Monday, September 3, 2012

The Libertarian Land of Bitumen

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At the request of a friend, I spent the weekend reading Tar Sands: Dirty Oil and the Future of a Continent by Andrew Nikiforuk. As the title of the book implies, the author isn't sympathetic to the oil sands in Alberta. Yet Nikiforuk takes the criticism to new heights, citing everything from the cocaine trade in Newfoundland to doctor shortages to highway deaths and even inflation as a result of the oil sands industry. Even the title of this post is a direct quotation from the book [1]. Needless to say, Tar Sands is an incredibly biased hit-piece that, while citing real environmental and crony capitalist problems, doesn't offer any credible solutions. This is partly because Nikiforuk is uneducated in (or unaware of) Austrian economics and despite his criticisms of government policy, believes government planning can fix things.

Financed by the David Suzuki Foundation, it comes as little surprise that Tar Sands is as biased as it is. But before revealing Nikiforuk's criticisms, perhaps it's best to highlight the book's strengths. It's a short book and can be read in a couple sittings, so it does an excellent job of summarizing the crony capitalism going on in Alberta. On more than one occasion Nikiforuk highlights cases where corporate conglomerates have essentially bought politicians, write regulations and bend over backwards to silence whistle-blowers. Nikiforuk also does a good job at summarizing the environmental destruction going on in Northern Alberta. The once drinkable lakes and rivers are now polluted beyond belief, ducks fly in and never come out and fish have mutated to resemble something from The Simpsons. Obvious to the Austro-libertarian is the lack of private property rights, but despite a couple mentions of it in the book, Nikiforuk doesn't seem to have put the connection together.

A majority of the land in Northern Alberta is owned by the provincial or federal government. The energy companies Nikiforuk blasts throughout his book are merely leasing the land the government claims ownership to. This entitles the government to royalties, yet ensures that the profitability of energy companies never relies on the long-term sustainability of the land. Never dawning on Nikiforuk, he instead suggests the government increase its royalty rate to discourage production. In the epilogue "Twelve Steps to Energy Sanity" he calls for carbon taxes, higher sales taxes and a national strategy for "energy security and innovation." In fact, the only consistent theme throughout the book is the government's apparent lack of planning. In nearly every chapter Nikiforuk sneaks in his approval of government planning while criticizing the current plans in place. Apparently Nikiforuk believes that the right people just need to be charge, and that these people will be immune to the lobbying of corporate conglomerates and their own self-interest.

Some of the arguments in Tar Sands are just downright weird. In a chapter entitled "The First Law of Petropolitics" the author claims that oil hinders democracy. One of the bad things about an oil rich region, according to Nikiforuk, is that "governments with lots of oil revenue don't need to tax their citizens" [2]. Evidently, this is a bad thing because "in the absence of taxes...[citizens] may not even bother to vote." Gasp! Nikiforuk advances his low-carbon agenda by concluding that if Canadians value democracy we "must consume less oil." I finished the chapter with the Hoppeian thesis in my mind - that democracy is the God that failed. If Nikiforuk is right, I reasoned, then I should proceed to turn on every light in my house before going for a long drive in an SUV with no particular destination in mind.

In obvious anti-capitalist fashion, Nikiforuk disparaged the boom town of Fort McMurray. Once a quiet cottage town, it is now full of prostitutes, drug dealers and "exploited" foreign workers. He has an entire chapter devoted to highway 63, the "highway to hell," where the number of accidents and deaths are not a result of increased traffic and inefficient road socialism, but rather, the fault of the oil sands. A homeless man addicted to crack? That's "bad bitumen luck" [3]. Calgary's property taxes that have nearly doubled - blame bitumen. People are driving BMW's and Porsche’s - the horror of bitumen. Long lines at the hospitals and a shortage of doctors - that can't be the government's fault. It's obviously bitumen extraction.

Yet it is all the government's fault. From environmental degradation due to a lack of private property, to externalities arising from the lack of enforcing private property rights. While Nikiforuk tries to blame the tar sand boom for all these problems, the cause is poor management from lack of private property. While Nikiforuk complains of not enough "plans," the reality is that there are too many plans and they're all influenced by crony capitalists and bureaucrats looking to line their pockets and climb the hierarchy.

The reason Andrew Nikiforuk doesn't devolve deeper into the problems is because, like all radical environmentalists, Nikiforuk most likely doesn't want to develop the tar sands. Although he never comes out and admits it, I got the impression that Nikiforuk admires the 'noble savage.' It's probably just as well that he begins his book with the story of Charles Mair, the explorer who ventured to the Mackenzie River Basin over a century ago. "The most interesting region in all the North," was how Mair described the undeveloped tar sands. Despite the amount of facts, figures and statistics in the book, it seemed that Nikiforuk was writing from emotion. An envy of a time that has past and the hatred of a system he incorrectly labels as laissez-faire. It is for this reason that I suggest Tar Sands be read before or after reading Ezra Levant's Ethical Oil: The Case for Canada's Oil Sands. The truth may lay somewhere in the middle.


[1] page 107
[2] page 154
[3] page 55

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