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Does Canada have a bad case of "Dutch Disease" AKA "Resource Curse"? And, if so, what can be done about it?

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socialdemocrati...
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Joined: Jan 10 2012

I understand. I just don't know how you expect to simultaneously achieve worker ownership, and ask those workers to stop focusing on profitability, and still be able to run the company in the long run. (Let alone reinvent those companies so our quality of life keeps pace with other innovative economies.)


M. Spector
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Joined: Feb 19 2005

"Stop focusing on profitability"? Workers don't "focus on profitability" unless they are shareholders. Otherwise, workers have no responsibility for ensuiring the profits of their employers. The capitalist system's drive to maximize profits has nothing to do with the "focus" of the workers; it's built into the economic laws that govern the way owners of capital use that capital to increase their own wealth.

You seem completely flummoxed by the idea of an enterprise that operates on a non-profit basis in order to satisfy collective human needs. You say you understand, but obviously you don't.

I'm talking about economic activity that is not primarily aimed at making profits for the owners of private capital, but rather is primarily aimed at producing manufactured goods that people need and find useful.

Try to imagine, if you can, a parallel universe exactly like ours, except that in that universe there never was a Canadian Broadcasting Corporation. Then someone suggests in 2012 that Canada should have a publicly-owned, non-profit broadcasting network that would provide services and content to Canadians that private broadcasters refuse to provide because there isn't enough profit in it for them. Would your response be that such an enterprise is impossible because it wouldn't be able to make a profit?


socialdemocrati...
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Joined: Jan 10 2012

Workers care about profitabiliy. That's how companies continue to exist, and the jobs that come with it. As soon as news leaks that a company has become unprofitable, workers get worried. Bankruptcy is especially troubling. Even the CBC is profitable. It needs to be.

Further... if you're proposing that workers are now controlling the company, they would effectively become its primary/only shareholders. They'd only care about sustained profitability even more. Their investment depends on it.


M. Spector
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Joined: Feb 19 2005

You're an idiot. The CBC is not profitable. It doesn't have to be.

You're an idiot. Workers who work for a non-profit enterprise don't have to "worry" about profitability. DUH!

You're an idiot. Control doesn't mean ownership. And ownership doesn't have to mean "making a profit".

And did I mention you're an idiot?


socialdemocrati...
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Joined: Jan 10 2012

Here's the first CBC financial statement I could find (more where that came from), where they emphasize the importance of maintaining profitability.

http://cbc.radio-canada.ca/annualreports/1999-2000/6_2_3_1_00.shtml

Even non-profits have to maintain profitability. It just means that profitability is held in balance with other goals. A non-profit that fails to maintain a surplus doesn't exist anymore. Having been on the board at nonprofits, I can tell you that as an effective controller of a non-profit I still have to care about profitability. I can also tell you that when funding dries up, employees at non-profits get VERY worried. (And when programs get cut, they get extremely disappointed.) I imagine that worry would only go up if employees were the effective directors of the organization.

This idiot keeps refuting the argument that you're trying to make. Care to try again?

And flagged for personal attack.


Erik Redburn
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Joined: Feb 26 2004

dp


M. Spector
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Joined: Feb 19 2005

I apologize for calling you an idiot.

Did the CBC financial statement show how much of a subsidy they are receiving from the federal government - a subsidy without which they would not be able to operate? Do you consider the government subsidy to be part of the CBC's "profit"?


Erik Redburn
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Joined: Feb 26 2004

M. Spector wrote:

You're an idiot. The CBC is not profitable. It doesn't have to be.

You're an idiot. Workers who work for a non-profit enterprise don't have to "worry" about profitability. DUH!

You're an idiot. Control doesn't mean ownership. And ownership doesn't have to mean "making a profit".

And did I mention you're an idiot?

 

PLease stop calling other people names Spector.  I know youre a favoured child here but even favourite children have to follow certain rules.  Or at least so I've been told.   The belief that companies need to make money above their basic operating costs is actually quite sensible and understood by the vast majority of people on the left now.  Just because certain entities can be operated at cost (or more accurately a pre-set budget) doesn't mean it would be sustainable for the whole economy to operate that way.  Many believe the failure to offer incentives for more succesful operations or more productive workers is one of the reasons that communist economies ultimately fell behind and failed.  The current leaders of Russia and China appear to agree, and so apparently do most of their people.


Erik Redburn
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Joined: Feb 26 2004

M. Spector wrote:

I apologize for calling you an idiot.

Did the CBC financial statement show how much of a subsidy they are receiving from the federal government - a subsidy without which they would not be able to operate? Do you consider the government subsidy to be part of the CBC's "profit"?

 

That's not the point of the argument you were making.  You were claiming that 'we' don't need profits period.  CBC operates on a budget taken out of general revenues, its continued existence within our present ecoomy hardly proves your original contention.


M. Spector
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Joined: Feb 19 2005

Erik Redburn wrote:

Just because certain entities can be operated at cost (or more accurately a pre-set budget) doesn't mean it would be sustainable for the whole economy to operate that way.

I didn't talk about the "whole economy". I talked about publicly-owned enterprises that are not required to maximize profits for shareholders. Is this a category of economic activity with which you are completely unfamiliar?

Quote:
Many believe the failure to offer incentives for more succesful operations or more productive workers is one of the reasons that communist economies ultimately fell behind and failed.

There is a difference between incentives and profits. There is no reason why non-profit enterprises cannot offer incentives. The best incentive is a decent wage and benefits.


M. Spector
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Joined: Feb 19 2005

Erik Redburn wrote:

You were claiming that 'we' don't need profits period.

I'm saying that there is no reason why a manufacturing operation has to operate at a profit unless it uses private capital, because private capital demands that it be allowed to appropriate surplus value.

The CBC is unprofitable. And yet it exists, because it fulfills a need other than the enrichment of the owners of capital. Not all economic activity has to be done primarily for the purpose of accumulating private wealth.

This is like talking to a kindergarten class.


socialdemocrati...
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Joined: Jan 10 2012

M. Spector wrote:
I apologize for calling you an idiot.

Did the CBC financial statement show how much of a subsidy they are receiving from the federal government - a subsidy without which they would not be able to operate? Do you consider the government subsidy to be part of the CBC's "profit"?

Yes, I do.

And if you're proposing that more and more of the country be operated as Crown corporations, you have to follow it to its logical conclusion.

The CBC operating budget is $1.5 Billion dollars, and somewhere between 1/2 to 2/3 of that comes from tax revenue.

To give you some perspective, our (shrunken) export sector still generates $400 Billion. When we turn all of those into crown corporations, are they going to have to sustain $400 billion in sales without tax revenue? That is, are they going to have to remain profitable?

Or are they going to require an additional $250 Billion in tax revenue to operate so they don't have to "worry"? Keep in mind that all of the government's spending is currently pegged at just over $250 billion now.

You do realize what you're proposing is effectively impossible to achieve? And even if it were achievable, it would probably be a path to national bankrupcty?


Erik Redburn
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Joined: Feb 26 2004

M. Spector wrote:

Erik Redburn wrote:

You were claiming that 'we' don't need profits period.

I'm saying that there is no reason why a manufacturing operation has to operate at a profit unless it uses private capital, because private capital demands that it be allowed to appropriate surplus value.

The CBC is unprofitable. And yet it exists, because it fulfills a need other than the enrichment of the owners of capital. Not all economic activity has to be done primarily for the purpose of accumulating private wealth.

This is like talking to a kindergarten class.

 

I told you to stop insulting others personally, or is acting superior the best you can do?   I'm aware of how you phrased it but you seem unable or unwilling to even consider what others are arguing.  Once again, its one thing to point out a Particular public sector corporation which Can operate without a (growing) profit margin, its something else again to argue that its proof that whole economies can effectively operate that way.  At least for very long.

Now if we want to talk about HOW profits are made or whether profit levels are way out of line with actual operating expenses, then maybe we could find some common ground.


Erik Redburn
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Joined: Feb 26 2004

M. Spector wrote:

Erik Redburn wrote:

Just because certain entities can be operated at cost (or more accurately a pre-set budget) doesn't mean it would be sustainable for the whole economy to operate that way.

I didn't talk about the "whole economy". I talked about publicly-owned enterprises that are not required to maximize profits for shareholders. Is this a category of economic activity with which you are completely unfamiliar?

I didn't mention 'maximising profits for shareholders' either, and neither did 'social democrat'.  He specifically pointed out that even worker owned cooperatives might need some profit margin to work with.  Having worked for independent 'non-profits' personally I know they tend to work on very limited often shoe-string budgets, which usually depend on volunteer labour and the charity of others.   The CBC is not an independant non-profit, but its budget is largely dependant on other taxpayers, most of whom work elsewhere in the private sector.  Its dependant IOW on the wealth created by the rest of the economy and therefore not necessarily a good argument for state ownership of everything -even if the average worker doesn't actually care about their bosses returns.

Quote:

Quote:
Many believe the failure to offer incentives for more succesful operations or more productive workers is one of the reasons that communist economies ultimately fell behind and failed.

There is a difference between incentives and profits. There is no reason why non-profit enterprises cannot offer incentives. The best incentive is a decent wage and benefits.

 

Youre just avoiding the point, which has only been made a million times before.  'Incentives' aren't just 'decent wages and benefits' (and I presume lifelong job security) but need to be seen as reflecting an individual workers' relative contribution.   If they are applied equally with no regard to individual productivity or input or position (hardly precise ideas but can be built on scales and experience) those decent wages might also be seen as disincentives to some/many/most.  Closer to my point, companies themselves might need some market incentives, to reflect revenues coming in and, in the bigger picture, to keep up with general trends or shifts in economic patterns or most importantly changing technologies.  Directors and management IOW should also reflect (and react to) performance in the wider economy, economies which themselves do not stand still.  Which could also be one of the weaknesses of modern corporate capitalism.


Fidel
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Joined: Apr 29 2004

socialdemocraticmiddle wrote:
You do realize what you're proposing is effectively impossible to achieve? And even if it were achievable, it would probably be a path to national bankrupcty?

 

I'm with Spector on this one. This talk of running public services like businesses subject to rules of the currently bankrupt financial system is a hopeless argument. If governments refuse to raise taxes, tariffs or make subsidies available, then what they are doing is handing over sovereign economic planning and decision making to the banking cabal. None of us vote for or elect bankers and money speculators living in other countries who pretend that they possess some sort of psychic power over government spending in Ottawa and the provinces. And their unmentionable claims to political impotence in Ottawa are simply not true. Their political impotence is not a real medical condition. It's all in their heads. They are fully capable of funding the CBC and all manner of social spending. And there is no real excuse for the $100 billion dollar infrastructure deficit across Canada. They are full of shit.


socialdemocrati...
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Joined: Jan 10 2012

I'm all for raising taxes to pay for infrastructure, and a select few public companies such as the CBC. In fact, that's what I concluded was the best course of action to combat the dutch disease in post #17.

I also appreciate that when sovereign countries go into huge amounts of debt, bankers end up having de facto power over democratically elected officials. But that's the point: we should balance a budget. They don't have inherent power over government. It only arises if we start borrowing from them.

What Spector is proposing is something far more drastic, infeasible, and (at least the way he's described it) harmful. He says that we should wind up the $400 billion dollars in exports to other countries -- just get rid of it -- and try to re-orient those factories so all their products are used at home with no waste. But there will be either huge waste (that is, unusable goods) that drives the country into bankruptcy, or huge job losses that drive workers into poverty. Probably a combination of the two.


M. Spector
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Joined: Feb 19 2005

The $400 billion in exports is not coming from manufacturing. That's the whole point of this thread. Most of it is coming from raw materials exports, and that is making manufacturing exports more difficult. Read the thread again.

I never said we should get rid of any exports. I said the fact that we may not be able to export manufactured goods because of our high dollar does not mean that we should not be doing manufacturing at all. The capitalists' response (and apparently that of their social-democratic fans) is that if "we" can't export goods "we" can't make (enough) profit to justify continuing our investment in manufacturing, so plants must close and workers must be unemployed. You seem to agree with that logic because you insist that even non-profit publicly-owned enterprises have to make a profit.

How's your local public transit service doing? Making a nice healthy profit or going out of business because it can't? How about your local public school? Are they paying nice dividends to their shareholders the way private schools do? Or are they going bankrupt because they aren't making a profit and there's no "incentive" for the teachers to teach?


Catchfire
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Joined: Apr 16 2003

M. Spector wrote:
You're an idiot. The CBC is not profitable. It doesn't have to be.

You're an idiot. Workers who work for a non-profit enterprise don't have to "worry" about profitability. DUH!

You're an idiot. Control doesn't mean ownership. And ownership doesn't have to mean "making a profit".

And did I mention you're an idiot?

I realize you've apologized for this, M. Spector, but to be clear, this is not okay. Please do not attack other babblers like this.


M. Spector
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Joined: Feb 19 2005

I'm sorry, Catchfire. I got frustrated. I forgot that babble is not a safe place for people to propose economic solutions that do not conform to the dictates of the capitalist market system, without having to re-argue the most fundamental tenets of economic reality all over again. I'll try not to make that mistake again.


socialdemocrati...
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Joined: Jan 10 2012

What economic reality are you talking about? The extent of your argument seems to be based on a parallel universe. Certainly no successful economy that's ever persisted in human history.

You're twisting my words if you think teachers should earn dividends. The school system, the CBC, the post office -- they all need to be fiscally solvent. They're all being attacked by conservaitves on the basis of their cost. And when it comes budget time, and there's a huge deficit because of education spending, Conservatives say "we need to privatize all this stuff". A modest increase in tax revenue would balance the budget. End of story.

What you're proposing is far more drastic. And it doesn't make sense.

Some of those products just don't have demand in Canada. We're a country of only 30 million people, who is productive enough to create 1/3 as much GDP as a country with 1.3 billion people. After decades of trade, our economy is now dependent on foreign demand. (In fact, our economy is also dependent on foreign supply: products that we lack the capabilities and capacity to produce here.)

What difference does it make if you want to slash all $400 billion in exports, or to keep exporting $200+ billion in raw resources while we eliminate the slightly less than half that comes from manufacturing? It's the difference between disaster and complete disaster. Even if there's domestic demand for some of those goods, you're still dealing with mass layoffs for workers who can no longer earn wages because no one is buying those other goods.


M. Spector
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Joined: Feb 19 2005

Sorry, the thread diversion is over. You've successfully managed to derail the discussion into arguments over the meaning of "profit", "non-profit", "ownership", "incentive" and other ordinary terms that one can easily look up in a dictionary. Mission accomplished.


socialdemocrati...
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Joined: Jan 10 2012

Funny, I was going to say the same thing about you. My real issue was your whole proposal to fix the Canadian economy by destroying it.


KenS
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Joined: Aug 6 2001

We could always try the topic, eh?

 

From the Steelworkers:

 

Oilsands Economics 101

 

USW National Director Ken Neumann and Environmental Defence Executive Director Rick Smith weigh in on debate about the role of Canada's petro-currency and its impact on manufacturing jobs.

 

 


Erik Redburn
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Joined: Feb 26 2004

M. Spector wrote:

Sorry, the thread diversion is over. You've successfully managed to derail the discussion into arguments over the meaning of "profit", "non-profit", "ownership", "incentive" and other ordinary terms that one can easily look up in a dictionary. Mission accomplished.

 

It migt be easier if you understood the topic.  Profit doesn't have to be used for 'shareholders' or any other particular group claiming ownership, including management.   However if there is no margin above the cost of doing business -profit IOW- it makes it difficult to ride out bad years, expand said business, pay back any start up capital with interest, or adjust to changing markets conditions.  Not unless we attempt to remove market forces entirely, meaning removing choice from the equation entirely, consumer as well as investor.  That too can be hazardous, as experience has shown.  I do I admit also retain a belief that the people managing a company should get a slightly larger slice of the income pie than an entry level rookie, that's where incentives come into it again.  Guess in your eyes that would make me a rightwing Republican.


Erik Redburn
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Joined: Feb 26 2004

socialdemocraticmiddle wrote:

I'm all for raising taxes to pay for infrastructure, and a select few public companies such as the CBC. In fact, that's what I concluded was the best course of action to combat the dutch disease in post #17.

I also appreciate that when sovereign countries go into huge amounts of debt, bankers end up having de facto power over democratically elected officials. But that's the point: we should balance a budget. They don't have inherent power over government. It only arises if we start borrowing from them. ...

 

I do disagree with you on the second point though.  Balanced budgets are not absolutely necessary, not every year.  That doesn't mean borrowing from bankers or international sources though, as you seem to think.  Government, unlike individual mortgage holders or small businesses, can print its own capital and borrow from itself, or rather from our own future setting its own terms.   Budgets should however be balanced over the entire business cycle, and overruns kept to minimums.  The failure to observe that boom-time rule was one of the reasons that Keynesian economics started failing in 1970's.  Before that it paid for a world war, pulled us out of a depression, and practically built the entire middleclass and the infrastructure it relies on.


socialdemocrati...
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Joined: Jan 10 2012

I don't disagree, Erik. It shouldn't be some kind of hard line requirement that we always balance a budget, let alone a constitutional amendment as some circles believe. Sometimes you have to borrow to grow, and sometimes you have to borrow to avoid a catastrophe. But as a general rule, we should avoid becoming to indebted to the banking sector.

It's good to see this topic getting more attention in mainstream circles. I've seen at least a few NDP candidates mention it. Now the Steelworkers mention it. The conventional wisdom is we should all be kissing the feet of oil tycoons for making Canada rich off oil, when the reality is oil can be a curse on the broader economy for anything that's not oil.

The Steelworkers point to Norway's stabilization fund. But I think we can be more bold. $100 million in infrastructure is a modest investment, and one we should make even without the tarsands problem.


JKR
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Joined: Jan 15 2005

It looks like the shale oil boom may drastically alter the world's energy equation. If the shale oil boom in the US drastically increases the supply of North American oil, Alberta's and Saskatchewan's boom could turn into another bust. That in turn would solve our petro-dollar dilemma.

 

The American oil boom and its impact on Canada

Quote:

Two years ago it was believed that oil molecules were too large to extract from shale. But now, new fracking technologies and horizontal drilling has led to the biggest oil boom in many years. After Russia, the U.S. has now become the largest non-OPEC crude oil producer in the world, followed by Canada.

 

What North Dakota Could Teach California

Quote:

All this is thanks to the technological leap forward represented by hydraulic fracking, a process that allows drillers to blast through underground shale rock and pump out oil and natural gas. Projections of how much oil is here seem to grow every year.

In 1995, the U.S. Geological Survey estimated 150 million "technically recoverable barrels of oil" from the Bakken Shale. In April 2008 that number was up to about four billion barrels, and in 2010 geologists at Continental Resources (the major drilling operation in North Dakota) put it at eight billion. This week, given the discovery of a lower shelf of oil, they announced 24 billion barrels. Current technology allows for the extraction of only about 6% of the oil trapped one to two miles beneath the earth's surface, so as the technology advances recoverable oil could eventually exceed 500 billion barrels.

 

 Oil Shale Reserves

Quote:

America’s oil shale reserves are enormous, totaling at least 1.5 trillion barrels of oil. That’s five times the
reserves of Saudi Arabia! And yet, no one is producing commercial quantities of oil from these vast deposits. All that oil is still sitting right where God left it, buried under the vast landscapes of Colorado and Wyoming.

 

 

 Shale oil's promising future

Quote:

And profits alone are not the only reason for rushing to shale oil using fracking technologies. With 3,000 new wells expected to be drilled in the next 12 months, there is the expectation of 2 million new jobs that could be created and a further hope that oil from shale will significantly increase our domestic oil supply.

It’s a drilling home run: more jobs, decreased reliance on foreign oil and technological advances that portend to bring the break-even costs per barrel down from the $60 where it hovers now. Of course, no amount of money could have generated these barrels even a short time ago. With the United States the global leader in shale oil reserves totaling perhaps a billion barrels, it’s full steam ahead.

 

 

 Weir sees shale oil and gas boom spreading 

Quote:

LONDON, Feb 29 (Reuters) - British engineer Weir Group said a boom in the shale oil and gas industry in the United States was spreading to other countries as it posted a 34 percent rise in 2011 profit that was at the top end of expectations.

The pumps and valves maker, which last year twice upgraded its profit guidance due to rapid growth in drilling for rock-trapped hydrocarbon reserves in the United States, said on Wednesday the industry was picking up pace in countries like Poland, Argentina and China.

"We are seeing the internationalisation of shale really starting to move forward. It is probably moving forward a bit quicker than we thought," chief executive Keith Cochrane said.

 

 

 China vigorously promoting shale gas exploration, development 

Quote:

In the first 5 months of 2011, Chinese crude oil import dependence reached 55.2%, according to the Ministry of Industry and Information Technology.

China's shale gas resource is 100 trillion cu m, and the technically recoverable shale gas resource is 36 trillion cu m.1

 

Analysis: Mexico in no rush to exploit shale oil bonanza

 

Quote:

"Even in the most conservative scenarios, exploiting these shale gas resources could and should spark the development of a national industry without precedent," Herrera - who directed Pemex Gas before his current post - said at an event shortly after taking office. He said the industry could attract investment of between $7 billion and $10 billion a year.

 


JKR
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Joined: Jan 15 2005

New-look oil rush shifting global markets

Quote:

Here's another structural transformation to add to all the others that you have to get your head around: it's the transformation of global energy markets as a result of shale oil and gas.

We've already got the digital revolution and the switch from consumption to savings after the GFC, not to mention the rise of China and India. Now we have the death of peak oil.

...

Forget declining oil, there is a new global oil rush. The US has an estimated 2 trillion barrels of shale oil reserves - about 70 per cent of the world's total and eight times the oil reserves of Saudi Arabia. The gas reserves, in the US, Australia and elsewhere, are vast.

The cost of extracting shale oil ranges from $US95 per barrel down to $US12.

...

The importance of this for the world is hard to exaggerate. The distribution of energy on the planet is shifting: the stranglehold that Middle Eastern dictatorships have over the world's energy supply is loosening and just as the rise of manufacturing in China shifted the world's economic axis, so will the rise of shale energy in North America.

...

If the United States could become self-sufficient in energy, its current account deficit would disappear and the US dollar would start rising again.

 


KenS
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Joined: Aug 6 2001

Shale oil is another one of those hyped up bubble investments that is supposed to be the real deal that turns around supply. First North America, and then the world.

Last decade it was deepwater Gulf or Mexico. We know where that went. Even before the Horizon blowout, reserve estimates were radicaly scaled back as costs were more realisticaly integrated... costs for which there never is going to be a technological silver bullet.

Shale oil is the same. Not quite as technologicaly challenging, but as dangerous. And where is all that water it sucks up supposed to come from? Alberta has it to waste on the tar sands if they choose. North Dakota doesn't. "Hh, we'll figure that out." Where have we heard that before?


KenS
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Joined: Aug 6 2001

Those articles linked to on shale oil come primarily from known boosters- let alone that even the non-bossters do not adequately take the claims with a grain of salt.

Here is an example from one of those articles. After [barely] noting that access to water, and contamination from shale oil on the scale being discussed are unresolved issues:

"These are, however, surmountable hurdles and the costs of operations are likely, if not guaranteed, to continue to drop."

There is that famous completely unwarranted confidence. Actually, the costs are guaranteed to go way up. For one thing, drilling rigs are cheap right now. But the bigger cost increase will be from inevitable tighter regulation. But there's the rub. These people BANK on there being no more regulation than there is now. And the talk about improved ways of drilling and production is just that: talk only. The irony is that costs go up way more than their sanguine expecatations even when they mostly get their way about no new regulations.


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