Wednesday, July 9, 2008

There's Hydrocarbons in Them Thar Hills

Last week Shell Oil came to town and gave an open-house about their coalbed methane project in the Sacred Headwaters. I had a fascinating chat with Shell Canada employees, Larry Lalond and Kathy Penney. It was disappointing to note that only a handful of local people came to the open house. Perhaps Shell could have done better to advertise their open house. I would think it would be in their interest to encourage more local participation.

Hopefully, we have gotten past the bad old days when resource extraction was a kind of smash and grab operation with no meaningful consultation with stakeholders. This time I'm assuming that Shell, who appears to be in this for the long haul, is really serious about listening to the public. The issue that grabs attention anywhere downstream of the Sacred Headwaters is the issue of water. In order to get the methane out, Shell is proposing to pump water from underground to the surface. This “produced water” could well be contaminated with heavy metals or salts, we don't know yet, until it is properly tested.

Shell insists that it will truck all the contaminated water, a thousand kilometers away to Fort St John, where it will be re-injected underground. This is dubious, because it is not only a ridiculous waste of energy, but also totally impractical, once more than a handful of holes are drilled. The other problem is that pumping water out of an aqueduct is likely to affect ground water levels which could adversely effect salmon fry. These are all excellent reasons for local people to get involved in the consultation process with Shell. We're talking about them screwing around with our water, people!

Royal Dutch Shell is one hundred years old. It is now the second largest energy corporation in the world, after Exxon-Mobil. Last year, Shell made thirty-two billion dollars. The CEO of Shell, Jeroen van der Veer, acknowledges both Peak Oil and Global Warming. He'd like to see a global agreement on Carbon Cap and Trade soon.

Why I mention this is because it has direct consequences for all of us. Peak Oil means that the global demand for hydrocarbons is or will soon exceed supply. The price of oil may have its ups and downs, but as long as global demand keeps rising faster than supply, which is near peak production, it's likely that it will become more and more expensive over time. This means that there is and will be a massive transfer of wealth from consumers of oil and gas to producers. Ordinarily, this would be business as usual in our global capitalist system, as the higher price would just encourage everyone to avoid these products, but in this case it isn't – for two reasons: First, there are no good substitutes for oil in our modern economy; and Second, burning hydrocarbons on the massive global scale that has been happening is leading to climate change. For these reasons it is essential that governments step in and limit the amount of carbon emissions in the economy by putting a price on carbon.

Everything is connected. The atmosphere is common to all and if too much carbon dioxide gets produced the costs are spread to everyone, in terms of the damage from climate change. On the other hand, Oil companies, and consumers of oil products are not paying for those costs. This is what is called: “market failure”, when one group in the economy avoids paying for all the costs of their activities. That is why government has to step in and devise a fair means of compensating the public for this cost and at the same time, slow down the massive transfer of wealth from consumers to oil producers. Stephan Dion, leader of the Federal Liberal party got it right when he said polluters should pay.

Unfortunately in all this consultation with Shell, where are our governments? The Campbell government has streamlined and fast-tracked coalbed methane tenures and subsidized roadbuilding and initial drilling. Not only that, the Campbell government has taken away the legal rights of municipalities and regions to have a say in resource extraction decisions. Something doesn't jibe here with the provincial government's commitment to fight climate change .

This is where the other problem of “political failure” comes in. From the huge transfer of wealth from the public to oil companies, a portion of big oil's money is going towards lobbying governments. This has led to political corruption on a scale not seen since the nineteenth century. As a result oil extraction, production, and consumption is subsidized instead of being properly regulated. And we have huge military expenditures for wars in the Middle East which just might possibly have to do with securing oil supplies there. You can see the damage this has done to our democratic institutions in the obvious bias of the Bush and Harper governments toward oil companies and their blatant foot dragging over doing anything decisive about global warming.

You may say, “What's global warming got to do with me personally?” Here's the connection: Only if ordinary citizens get involved and take governments to task on these issues will we be able counter big oil's money and influence. Otherwise they'll run the show. And if you want to know what that's like, take a look at Iraq.

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