How the Oil Sands Industry is Distorting Canada’s Economy

This is a guest post by Thomas Homer-Dixon, professor of global governance at the Balsillie School of International Affairs, University of Waterloo. It originally appeared in the Globe and Mail and is republished here with permission.

By 2030, Canada’s output from the oil sands will reach about five million barrels a day, more than twice today’s output. Yet, by 2030, chances are also good that the world will have placed a price on carbon emissions to spur energy innovation and wean humanity off carbon-based fuels.

By then, climate change’s impact on global food security will have become starkly obvious. Already, heat waves and droughts in major grain-producing regions have caused food-price shocks and political unrest around the world.

On a planet with a rapidly changing climate, Canada should be figuring out now how to wind down carbon-intensive resource extraction. Otherwise we may soon find that we’re producing masses of stuff we can’t sell.

But anyone who even hints at this idea in Canada is regarded as nuts. Any politician aspiring to national leadership who says such a thing can kiss his or her political career goodbye.

The realities of climate change mean that the oil sands have a best-by date, and that date could come much sooner than industry boosters say. Yet to the extent Canadians are having a conversation about the oil sands, it’s restricted by no-go zones. And in the absence of a full debate, as I wrote recently in The New York Times, we behave like a gambler deep in the hole, repeatedly doubling down on our commitment to the industry.

We do so partly because the industry brings vast immediate benefits to Canadians: billions of dollars of salaries, royalties and taxes that pay people’s mortgages, put kids through school and support government social programs. We do it too because oil sands supporters and the Conservative federal government attack as unpatriotic anyone who criticizes the industry. In the minds of these folks, it seems, the interests of this industry have become synonymous with the interests of Canada.

In January, 2012, for example, in an open letter that is still available on his department’s website, federal Natural Resources Minister Joe Oliver says that “environmental and other radical groups” aim “to stop any major project no matter what the cost to Canadian families in lost jobs and economic growth. No forestry. No mining. No oil. No gas. No more hydro-electric dams.”

What nonsense. People opposed to the oil sands don’t want to wreck Canada’s economy. They want to stop an environmental and economic disaster. This kind of statement from an immensely powerful person such as Mr. Oliver only polarizes our society and shuts down democratic debate. It isn’t worthy of Canada’s long tradition of informed and tolerant civil discourse.

Our democratic conversation about the oil sands is constrained in other ways too. Canadians need to understand climate change and its consequences to make fully informed decisions about the industry. But the Conservatives have slashed funding for climate research, closed climate-research facilities, cut research on climate adaptation, reduced or eliminated funding to maintain archives of climate data, restricted online access to federally funded climate studies, and stopped federal climate scientists from talking about their research without advance political approval.

I believe it’s unlikely this assault on Canadian climate science would have happened in the absence of the oil sands industry’s influence – channelled through the Conservative’s powerful Alberta caucus – on federal policy.

When oil sands critics are attacked as anti-Canadian and the flow of scientific information needed to make informed decisions about the industry is restricted, Canada’s democracy is harmed. This is one of the reasons I argued, in my Times article, that Canada is beginning to exhibit the characteristics of a petro-state.

We’ll never become a fully blown petro-state, of course: Among other things, oil extraction doesn’t make up a sufficient fraction of the Canadian economy. But we know that societies highly dependent on resources such as oil have common features: Not only do the extraction industries gain influence over the state, but these societies’ economies often suffer from skewed capital investment and low innovation. The Organization for Economic Co-operation and Development, in its 2012 Economic Survey of Canada, identified exactly these features in the the country’s economy and suggested that they were partly a result of Canada’s dependence on natural resources.

Canadians need to start talking about whether it’s wise to keep putting so many economic eggs in such a fragile basket. Small-c conservatism used to mean a commitment to prudence in public policy. But with respect to the oil sands and the related issue of climate change, the policies of the current Conservative government are radical and reckless. They could cause Canada enormous future harm.

Image Credit: Kris Krug via flickr