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since June 19, 2001


Only arrogant Liberals would trivialize job loss

Alberta will bear most of the pain if Kyoto passes, and that's just fine with the crowd in Ottawa


Only arrogant Liberals would trivialize job loss: Alberta will bear most of the pain if Kyoto passes, and that's just fine with the crowd in Ottawa

Wednesday 16 October 2002

p. A14

The nation's banks are already tightening up on loans to energy companies, and the Kyoto accord hasn't even passed Parliament, yet.

Is the principal industry of any other province under similar Kyoto pressure? No. Ontario's and Quebec's manufacturing sectors are not at similar risk. And they likely never will be.

Yes, manufacturers consume huge quantities of energy. And energy is likely to get much more expensive under Kyoto.

Electrical bills could easily jump 50 per cent, or more. Home heating may double. A litre of gasoline may well reach $1.10 to $1.30 over the next three or four years.

Ottawa's central planners, and the environmentalist lobbyists who have their ear, hope high energy prices will discourage consumption and thereby reduce the emissions created while extracting fossil fuels, producing electricity and, finally, manufacturing products.

But even if manufacturers are hard hit by rising energy costs over the next decade, the impact on them will be less than the impact on Alberta's energy companies.

Energy is but one of the manufacturers' input costs. A 40 per cent rise in the price of energy does not translate into a 40 per cent rise in the cost of manufactured goods -- more like a 10 or 15 per cent rise. That's enough to scare away some customers, sure.

But energy is THE product of energy companies.

A 40 per cent rise in cost translates into a 40 per cent rise in the cost of goods energy companies sell to commercial and residential consumers. And if a 10 to 15 per cent rise in prices scares away manufacturers' customers, a 40 per cent rise will send scads of energy customers fleeing.

No matter what assurances Jean Chretien, the Prime Minister, gives to Alberta about how this province will not bear Kyoto's burden disproportionately, the truth is if Kyoto passes in Ottawa, we in Alberta are going to be hit, and hit hard. Indeed, I suspect this is partly the federal government's goal.

It wants Kyoto, but not to put down Alberta before it becomes rich and powerful enough to be a competing power centre for the Toronto-Ottawa-Montreal Golden Triangle. Rather, Ottawa's bureaucrats and cabinet ministers have merely decided fossil fuels are a thing of the past. Better to price them out of the market so alternatives are developed as quickly as possible.

This is what the "Green" lobbyists believe. And since Ottawa is utterly and completely infected by the Greenies' thinking, it's not much of a leap to believe that Ottawa hopes one of the side effects of ratifying Kyoto will be the beginning of the end of the conventional energy sector.

So anyway, even before Kyoto has been voted on, Alberta exploration and servicing companies with extensive lines of credit are being called in to explain to their lenders just why they remain good risks.

Why shouldn't their lines be reduced, or placed on stricter terms, or yanked altogether?

In light of the devastation Kyoto may wreak on the sector, especially on small to mid-sized, independent oil and gas companies -- the frontline soldiers in the energy wars -- bankers are asking energy firms to re-demonstrate how they intend to pay back loans they've already qualified for.

It has already become harder for oil and gas companies to find the cash they need to continue drilling, to keep servicing wells, to expand their pipelines and plants.

It's often said a recession is when your neighbour loses his job, while a depression is when you lose yours.

In Ottawa, it seems, a valid national policy is one that puts most of the pain on Alberta, while any one that puts much of the pain on Ontario and Quebec is unacceptably narrow and regional.

You could see this insensitive and arrogant thinking in spades, too, last Friday when Ottawa, grudgingly, and only under the threat of suffering political damage, finally admitted Kyoto would result in 240,000 fewer jobs being created in Canada over the next 10 years. A hit it judged "modest."

Yes, "modest" is when some other dumb slob's new job never materializes, while devastating is when government economic forecasters and comfortable deputy ministers are put out of work.

Assuming Ottawa's projections are correct -- and they are not, these are the same geniuses who have predicted in the past that we could tax our way to prosperity and inflate our way out of debt -- the quarter of a million new jobs lost amount to all the jobs created over seven full months in a booming economy.

In a good year, Canada creates 425,000 to 450,000 new jobs. A recession reduces that to about 250,000. And Ottawa is projecting that Kyoto would reduce that output to about the equivalent of 175,000 to 200,000 in a year. Admittedly, those losses would be spread out over 10 years, not concentrated in one year. But it's unnecessary pain. And you have to trust Ottawa to be honest and correct to believe even that number.
Lorne Gunter
Columnist, Edmonton Journal
Editorial Board Member, National Post

Index to some of Lorne Gunter's articles

On global warming

On other issues

See also:

  • Global Warming — A collection of information by reputable scientists from around the world who disagree with the David Suzuki crowd and the IPCC [Intergovernmental Panel on Climate Change], and who provide irrefutable evidence that debunks the global warming hype.

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Posted 2002 10 16