McQUARRIE – The end of oil dependency is only a motion away
WHAT WOULD happen if Canada’s and therefore B.C.’s natural resources were no longer as strongly valued or even needed by the rest of the world?
Over the decades we’ve experienced mini versions of this scenario, usually brought on by a global recession and lasting for a few years. So it’s not unusual and we always rationalize and explain it away by referring to our resource sector as a Boom and Bust type economy.
However, let’s suppose that 10 years from now, someone somewhere invents a new technology that makes oil and gas obsolete. Almost overnight, oil as the engine and prime driver of the industrialized world has been replaced by this new non-carbon technology. The Industrial Age that began with steam will now be driven and likely renamed by this new technology.
In this story line, oil will not disappear overnight as there’s an obvious legacy factor… A time span that is needed to phase out or retool carbon based infrastructure and I suspect that cleansing cycle would be in the neighbourhood of 20 or so years.
However, our economy will feel the impact immediately. Oil and gas producers, now faced with this new technology will begin to dump inventories, prices will fall and we will once again be facing revenue and tax shortfalls along with growing unemployment. A storyline very much like what we are now experiencing.
You only have to look at the current job loses in Alberta, Saskatchewan and Newfoundland to get a sense of what happens when demand falls off and prices take a beating. The difference, and it’s a big difference, with this future scenario is there would be no boom/bust cycle. It won’t be coming back and this time the bust cycle would be permanent.
Sound a bit far fetched and thinking it won’t happen that fast? Consider for a moment that you’re reading this column on your phone, or tablet or computer, receiving your data through the internet and likely doing so wirelessly. Yet just 30 or so years ago, none of the technologies you now use without so much as a second thought, existed.
If we had met back in 1985 I told you how you’d be reading my column in 2016, you’d smile at me nervously while calmly backing away. I mean how far fetched and crazy could I be? So, humour me, like you would have in 1985 and think about the impact it will have on the world and more importantly, for us as an oil and gas-producing nation.
Where does our economy go? When someone tells me that carbon based energy sources will not be replaced in our lifetime or even that of our children’s, I have a tendency to look at them strangely.
Others, uncomfortable with this type of conversation and looking for fault, try for the pivot by pointing out that I drive a car, heat my house and use products (plastic) manufactured with oil. However, I remind them of the thousands of scientists and engineers working on ideas to eliminate my carbon dependencies
As sure as the automobile replaced the horse and buggy, something will replace the car and associated technologies. You just have to look at the work of Tesla’s Elon Musk to see the direction we’re headed. His battery technology is now open source and available to all without licensing. And his ideas and existing technologies for batteries and solar arrays are just one reason I don’t invest in energy stocks.
Our politicians, especially those here in B.C., will say I’m wrong. I’m also certain some of you reading this column will agree with their position. Others will say such thoughts are part of a green anti-industry conspiracy.
There are those that remain convinced that carbon energy is the pathway to a long term and prosperous future. I disagree, believing instead that we can decide to take this time-limited opportunity to shape and be part of the future that is likely going to happen.
For now, though, I will leave you with this thought. If I am wrong you lose nothing, you get to remind me of my stupidity on a daily basis and our resource based economy charges ahead, unchanged for another 100-plus years.
If the politicians are wrong, our resource economy begins its collapse within two, possibly three, decades and, to date, they have done nothing to prepare you for that outcome. And remember, denial is not a solution.
Bill McQuarrie is a Kamloops entrepreneur. He can be contacted at billmcquarrie@gmail.com. He tweets @mcrider1.
ArmchairMayor.ca 
As someone with a keen and active interest in this subject, I would say your projections are – if anything – overly optimistic when you ponder how long we have to figure this stuff out. It’s happening now, but most of us haven’t figured that out yet. If we want to remain competitive and relevant, we need to plan for the transition NOW, or be stuck to catch up.
Those who know me are very aware of my thoughts on this… perhaps ‘painfully aware’ is more correct, if I’m honest! But let me find my soapbox and make some points…
I made it a personal goal to reduce my carbon footprint. My house is heated and cooled with a geothermal system. I drive an EV and I have solar panels on my roof. Other than the carbon associated with the odd trip on a plane and my gas stove and BBQ, my personal carbon production is really limited to that connected with production and transportation of purchases – food, clothing, whatever. How have the changes impacted my life? Turns out, positively!
1) The house is always at the seasonally comfortable temperature, because the geo system doesn’t get set back at night or while away at work. It just ticks along month in and month out and the house is more comfortable than previous homes I’ve had with gas heat.
2) My car is the best car I’ve owned. The best *anything* I’ve owned, actually. Yes, a Tesla is expensive and it was a big gulp to purchase. But my payback due to minimal maintenance and ridiculously cheap ‘fuel’ costs balance the equation very quickly (people generally see only the sticker price and don’t factor in ownership costs). Over my expected period of ownership, I’ll be significantly better off than with any reasonable typical car/truck/SUV. The usual comment I get is ‘that car is unaffordable’… often made by someone with an expensive pickup or SUV who pours hundreds of dollars a weekend into an RV or boat. Priorities… I drive where I want, when I want, with no guilt and only minor costs. Feel like a Blizzard on a hot summer day? If the answer is ‘yes’, the next question is whether we should go to Merritt or Cache Creek to get it (seriously). The performance and general driving experience is better than virtually any car on the road. And the Model 3 will address the ‘cost’ problem – next year! I’ve lost count of the number of people I’ve taken for a spin and often have had take the wheel. Seriously, I can’t keep track… but I do know than *nobody* walked away with a negative or even a neutral impression. Electric cars could take over the market based on performance alone, but reliability and operating costs will be the blow that kills the internal combustion engine. The first domino has already fallen and the rest are guaranteed to follow.
3) The solar array I have on the roof of my home generates enough power on an annual basis to drive my car 30,000 km… 50% more than the typical car travels in a year. What I don’t consume myself on a sunny day goes out to the grid and powers my neighbours… and my meter ‘turns backwards’. Yes, it cost money to install, but it’s paying a return of around 5% annually… and will for decades. Last time I checked, that’s a tad better than the banks are paying, and my house value is now that much higher.
Almost anyone can take a first step… be it an air-source heat pump or a few solar panels on the roof. Anyone who owns a car and a home is very likely to be able to juggle their finances to make *something* work. And do a little more whenever finances allow.
In my case, social responsibility drove me to take the plunge. However, knowing now what I didn’t know then, I can say that the economics alone are enough. And those economics are improving every year. Nuclear power has priced itself out of existence (research the Hinkley Point project in the UK for a lesson on project inertia… applicable to Site C perhaps?). Wind is getting cheaper and solar is becoming even more so. I recently saw a story on a molten-salt solar facility proposed for the US… it was being criticized as a bad idea, because it would require power to be sold into the grid at 2.8 cents a kWh to be economically viable… and solar/wind cost projections suggest *that* will be too expensive! Seriously?? If so, how can LNG (for example) compete, even without the true carbon costs applied? It only can at the moment because the renewable infrastructure hasn’t been built. But neither has the LNG infrastructure. So the bet is, how long will it take to build out renewable infrastructure? ‘Not very’ is my prediction. And I question whether Petronas will actually pull the trigger on a deal for LNG in BC, because anyone reading the tea leaves will suspect that it won’t be competitive by the time it’s ready to produce. That’s not tree-hugging climate change stuff talking… it’s pure economics.
Using your example of technology… the adoption curve quickly went straight up. If renewables continue to trend that way (as they are today), oil and gas infrastructure (and maybe even Site C) will simply be bad deals in a dollars and cents way… the environmental arguments almost become moot.
The fact that our government is apparently incapable of seeing this may turn our province into a ‘have-not’ sooner than we think. Short term dollars and votes won’t cut it in the long term.
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Pretty unlikely the oil and gas demand will suddenly disappear. Hopefully it will phase out gradually. As the ‘green’ technology strengthens, hopefully, Canadians will be in on the replacement technologies.
The disaster in Alberta, and it is a disaster, is brought on by thoughtless strategies on the part of governments. Alberta cannot sell Canadian oil to other Canadians. Our money pours out of the east into foreign coffers. Pipelines are risky, but not as risky as oil tankers. Canada has some of the strictest pipeline standards in the world. I wonder how strict the safety standards are on the oil tankers off the east coast.
As for the horse and buggy being replaced by the automobile, there are still areas that use animal power. The process did not happen overnight. In the 1940’s the German army still relied heavily on horse transport. The push should be for increased efficiency, reduced use and cleaner emissions as we look for better systems.
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A lot of the “green stuff” is presently only a placebo. A “feel good” gudget, not a good and effective one. Regardless, who needs a 7 liters diesel to drive to McGill to drop off a bag of grass clippings or drive to Costco for a cartfull of junk or to go downtown for coffee?
Bill, IMHO you are both right and wrong and the politicians need replacing but we have no one to replace them with.
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