A clear diagnosis of the Oil Sands fever
variant of Dutch Disease may be just what the doctor ordered to rally
Canadian workers in the fight against global warming.
A rapid increase in natural resource investment and revenue usually
drives up a nation’s currency. This generally makes other industries
less competitive and can greatly weaken a country’s manufacturing base.
Widely known as "Dutch Disease" (named after a period of rapid
expansion of the natural gas industry in the Netherlands), this well
established economic paradox has become a taboo subject in this country.
Canada’s highly class-conscious elite is worried that manufacturing
workers might make common cause with environmental groups and even some
business sectors to challenge the carbon/profit bomb known as the tar
sands.
A recent Pembina Institute/Equiterre report titled Booms, Busts and Bitumen
argues that Canada’s economy is facing "Oil Sands fever." The study
points out that the Bank of Canada believes one-third of the Canadian
manufacturing sector’s decline has been caused by a more expensive
dollar, which rose alongside the price of oil from $.61 US in 2002 to
$1.10 US in 2007 (and has hovered near par since). The study concludes
that 40% to 75% of the currency increase has been caused by rising
commodity prices, principally oil.
The higher price has led to a boom in production and export. Between
2002 and 2012 energy grew from less than 13% of total Canadian exports
to over 25%. And if plans to double tar sands production over the next
decade are realized, this dependence will increase.
A February Canadian Centre for Policy Alternatives study gives a
sense of the jobs impact of Oil Sands fever. The Bitumen Cliff notes:
“The forestry sector lost close to 30,000 positions. And the
manufacturing industry, of course, haemorrhaged nearly a half-million
positions. For every new job created in the petroleum sector during the
past decade, 30 have been lost in manufacturing. Across all of the
export-oriented goods industries… net employment declined by almost
520,000 jobs in the past decade.”
While the precise job toll is debatable, the rapid growth in tar sands exports has undoubtedly hurt manufacturers.
Despite the obvious link between tar sands expansion, a higher dollar
and a decline in manufacturing, corporate sycophants denounce any
politician or established organization that draws attention to the
relationship.
Federal Leader of the Opposition, Tom Mulcair, was aggressively
attacked for raising the issue as was former Ontario Premier Dalton
McGuinty. In response to the Pembina/Equiterre report, Financial Post
editor Terence Corcoran called the mainstream Pembina Institute
“off-kilter ... fomenter of oil sands phobia ... keen on triggering a
nation-splitting debate over the oil sands.” For his part, Sun Media’s
Lorne Gunter wrote: "Left-wing environmentalists should just come clean:
they hate the oil industry, they hate profits and love big government."
Both Corcoran and Gunter cited a recent Canadian Manufacturers and
Exporters (CME) study lauding the tar sands. It notes: "In recent years,
much of the discussion linking the oil sands with manufacturing has
included so-called 'Dutch disease,' with any supposed relationship being
characterized as inherently negative. While the effect of the rising
dollar has impacted the competitiveness of the Canadian manufacturing
sector, especially exports, the underlying problem was poor labour
productivity, lack of diversity among customers, and lower rates of
overall capital investment. While increased investment in the oil sands
may have strengthened the Canadian dollar, it is by no means the root
cause of the challenges faced by Canadian manufacturing. Rather than
having a negative impact on Canadian industry, the oil sands are
providing a customer base for manufacturers."
While most sane people would argue it makes little sense for the
lobbying arm of Canada’s export-oriented manufacturers to dismiss
oil-fuelled currency increases that have added 5, 10 or 30 percent to
their costs, the CME is a highly ideological institution. When
environmental or labour regulations add a few percentage points to their
costs it goes berserk. For instance, before Parliament ratified the
Kyoto Protocol in 2002 the CME claimed that reducing greenhouse gas
emissions 6% from 1990 levels by 2012 would cost the country 450,000
manufacturing jobs. (Perhaps CME researchers should check to see if they
didn’t mistake a minus sign for a plus symbol since the trashing of
Canada’s Kyoto commitments through tar sands expansion has contributed
to significant job losses in manufacturing.)
The CME tends to represent the voice of its biggest members, many of
whom have plants in other countries. They can shift operations to
lower-cost jurisdictions or use the threat of moving jobs to force wage
and benefit cuts.
But that’s only part of the explanation for the CME’s pro tar sands
position. That organization is, in fact, a mouthpiece for capitalists
who are more widely invested than ever before and thus less wedded to
particular firms. Without too much difficulty they can move their
capital from lower margin to higher profit industries. It’s all about
chasing profits and damn the negative consequences for workers.
In recent years the tar sands have been a major source of profit
making. The Parkland Institute estimates that oil sands operators
realized pre-tax profits of $260 billion between 1986 and 2010 (the
public owners of these resources received less than 10 per cent of that
sum). Over the past decade Canadian resource companies’ profit margins
have nearly doubled the service, manufacturing and "nonfinancial"
sectors of the economy. According to a late 2011 calculation, the market
capitalization of the 405 oil and gas companies listed companies on the
Toronto Stock Exchange topped $379 billion.
The boom in tar sands profits and stock prices clearly benefits
leading Canadian capitalists. A recent Canadian Business magazine
profile of the "100 richest Canadians" explains: "Collectively, the
individuals on the Rich 100 are worth $230 billion, more than the total
gross domestic product of many countries in the world, including New
Zealand, Ireland and Portugal. And this year has been one of their best
ever. Their combined net worth surged by more than 15% … While the
actual economies of Canada and the U.S. aren’t faring particularly well,
so long as the U.S. Federal Reserve maintains its stimulus program,
stock markets will tick higher."
The "100 richest Canadians" -- and the rest of the 0.01% of top
shareholders who control most corporations -- dominate corporate
lobbying associations such as the CME and they also have significant
influence with many think tanks, university departments and news
outlets. Like their wealthy patrons, these institutions tend to back
whatever generates the most profit (that’s the point of capitalism after
all). As a result, there’s little interest in discussing the
deleterious job impacts of Oil Sands fever.
But environmentalists and union activists should be making common
cause by explaining how tar sands profits that go to the rich and
powerful cost Canadian workers hundreds of thousands of jobs. Expansion
of the tar sands and the resulting bouts of Oil Sands fever may be good
for capitalists but it will further weaken the job market and do great
harm to Canadian workers.
Source: Rabble.ca