Oil servitude and the new Canadian petrostate: An interview with Andrew Nikiforuk

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Andrew Nikiforuk is an Albertan journalist and author of several books, including the acclaimed Tar Sands: Dirty Oil and the Future of a Continent. Lori Theresa Waller interviewed him late last month on the eve of a talk he gave in Ottawa for the launch of his latest book, The Energy of Slaves: Oil and the New Servitude. What follows is an excerpt of their conversation. Part II of this interview will be published later this week.   

Lori Theresa Waller: You write, "When it comes to oil, there are only masters, traders and slaves." Which category would you put Canada in?

Andrew Nikiforuk: We're all three, right now. Canada has almost become a plantation economy where all conversations are about the production and export of oil. If you're opposed to that agenda, you're a radical and unpatriotic. That's the kind of low-level conversation you have in petrostates. But we're also a slave to oil in the sense that half the country is dependent on foreign oil from the Middle East and the North Sea. We are not an energy independent country at all. 

LTW: This concept of a petrostate is one you discuss at length. What are the defining characteristics of a petrostate? 

AN: The person who's done the most work on this is Terry Lynn Carl, an extraordinary political scientist from Stanford University. Americans pioneered oil, and now we have an American who's pioneered the study of how oil impacts states and governments. Technically a petrostate is any jurisdiction where approximately 20 per cent of its income is coming from hydrocarbons. Alberta was there a long time ago. The first thing that petrostates do is they dismantle the relationship between representation and taxation. They say, "We're gonna make you all feel warm and fuzzy about oil production by lowering your taxes." They don't add the next part, which is "Oh, and by the way, if we're not taxing you, we're not going to represent you."

Petrostates first and foremost represent the developers of the oil resources. The next thing that happens is that you have so much easy money flowing into a petrostate that all statecraft disappears. Whether you're looking at Russia or Saudi Arabia or Iran or Nigeria, or Alberta, or Louisiana, Alaska, and Texas, you're struck by the lack of innovation, the lack of smart public policy. Any and every problem is resolved by pouring petro-dollars on it. 

Then the third thing is secrecy. Petrostates are not very transparent because there are so many issues about the money -- who's getting the money, who's watching the money, and is any of the money being saved? That information is very hard to come by. In Alberta, there is a whole fog that surrounds any royalty issues. In fact the government actively discourages any discussion of royalties or corporate taxes. 

The fourth characteristic would simply be hubris. When they're sitting on top of all these hydrocarbons, governments act as though they've suddenly become wiser and nobler than the rest of mankind. Venezuela was going to have a grand experiment, Mexico was going to have its miracle, and Iran was going to create a new civilization. Alberta had the "new advantage," and Canada is now going to be the "new energy superpower." Oil and bullshit go together. 

LTW: Do you see a danger of Canada overall becoming a petrostate? 

AN: Absolutely. The governing party, its base largely comes from Alberta, and its financial backers are largely coming from the oil industry. Canada seems today to be only about one thing, and that is the production and export of oil -- at any cost. 

LTW: What are the essential changes that you'd like to see in the way Alberta and the federal government are managing the tar sands boom? 

AN: Since 2008 when I wrote Tar Sands, I've advocated a set of principles that [former Alberta premier] Peter Lougheed outlined in 2006, when he was interviewed for Policy Optionsmagazine. The first was "we need to behave like owners" -- we're not. The second was "we need to collect our fair share." In other words, control the pace and scale of development by imposing fair royalties and corporate taxes. Right now we're giving away the resource; we have among the lowest royalties and taxes in the world. 

His next principle was "we should be saving for a rainy day." He was actually dealing with this whole issue of representation and taxation. He was saying the majority of this money should be saved for future generations; our government should be running on taxes, and not on these artificial oil revenue streams. Then the next one was "one project at a time, or go slow."

His other principle was "add value." We shouldn't be exporting raw bitumen, any more than we should have been exporting raw logs and raw furs. We should add some value to this resource, because that's where the real economic benefits come in terms of jobs -- in the refining and upgrading of bitumen. Instead of peddling bitumen, we should be selling diesel, gasoline and petrochemicals. 

His last point was that we should clean up the mess. You can't develop a resource like this without adequate scientific monitoring, environmental regulation and enforcement. This is a program that has been entirely ignored in this country. It's what we need to do. 

LTW: At the federal level, a lot of the current policy approach was already in place when Chrétien and Martin were in power. Do you think a Liberal government in Ottawa would make much of a difference in terms of tar sands policy? 

AN: No. The danger is that here's this great pile of cash. Every political party's going to look at this pile of cash and say, "Here's an opportunity for us to push our political agenda." Stephen Harper is using bitumen revenue the same way Margaret Thatcher used North Sea oil revenue to push her political revolution. 

Only two parties have indicated they might do something differently: the Green Party and the New Democrats. It would take a courageous political party to say, "We're not going to run on this revenue, we're saving it for future generations."


Lori Theresa Waller is a freelance writer and editor based in Ottawa. She has written for Briarpatch MagazineThe Dominion and The Ottawa Citizen.

Part II of this conversation will be published later this week. 


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