian, Chinese, and Saudi situations I think we will definitely see $150, I can't say whether or not Zero Hedge's $200 will happen, that seems a little high. If it does happen, oil will be so hard to find on the market that it won't matter I believe.

Occupy: Out with the old, in with the new

I'm happy to say that since my last post Occupy Edmonton is doing very well. Edmonton (and the whole world) showed tremendous support tonight. I dare say Occupy Edmonton is nearing the amount of critical mass it needs to carry forward as a major movement. But where to?

All around the world it seems this is becoming the next big question: What is next for the Occupy movement? Will they start political parties? Will they make demands? I've been thinking about it for sometime from a theoretical point-of-view.

Some of the people who I talked with might remember me saying that ending compound interest for instance might be a good demand. But as this week has gone on I started asking the question 'why should there be demands?' What the people are upset about is obvious. Forcing them to make demands is almost an act of submission in itself, just wrapped in a confidence bow. Sure specifics need to be provided, by why is all of the onus on the people to come up with a credible "societal equitable business plan" and present it to big business/government when they would have us believe they make the big bucks because only they know how to make the big decisions or plan the big plans.

Obviously this stance by the system is completely contradictory. It serves a purpose though, it allows them to play both sides of the field. Say Occupy does make a plan or demands and we present them; it's highly likely the system comes back and says that it had it's "experts" analyze our plan and it simply won't work for one reason or another. When dealing with a systemic issue as large as we are the number of straw-man arguments is endless, there are countless ways we could restructure and everyone has a different idea what that restructuring looks like. Its simple to come up with an argument against any system, as the perfect system is yet to be invented. If no demands are made at all we make an argument for the system in that "we do not know what we want". This isn't desirable either.

So seemingly both avenues are cut off. But wait! There is another!! What if the demand is Occupy itself? Think about it. What if instead of demanding what the people need, the people are actually just doing what the people need? Could our society (for now mostly the U.S. although Canada's turn is coming soon) actually have already reached a point where confidence in the system is so low the people are simply shedding it?

Look at the U.S. right now, Occupy tent cities everywhere. They are beginning to turn into miniature self-governed communities. If these continue to grow.. what significance is the government anyway? If the government can't take care of the people and is just a revolving door and shell game with the banks, what good is it? What service exactly is it providing?

This week it occurred to me that the world just might have been looking in the wrong spot. While we were sitting and waiting for demands, we witnessed the birth of a globally supported, internet based governing system. A system based on direct democracy and consensus.

Lets be honest here and admit society is collapsing, and everything is not ok. As a society we have neglected and underestimated many fundamentals to life which have been lost in our current standard of living. Perhaps without even realizing it the human race is already adapting for the inevitable low-energy future just around the corner.

Katie from OccupyYEG says "As one voice, and one individual I am proud to state, I am a part of the Occupy Revolution. I will not stand silent, I will not relocate and I will not give up. We do not have hope, we are hope."

Maybe more than she even knows.

Canada: A country in economic denial

Well the market since the S&P downgrade of U.S. debt has been a fun ride huh? Gold continues to set what seem like daily records while stocks are "only slightly higher than a decade ago". But all of these lightning fast developments have not shaken the faith Canadians (and in particular, Albertans) have in the positive outlook on the economy. Canadians still believe that the politicians we call leaders had "no idea" this was going to happen. We are a country in economic denial.

Psychologically it is no different than when a wealthy business man looses their job, their house, and will continue to dress in suits even though they live in a car. This is becoming commonplace amongst the U.S. population whose jobless outlook is bleaker by the day. It is indeed a psychological issue, and is quite prominent amongst our population too.

No one believed the titanic could sink either...

For instance, last week when I tweeted that I had successfully predicted the Bank of Canada interest rate dilemma i received an overly rude message from a fellow Albertan which said "Being essentially the smartest man alive, I'm sure you've turned all your nostradamus like predictions into millions ". This is a typical reaction from someone that is in denial, and finds the topics I write about truly frightening. So frightening that to effectively deal with them he must fantasize about nostradamus like "fortune tellers", which normally are quite crazy to put his mind at ease. For it is simply impossible that Canada is not in the pristine economic shape it has been claiming and anyone with evidence or opinions to the contrary must be crazy.

My prediction wasn't the work of nostradamus. It was a simple conclusion based on a trend being set by current events; the outcome was obvious and I explained briefly the logic to reach the conclusion. All it takes to make such a prediction is to stay current with events, and to think for yourself. The sender of this message obviously hasn't actually read anything I've written, otherwise he would be well aware that millions in fiat money is just what I have been saying it is. Worthless. Why would I want it? I write what I write because it is what I think, and I strongly *hope* that at least a few Albertans and Canadians were inspired to prepare for their futures from my words; that is all, not money, nor twitter followers. I personally don't care if you listen to me or not -- ultimately we are all in charge of our lives, but what we all have in common is that we are on the Canadian economic titanic together. It is your choice whether you want to believe this ship isn't sinkable or not, I surely won't convince you otherwise if you believe it's unsinkable in the first place.

Of course, having provincial and federal governments that also are in denial are not helping matters. Alberta has announced that it's deficit is in better shape than first thought. Of course these numbers are all based on events before the U.S. downgrade during a period where oil was sky-rocketing. As I have reiterated over and over and over again; the oilsands can *ONLY* bring in a profit during large upward moves and it is unlikely with world-wide economic growth outlooks that we will see $120 oil again this year, and it will be rare that we see $100. I predict the price will remain between $80-$100 for the rest of the year. This of course means all of the profit predictions being made by the Alberta government are based on the Q1 run up in oil prices. again as I've explained many times though, input costs take longer to catch up to the price of oil than profits do and once the bar is set for $80-$100 input costs all of those market riding profits are going to dry up. We've already seen this happen once before, remember when $70 was "high and profitable"? Now the government dreads a $70 oil price. It's also a one way road, meaning that input costs don't come down. What happens instead? the projects shut down. The Alberta and Federal governments have been playing Russian roulette with the Albertan (and Canadian) economies with the full support of an uninformed population in economic denial. They are uninformed because an informed populace would have seen the direct connection between Alberta's "growth" in the last few years and the U.S. QE programs. An informed populace would have noticed how in 2008 we lost hundreds of thousands of jobs the moment injections of cash from the U.S. stopped flowing into American businesses in Canada.

As I often say to my friends "if Canada was any other country [without our vast natural resources], we'd be so broke we wouldn't know what to do with ourselves". We may quite possibly be the worst money managers in the first world. We simply don't realize it because theres always more "oil in the ground" or "fish in the sea" to replace the funds we squander and not to mention our number 1 trading partner can (for the moment) print all the money they need to pay us. If Canada properly managed it's resources, we'd all be living like kings. Instead we've opted to "sell the pond, instead of the fish" and at bargain basement rates at that. From the actual issuance of our currency, to the oilsands, to our nuclear industry it is safe to say that Canada is "For Sale" and it is through these bottom basement price sales that Canada has been able to lie about the amount of foreign business we are loosing due to global economic circumstances. At least up until now.

Canada, we are a country in economic denial. Time to face reality.

A rundown on Alberta's future

So the deed is done, the U.S. has now officially been rated AA+ for an entire trading day during which the S&P took the ratings axe to many U.S. institutions. Many people who have read this blog probably look at it with an overly negative outlook. Please now look back at all of my posts and notice they revolve around two themes. The price of oil & the collapse of the USD.

I've been clear about three things in particular:
1) The USD will collapse.
2) The price of oil will not rise continually enough to sustain the oil sands developments, and the failing America's will not be able to afford it.
3) Alberta's failure will be due to lack of diversification or having all of our eggs in a failing market.

They are really not complex principles. Hard to believe maybe.. back in April, or March. Or if you followed me on Facebook before I moved to twitter/this blog for the two years on there in Canadians for an Energy Revolution. But are they hard to believe now?

I have to tell you all, I'm pissed. I do not write about these issues to be a "downer". I write about them because NOBODY is discussing them. I don't *want* Alberta to fail, but it WILL fail unless we address these issues now, TODAY. For over two years I have been posting news, writing blogs, emailing the legislature and parliament, and nobody wants to address a U.S.A. failure and the implications on Canada.

I don't have solutions for you. I'm not going to lay out any plans for you to follow. This is a job for the community to do. The communities around Alberta collectively need to discuss the very real and imminent problems in the economy that will be caused by maintaining the oil sands projects. They need to figure out how to adapt their economies away from an industry that puts multiple projects on hold if the price drops. This "stop and go" mentality is my main reasoning for my negative outlook on oil sands production capacity along with the three points above.

Extreme oil price volatility will be a fact of life now until 1 of 2 things happen:
1) U.S.A. stabilizes (won't happen)
2) USD is dropped as the reserve currency of the world. I've written a bit about this scenario here.

And Edmonton, for god's sake stop bothering with the stupid arena project already. Does our city counsel not understand that the world has big problems on it's doorstep? Canada is not invincible, it may seem so now but as I've said before we will be near the bottom of the list of countries affected. This is because we won't see a massive drop in revenue until our trade partners can't afford the costs involved. At this point, we will be hit fast and hard.

A chain-reaction is happening right now, as I write this. The last support in the U.S.A. economic house of cards has fallen and the debt collapse I spoke of on Friday is underway.

* Update | 08/09/2011: Seems that OPEC has now revised it's oil demand outlook downward once again. One of the reasons cited is the cost of oil hampering economic growth. Look back to point 2, The price of oil will not rise continually enough to sustain the oil sands developments, and the failing America's will not be able to afford it.

* Update | 11/09/2011: MSM articles about Canada's U.S. dependent economy are starting to emerge ( article1, article2 ). It's only a matter of time now before the truth is obvious and in our faces.

* Update | 17/09/2011: Will Canadian oil go to China instead of the U.S.? What Stefan doesn't understand in this interview is that it is not "individuals" from China investing in oilsands. It is the government of China investing. All oil in China is state run.

A conflict over ethical oil

By now anyone who follows energy, economics, or the environment has probably heard the term "ethical oil". If you are not familiar with it; it was coined by Ezra Levant in his book Ethical Oil: The Case for Canada's Oil Sands. It also coined a lesser known term "conflict oil".

Recently a new blog came to my attention which was influenced by Ezra's book and it's causing quite the stir amongst environmental groups not sure how to counteract the image being portrayed. This image or argument is essentially that right now society requires oil, so would you rather get this oil from unstable, civil rights violating dictatorships or from friendly democratic Canada. This argument is painted for you in colorful contrasting advertisements which pop up on the blog showing the clear contrast between "life" and "death" (green or orange), along with exaggerated images to reinforce the idealism. A happy worker in a green field for "life", and a destroyed oil excavation site with Hugo Chavez imposed over top for "death" for instance.

Inside the site is scattered with cherry picked statistics, such as the employment statistics for nearby native communities. It is certainly a clever ploy by Big Oil which more or less renders the environmental aspect and argument moot as no matter what anyone says regarding environmental impact the response has become "well would you rather have 'ethical oil' or 'conflict oil'?". Clever indeed.

What the website fails to mention however is that as long as we have dependence on oil the world will always require conflict oil. Lets put this in perspective, here is a chart showing world oil consumption and production. Do you see the spread between European oil usage and production? How about for North America? Never-mind even about Asia-Pacific, but consider it none-the-less. For this argument we will not look at it as we don't need to. So roughly from that chart, you could say that if Europe and North America didn't import (or export), production would need to increase by what? 20million/day? 30million/day? Well according to Canadian Association of Petroleum Producers Canada's total production in 2010 was 2.8million barrels / day. By 2025 they estimate 4.3!!! (Keep in mind, this is the oil industries estimates, not the *REAL* numbers.).

So here is what I ask you Ezra, how is your argument for Canadian oil relevant at all? The world doesn't just need oil, the world needs conflict oil. There is no magic bullet to make that not so, and no amount of Canadian ethical oil (rated at 1.5million barrels / day in 2010 (World usage = at least 85 / day)) will change that. Do you know why Ezra? Because unlike ethical oil, conflict oil doesn't need $100 / barrel to pretend a profit is coming in.

The oil sands are environmentally damaging and are not financially viable. We don't even know what the untold costs in environment and water usage are. They will never ever ever add up to more than a drop in the world oil usage bucket, because production is inefficient. It requires too much energy to make a barrel of low-quality "oil" from these projects of last resort. Remember when $70 / barrel was "expensive" and enough to make Alberta a profit? What happened to that? now we need $100. What happened is the input costs caught up with the output costs, and we don't want to know what happens if a sudden market move drops oil well below the input costs as it takes time for those price fluctuations to reach production. In other words the oilsands *only* bring in profit during sudden upward market moves in oil up until the time input costs rise due to the cost of oil. Get it?

Conflict oil vs. Ethical Oil is a straw-man argument. The infinite growth economy doesn't care how many people die to fuel it, or how much of the environment is destroyed. All it cares about is fueling more growth, which needs more resources, or the debt pyramid we've sold our kids into will collapse on our heads. You've been warned.

PS: Here is another reason to not buy into ethical oil vs. conflict oil.

* Updated | 08/08/2011: Well it's Monday now. The U.S. S&P downgrade has taken effect in the market; and what do you know, this appears in my twitter feed. Yea, wow. Amazing I know. Get it yet? The oil sands are a MONEY LOOSER. The price CAN NOT climb forever. What is worse: we are selling our resources short, without our own stock or "strategic petroleum reserve". That's right, we have no SPR.

The next Alberta economic boom will be funded by faith

Good day to you Albertans. I haven't written on this blog for quite awhile, in fact I wasn't even sure if I was ever going to blog again. Things are moving too fast now to really spend any significant time on a particular subject however I feel Alberta's economy needs some special attention right now.

Just recently I saw an article proudly displayed on every frontpage: Alberta tops U.S. job creation. Apparently Alberta's job market grew by 22,000 jobs where as the ENTIRE united states only recorded 18,000. Naturally Albertans rejoiced, claiming that boom times were back and economic growth was on the way. Further it seems to be not a reason to be concerned but instead put even more faith the Alberta government is right "waiting for oil & gas revenue to rebound". Anyone remember Ed-TV almost 3 years ago? Anyone remember Alberta's "5 year economic action plan"? Yea, I didn't think so, apparently 3 years into this plan we are still on step 1 "waiting for oil & gas revenues to rebound". So lets look at when they will be rebounding.

Who buys our oil? Who is our largest trading partner? Well it happens to be the U.S. The same U.S. that had the remarkable drop in job numbers, and now today GDP data just kicked the U.S. while already down. One has to wonder exactly where all of this expected economic growth is going to come from? U.S. oil demand continues to stagnate, and lets be honest about how much time it takes for oil infrastructure to be set up for any profitable sales to China or other cross-continental markets. A long time. China certainly is pursuing this option though, and you can trust that China (the largest slave-wage market) really has Albertan's jobs and wages at heart.

Just wait for the day in the very near future where Alberta says "hmm, we really didn't see this coming". Because they will, of this I have no doubt. The forgotten 5-year plan will be revived and extended into a "10 year plan" and by the time Albertan's and the Alberta government take the global economic situation seriously we will not have the funds to do anything about it.

The new Alberta boom is based entirely on faith that Alberta "always has a boom". We simply expect economic booms to be thrown our way, and when we are not in one we are waiting for the next. There is no world-economic data to show any signs of a coming boom for Alberta. Yes, we had more jobs than the U.S., so what? That means a whole bunch of our clients will soon not afford our product. 18,000 jobs for an entire country is dismal, it does not point to an Alberta job boom, it points to a U.S.A. mega-economic failure and this will surely affect the Albertan economy in the not-to-distant future. Faith alone can't sustain us anymore.

Oilsands optimism on the downslide

canada.com

The oilsands continue to take public relations hits across the globe. Just recently the Keystone pipeline leaked yet again making for the forth pipeline leak in relation to oilsands pipelines in the last 2 months, 2 of which occured in Alberta. In the midst of all of the bad public relations it seems a very important long term trend has been overlooked: Canada has significantly decreased it's expected oilsands output.

In 2005 the alberta government released a video of their current plans for Alberta's oil economy:

The video makes an estimate that Canadian oil output will be 5million barrels per day by 2030, however just recently the Guardian released an article about Canadian oilsands which contains an interesting little blurb:

Output will increase five-fold to 5m barrels of dirty oil a day by 2040.

Now obviously this author is biased against oilsands oil, and in being so could have his facts wrong. He doesn't source where this output estimate comes from. If he is correct however, that means in the last 6 years, Alberta (and Canada) have significantly lowered their output expectations.

Going by Alberta's original video, over a period of 25 years we would see gains of about 140000 barrels per year. But if the 2040 estimation can be believed we will be seeing a yearly increase of only 100000 barrels per year over a period of 29 years. (Calculations based off 1.5m barrels / day in 2005, 2m barrels / day today).

So what could this indicate? Well for one, it indicates that prior to 2008 economic turbulence probably was not considered by the Alberta Government. Indeed their attitude at the time was "We're in a boom, we have money, it'll never end!", well until it did end that is. It tells us that Canada is overly-optimistic of their production capacity during a time when the input costs are an unknown (the gas and water and electricity needed to power the oilsands operations).

With an estimate of 5m barrels by 2040, I am now forced to lower my estimates of a peak of 3.5m barrels in 2020 to 3m barrels in 2015. We'll never reach the 5million mark, as oil price lead depressions will destroy demand as soon as any sort of production ramps up, causing the sorts of shutdowns we saw in 2008/2009.

Alberta, you need a new plan, and Canada: we'll never become an energy super-power if we expect to get our energy from the energy intensive, unstable, and fiscally impossible oilsands industry.

* Update: Changed calculation results from fractions to whole barrels produced.

Edmonton Arena pt2: The world class city myth

* UPDATED * My solution to the Arena Debate.

Ok, wtf. I write 5 articles and my 2nd and probably worst one gets the most hits? no comments? what gives?

Seriously I wrote that while having an overdose of anger, and its not very well done. So let me try this again. I *really* want to make the case here. I am not just some arena hating guy but that I strongly believe we are being convinced of something that is not economically feasible and is at the moment a ridiculous use of our resources. The previous article was really just a blend of half-assed points that really need some background to really make any sense.

You'll notice much of what I am writing on this blog is about energy and economics, particularly oil. Indeed my argument against the Katz Arena is centered around oil, or more specifically what has come to be know as the representation of oil world-wide, the U.S. dollar.

To understand why the state of their dollar matters to us Canadians and particularly to Albertans is that that is what they give us, for what we give them. We give them oil, they give us digital paper and say "this is worth something". Think about it, therefore what are Canadian dollars? Denominations of the American dollar. This is why staying near or below parity is very important for our government, preferably for the Americans they would want below parity.

Still with me? I promise this relates to the Arena, we'll be getting to that soon. Alright, so we've covered oil and the fact that oil is represented by the American dollar. Now, why does oil give the American dollar value? Well because up until recently it was the sole currency oil could be traded in, it is energy. How do we use it? In everything! In every stage of production! Oil is the engine for modern day consumption, it's not just any commodity it is the base of everything we have today.The American dollar is based of the future capacity to pay debts. If countries didn't accept American dollars, then they wouldn't have any value. They are not intrinsically valuable. It is a promise to pay. (Previously redeemable in gold). So what does Alberta get for it's oil? USD.

So how do we get materials to build say.. an Arena? Well we *pay* for the energy; both human and mechanical that is used in the process of getting them. This is where a term called "peak oil" becomes relevant, and which I am not going into here. There are many resources on the internet about peak oil, I suggest checking it out for yourself. I will say this though, Peak Oil is not Oil depletion. Anyone who implies this doesn't know what they are talking about.

Ok, almost to the arena now. You should see now why the USD collapsing is going to play a big role in the coming years. Think about all of these USD Quantative Easing, they are simply pressing buttons on a computer, making "cash", and then giving this "cash" to middle eastern countries for oil. So the U.S. presses a button, prints 1 trillion, and in return they get oil and also the work required to get that oil which likewise costs oil to provide the industry enough energy to get more oil. The same thing goes with derivative energy by the way, so don't think that there is an easy fix to this issue. Soon the CDN government will need to choose whether they go down over the cliff edge devaluation of the USD to maintain the huge trade relations or to revalue the CDN currency effectively cutting off the U.S. trade capability as it would be too expensive for them which likewise would affect our economy substantially as we saw with the brief interruption they had to their economy in 2008 which caused many Canadian auto shops to close, hundreds of thousands lost jobs.

So in either case we can expect a huge economic impact, there is no recovery, the recovery is a bubble, the final bubble you could say (pt2). A bubble of the USD itself, the international currency. There has been no recovery because you can't eat digital paper, or drive with it, it doesn't make buildings or develop new technology. With the manufacturing base in the U.S. gone, they are literally giving the world nothing in turn for everything, how long do you think that will last for?

When it comes to the arena, construction prices will skyrocket along with the price of oil, as the more the U.S. devalues their dollar, the more USD OPEC will ask for oil. (noticed anything expensive lately?) They are in a competition with China and India, China which by the way made the first ever deal for oil with Russia that is not in USD recently.

Daryl Katz did not become a businessman overnight. To own 1800 drug stores proves he obviously has a good grasp on the economy. How much do you want to bet that if someone like me sees this coming, not to mention many others then he probably does too. So why is it he would rather put his big money into a public relations campaign (public relations is propaganda) which I'm sure isn't cheap, instead of just putting it into the arena he wants to help "give" Edmonton?

This is not the great depression, economic growth in the future under today's terms of what an economy means isn't going to work no matter how many fiat dollars they print. Namely GDP which is just a fancy way of saying it is based on debt. This is because energy is now expensive, and will remain expensive as long as we require yearly increases in energy consumption to fuel GDP growth. More cars, more factories, Quantity not Quality.


Now. I want to get into this first class city crap. You want to know why Edmonton is not a "first class" city? I'll show you why:

From top left to bottom right:

• Sports Bar, Home away from home.
• The Strat, Classy.
• More classy places
• Used Cars
• Gravel parking lot

This is the intersection at 103st and 82ave. The FIRST main intersection showing what Edmonton has to offer to anyone coming into the city from the airport, the reputable center of our culture. The above lists what they see first. I highly doubt this would fly in a real world class city, you know like the ones Katz Group points to as successful?

We aren't a world class city, and a downtown arena won't change that. Katz Group is playing on your wants for such a dream town, they are playing on your fears of loosing the Oilers. Edmonton has a long way to come in a lot of areas before an arena is going to make or break this city. Its a wasted investment. As I advocated in my previous article, let's spend millions of dollars in thousands of places. We could start by putting something useful in the prime real estate that is the gravel parking lot.

That all I got to say on this subject, thanks for reading. Please read my first article on the arena if you haven't already or continue on about Canada's economy in general.

Capturing carbon or public support? The 2 billion dollar conversation

The Sleipner A project injects carbon dioxide into saltwater aquifers deep beneath the sea floor off the Norwegian coast. (Credit: Statoil) / sciencedaily.com

Carbon capture has been a hot topic in Alberta for a few years now. It's pretty well been the government's pre-canned response to any criticism of the environment related to the oil sands. For example:

As such, he cites committing $2 billion to carbon capture and storage - touted by industry and government as a way to green oilsands development.

Alberta's media has been flooded with references to this 2 billion dollar deal as a successful solution to oil sands carbon pollution. For the record, I don't think oil sands carbon pollution is really all that bad in comparison to the tailings, acid rain, or impact on the water table but for the sake of this post let's assume that is the top priority. So lets have a look at whether or not CCS is really a "solution" to the problem. Here is the problem:

How can we generate more power and produce more goods without increasing the amount of carbon dioxide in the atmosphere while keeping energy just as affordable, if not more affordable?

 I think that pretty well describes the problem CCS is being touted as a solution for but if you disagree please comment. Now looking at that picture there -- I think it's reasonably safe to say that cost is not cheap. Obviously that's the Norwegian offshore way but just recently their CCS program was in the news as being set back considerably.

A Carbon Capture and Storage (CCS) facility at the Mongstad oil refinery in western Norway was originally planned to be in place by 2014 but has been delayed several times.
"An investment decision could be taken latest in 2016," the Norwegian oil and energy ministry said in a statement. In May it had said a decision on investments would be postponed to 2014.
CCS may cut the contribution of coal and gas-fired power plants to global warming by trapping and burying carbon dioxide (CO2), but it is untested on a commercial scale.

The most interesting part I find from this exert is "coal and gas-fired power plants", not oil sands. The oil sands are large and spread out. CCS itself uses enormous amounts of power which Alberta is already the top consumer in Canada of largely in part to the oil sands. This would make CCS ideal for Coal or Gas plants in Alberta but what does that have to do with making the oil sands cleaner? Well in my last article I demonstrated that the majority of our new power consumption is from the oil sands itself so in a sense yes CCS would "make them cleaner"; so why isn't the government explaining it that way? I'm guessing they would prefer Albertans not look at how much demand the oil sands are themselves creating.

Anyway, back to the topic of CCS. As I was mentioning that CCS itself is energy intensive, the equipment must be built, it takes huge amounts of energy to compress the carbon, and the storage theories for carbon capture certainly have some safety concerns. Further, no oil sand related companies have as of yet stepped up to the plate with the implementation of CCS in oil sands development. Why? My guess is as with anything oil sands, it simply is not cost productive to do as producing them in their current state is only cost productive by socializing losses.

The only conclusion I can be left with is P.R., 100% P.R. We'll probably never see it implemented, and I wouldn't count on the 2 billion set aside for it to still be there either (but that is another conversation all together). It's likely gone with the 25 million wasted on a website and that shitty slogan no one can remember. Public relations change instead of real change because the truth is we can't afford the real change without the big business on top "taking a hair cut".

What was that slogan again? Freedom to exploit, spirit to believe?

Understanding the real 'why' behind Alberta's transmission lines

climatechangecentral.com

These power lines are causing quite the uproar in Alberta as of late. Lots of accusations flying around about money greased deals and corruption. The controversal land use law is driving debate all around the province. I'd like to give my take on the transmission lines themselves as I believe it's about money, greasing deals, but also largely about U.S. and Chinese oil supplies.

To set the stage for my argument I would like to point to this article from StatsCan / 2005. I've chosen 2005 as that is when we were in the high growth stage of our last oil boom.

Alberta is Canada’s biggest per capita consumer of energy. In 2003, Alberta’s per capita consumption was two-and-a-half times higher than the national average. Between 1990 and 2003, per capita energy consumption increased by 11%. That surge was not entirely due to a sizeable increase in population. A big part of the increase in total energy consumption resulted from industrial activity in the province.

The most notable portion of this paragraph is that we are the biggest per capita consumer, and that most of this energy demand is from industry. This video from Alberta's gov't gives a run down of their plans for the future, released at roughly the same point in time as the StatsCan article:

So at the time of this video, Alberta was producing 1.5 million barrels / day, which they hope to increase to 5 million barrels / day by 2030. So in 2005 Alberta's industry was about 28% of the total industry Alberta wants by 2030 which also means industrial power demand is 28% of the total power demand Alberta can anticipate from industry in 2030.

The problem with this is that the world uses near 90million barrels / day today, so the oil sands are only providing 1.5 million barrels of that, regardless if we have even 500 billion years worth of oil we still are only providing a drop in the bucket in actual oil produced. That oil is all still in the ground and useless to us at the moment.

Now most Albertan's know that primarily the U.S. receives our oil, but few realize that many other huge oil consuming economies like China also have big investments in the oil sands, and for good reason: they really really need that oil. Not only do they really need it, but they really need it cheap. Now think back to that statscan article I linked above and the fact most power demand increases in Alberta is directly from industry and in Alberta that industry is mostly oil sands. Some warning bells about our economic structure should be going off right about now, that our energy production has huge power consumption demand.

Most of our power production also seems to be being built up north such as this one and this one. Why would they be being built up north, and not near Calgary where Alberta's population needs power the most? Well reading the article should give you a hint:

Energy Alberta Corporation has chosen Peace River, Alta., as the site for its proposed $6.2 billion nuclear power plant.

 Yup, they chose it! Now what reason would a power generation company have to choose a location that is nowhere near the population of the province? Well my bet would be money, stakeholder money to be specific.

So, how is this relating to the power lines you might be asking? Well consider that the U.S. and the Chinese are the primary investors in our oil infrastructure. Consider that there are riots in many of the key oil producing nations which it can be assumed that Government's have been aware of and preparing for. Consider that our oil is expensive to produce and that the U.S. and China rely on cheap energy to fuel their massive economies.

So, using simple logic what is the reason the government is pushing power lines on Albertans that Albertans pay for 100%? Is it to sell power to the U.S.? Probably a little. Is it to grease the pockets of power companies and politicians? Yup. But the deep down reason? The power consumers don't want to pay for the full generation and transmission costs of the future. It's preferable to the eyes of big business that we pay for it. Naturally it is cheaper to consume power if the power is being generated close to you. Albertans will be paying the transmission costs that industry should be paying instead.

Do not support this scam, demand power plants are built near our populations. I refer to this as classic "privatize profits, socialize losses" policy making and as uptag has noted is not reflective of the population's power demand at all.