February mid-month round-up: Greece burns, Alberta gambles & Canada trades soul for Pandas

Well it would appear that China has finally found a spot to park it's unwanted USD. That would be here in good old Canada and all it cost them was leasing us two Pandas. What a deal! Back in 2011 I wrote a quick post about why Canada's economy is good, bad and bullshit. A key portion of this post was that China was dumping the USD - but one year later with multiple countries such as Russia, India, and Iran writing off the USD as well one has to wonder, who exactly is taking it? Well it would appear the answer is Canada.

Now not only are we trading resources to the U.S. for a devaluing USD, no no.. now we will accept them from China as well. Many people are probably looking at our new trade relations with China and say to themselves: "well thats good isn't it? We're diversifying from dependence on the U.S. economy" - but this isn't really the case. Whether we are receiving USD from China, or USD from the U.S. it is still USD which is directly tied to the health of the U.S. and global economy. So are we breaking our dependence on the U.S.? When it comes to the actual physical trade: yes. When it comes to the value we receive for what we trade: no.

Are you a big coffee drinker? Have you noticed anything happening to the price of coffee? How about other imported foods? If you are conscious about your grocery bill you will probably have noticed it's gone up quite a bit. This is a direct result of piggybacking the CAD off the USD. Many analysts now claim the CAD is directly tied to resources now. They indicate that when resources go up, the CAD goes up, and when resources go down, the CAD goes down. However, the target for comparison always happens to be the USD. You may notice that if the CAD does exceed the USD, it's not by very much and not for very long. This is because while resource prices influence our dollar, a 1:1 ratio with the USD at most (approximately) is essential not just for continuing trade with the U.S. but also to continue trade with any country who trades using USD. The number of countries is large, albeit dwindling. It is really a match made in heaven: MAny countries around the world are looking for a place to dump their USD and Canada's valuable resources are "open for business". As most of our politicians are heavily involved in the U.S. stock market, they also have a vested interest in keeping the USD alive, even if the cost of food and gas for you and your family becomes unaffordable. This is the new measure for economic health, this is why the Euro was rising even as Greece was burning. On paper accepting austerity is great, but in reality it is destroying what's left of their physical economy. You know; the economy that feeds people, not HFT.

On top of Canada's "everything must go" fire sale policy it appears that we also are in a bit of a huff about proposed changes to the U.S. banking system. The take away paragraph from this article is:

The source of concern is a new U.S. regulation meant to deter deposit-taking institutions that receive backstopping from Washington from engaging in speculative trading for their own—not their clients’—profit, a practice known as proprietary trading. Risky trades by global banking giants were central to the banking crisis that compelled former U.S. president George W. Bush to launch a $700-billion bailout of Wall Street in 2008.

Translation: our banks engage in the same practices as in the U.S.

It goes on further:

“I think the impact could be very, very negative,” said Canadian Bankers Association President Terry Campbell. “If you interfere with the ability of governments and corporations to fund themselves, if you interfere with liquidity in the marketplace, which is necessary for funding, then you could have a very severe impact on our economy.”

Translation: Governments and Corporations fund themselves using risky and sometimes fraudulent banking practices and if we try to change that now then our "financial stability" is put at risk. Canada's complaints about these changes should confirm for all Canadians that our banks ARE NOT anymore stable than the U.S. or European banks. When you combine this fact with a world that uses the USD and a U.S. whose financial system is mostly dependant on foreign countries providing goods for that USD it should be no surprise the Fed's crisis fund bailed out non-US banks including Canada's TD.

The crisis in Greece is a preview of what's to come for all countries that engage in these practices as their ponzi economies rely on ever-increasing returns while peak oil ensures returns will be ever diminishing. It is the shortfall between leveraged value and real wealth which has Canada concerned as without riskier and riskier ways to leverage funds: profits dry up. For proof of this look no further than Alberta's latest budget which depends on a predicted 40% increase in oil revenue to meet expenses and bring Alberta out of a deficit (yet again).

Alberta's entire budget is based on a "bet" and betting is a feature of gambling. So Alberta's budget isn't really a "budget" at all now is it? When I budget for the month, I do not assume that sometime during that month I'm going to win the lottery and I certainly do not factor my theoretical lottery winnings into my budget. After you win the lottery and have the money in your hand then it is safe to include that in your budget. Now of course the odds of predicting oil price are a lot better than winning the lottery, but the cost of failure is the same.

Back in 2008, no energy analysts and no economic experts predicted a drop in oil price from $147/barrel to $38/barrel. No experts predicted that there would be a scooter revolution due to the price of gas at the time. Alberta has spent the last decade convincing Albertan's the oilsands were making them rich and yet wheres the money? The sustainability fund has been drained, infrastructure is crumbling or 20 years behind, the heritage fund in leu of their olympic train, $25m rebranding effort, and $2B for carbon capture is hardly sufficient to account for all of the resources given away in Albertan's names. With the latest budget and Alberta's continued campaign to pretend it has more money than it does - I expect a repeat of the 2008 situation in Alberta within the next 2 years.

Remember, at $147/barrel - and with cheap credit everywhere - debt could not be sustained. This time around all of that cheap credit has been used up and I believe the ceiling on oil demand is a lot lower. There is no more debt people (Americans) can get into to subsidize their ever-increasing cost of living. If oil hits Albertas targets and without some external crisis (Iran), it's highly unlikely it will be sustained any longer than the time it takes for those price changes to show up in the cost of consumer goods.

Further Reading: The Federal Reserve's Explicit Goal: Devalue The Dollar 33%: Forbes

Why the dinosaur propaganda system can't use social media effectively

Lately I have been swinging my sights on to Ethical Oil's latest mouthpiece Kathryn Marshall. Of course I am not a radical environmentalist; what angers me about Ethical Oil is how insulting their campaign is. Their campaign is propaganda designed to fool Canadians, not other countries.

The Ethical Oil campaign is the face of fascism. Their campaign is nationalist in nature (Canadian interests against foreign interests). Their campaign is a collaboration of government and industry. It is text-book fascism, and fascism never falls on the side of truth.

Luckily for us that live in the era of social media; fascist propaganda is a lot harder to get away with. Take for example Marshall's viral embarrasment from a few weeks ago. All 3 organizations featured boasted this interview on their social media feeds; each expecting to have positive feedback as a result. Of course since Marshall's performance was so poor the Ethical Oil organization didn't get the feedback they were probably desiring, and instead received a big 'ROFL' from the Twitter universe. This brings us to today's topic, which is why the old dinosaur propaganda outlets just can't master the art of social media; specifically Twitter.

The first thing to notice about social media is that your audience is very aware if you are "real". Almost every politician has a Twitter account, but not all of them actually man it. Many (such as http://www.twitter.com/PMHarper) simply treat it as another arm of their PR spin, putting out "tweets" like they put out news releases. It's impersonal and a failed use of social media for PR. It's rare that you will get a reply if you message these sorts of "manned" accounts and it's so obvious that it's a PR team answering your message even if they do reply that these accounts should really be named @[Politician]sCampaign.

Another form of "news release style" social media practices are those used by the @Ethical_Oil account and @KVMarshall. They do take an interactive approach, but they do so in the same form of a relationship that say a blogger and their readers/commentors have. Bloggers often moderate (censor) comments coming from their readers and as a result most blogs usually end up with a "cherry-picked" feeling; where all of the comments strangely seem to be of the same view as the blog they are published on (For the record I do not modify, moderate, or delete comments posted on this blog). Of course, what Ethical_Oil and Kathryn Marshall seem to not realize is: that Twitter isn't a blog and you can't cherry pick your public presence on it (even though it might appear that you can).

For the next few days after her embarrassing interview, Kathryn Marshall went on a Twitter banning spree. Anyone who disagreed with her was banned and blocked from following her on Twitter and thus she no longer can see these user's mentions either. She justified this mass blocking beating some sort of sexist drum and retweeting the few who did make sexist comments to make it appear as though everyone she was blocking was being sexist. Of course most in fact were questioning her absurd statements about Enbridge funding being a "conspiracy theory". What Kathryn Marshall doesn't seem to understand though, is that a Twitter search still returns all "mention" tweets even by user's she herself has blocked. Since she's blocked all those user's who oppose her (Enbridge's) position she has inadvertently created a virtual "social reality" in which everyone she sees agrees with her which reinforces her belief that most of Canada must be on her side.

The result of this is quite amusing, looking at her feed you will see statements such as "I'm so glad I have so many fans, etc" - and looking at her twitter in which she retweets anything even remotely positive about her or Ethical Oil it would indeed appear that is the case, however.. the picture changes starkly if you search her twitter handle. Under the tweets mentioning her handle (or @Ethical_Oil), you will find the majority of them are quite negative. Most are calling out Ethical Oil for being funded by Enbridge. Many are laughing at Marshall herself for seemingly being so oblivious about how stupid she has made Ethical Oil look - and are there any replies or rebuttals to any of these statements? No. Why not? Well it's hard to reply and make your point about your PR spin if you block everyone who disagrees, this might work on a blog but when it comes to social media - sorry - all of those "blocked" comments are all still available for everyone except the blocker. Not exactly smart when the point of launching such a campaign is to convince those who would disagree with you that you are correct. By blocking everyone who disagrees they are simply revealing how disingenuous they are. What's really sad is I think that this point is actually beyond Ethical_Oil and Kathryn Marshall, either that or this campaign is designed "for the ethical oil choir". I mean honestly, the only people they are "convincing" is those who already agreed with the concept of "ethical oil" or those who are so brainwashed they think giving our oil to China isn't "foreign special interests" - but these people all thought this way before Ezra's pathetic blog.

So this is why the dinosaur propaganda outlets will never make good use of the social media platform (however hard they may try). The reason is that social media (unlike traditional media) is an interactive two-way street. Propaganda depends on a one-way, information-out only - where critical thinking is deflected with straw-man arguments about nothing at all. Such as "is our oil ethical?". This is why the ethical oil argument can't stand up in any interactive forum, it's propaganda at it's purest - a 100% straw-man argument - that when analyzed or questioned even a little: falls apart like a house of cards.

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.

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.