Killing the Golden Goose!

Environmentalists are constantly yapping about "dirty" oil and shutting down the oil sands. Their wish might come true. Already we are seeing layoffs and easterners returning home to claim EI.

Atlantic premiers have toured Alberta for several winters now to plead for native sons and daughters to return home, but they could never drown out the siren call of those six-figure oilpatch paycheques.
Not any more. With two of the four premiers sending their regrets to Monday’s third summit in Calgary, despite the lure of prime Flames hockey tickets, there’s a polar-opposite subtext in the messaging: Don’t move back all at once. Please.

So those wonderful cheques that easterners were sending home for years are about to stop, further depressing the Atlantic provinces. That is step one in the success of the environmentalists fight. Free the workers from their oppression in the "tar sands".

Next we have both the provincial and federal governments working to stop the oil production.

Alberta and Ottawa moved Monday to charge an energy heavyweight with breaking environmental laws after the industry – and the country – were humiliated last spring by the image of hundreds of oil-soaked ducks dying in a toxic byproduct of the oil sands.

Syncrude Canada Ltd. could face fines of up to $800,000 if convicted under provincial and federal environmental legislation in connection with the deaths of 500 waterfowl at one of its tailing ponds north of Fort McMurray, Alta.

Step two is killing the golden goose, or should I say ducks. Environmentalists are excited about the power they now have against government. Let's see how excited they are when Alberta can not send any money to the federal government to fund their little environmental projects because the goose is dead.

Back Over A Year Ago...

I wrote a post on May 18th 2007, about stagflation. Funny how no-one listened to me then, might they now?

Let me take you back to the 70's, to something called stagflation (High inflation, high unemployment). Around 1975/6, OPEC started controlling the supply of oil, raising the price of oil, the US auto industry was producing gas guzzling autos just when the Japanese were entering the market with fuel efficient vehicles. To make matters worse, the auto unions, asked for, and got COLA's (Cost of Living Allowances), meaning that if inflation went up by 4%, they wages would automatically go up by that amount, and then they could still negotiate an increase on top of that rate. We also had the NEP (National Energy Program) that restricted the price of gas, shutting down Alberta.

Flash to the present. High oil prices, inflation on the rise, unions striking, climate change costing Alberta billions, high dollar leading to unemployment in the manufacturing sector, starting to sound familiar?

Beware, stagflation is not something that the government can fix. If the government targets inflation by raising the interest rate, that slows the economy, but if manufacturing jobs are being lost already, that kills even more jobs, making unemployment worse. So, if the government fights unemployment by stimulating spending, it makes inflation worse.

What got me started looking for that post was this one by Unambiguously Ambidextrous.

It's not a sexy topic, but it is important, start thinking about what might happen to you, if the Bank of Canada raises the bank rate? Is your mortgage locked in? With rising oil, home heating, and food prices, not to mention property taxes, can you survive higher interest rates? Over a year ago, I saw the signs (and my office mate who happens to have her Masters in Economics also agreed) of stagnation. I still see them, and Dion's tax grab will act the same as the NEP did back then, it will kill jobs across Canada, not just in Alberta.

Scare mongering? You decide, but even the Globe and Mail has an article about it.

Remember, my post is from May 18th, 2007, hate to tell you I told you so, but I did, over a year ago. Will you listen now?