[R-G] Blaming labor for peak oil problems

[Macdonald Stainsby]

Blaming labor for peak oil problems
http://www.salon.com/tech/htww/2007/08/15/oil_sands_labor/

A labor shortage is "wracking" the province of Alberta, Macleans tell 
us, brought on by the mad rush to exploit the vast reserves of petroleum 
locked in the fabled oil sands of Canada's Wild West. The jobless rate 
in Alberta is a "historically low" 3.4 percent even with net inward 
migration in 2006 hitting 62,000.

Labor shortages mean workers have leverage, a fact that appears to be 
inspiring some dismay among the oil companies operating in Alberta. In 
July, five trade unions authorized a strike mandate, setting the stage 
for a showdown in which oil sands workers demand a larger piece of oil 
sands profits.

As Macleans describes it, labor's demands are just one more factor 
making life hard for oil companies. The price of steel, driven by 
Chinese demand, is also surging, and government officials are making 
noises about reducing some of the incentives that originally aimed to 
encourage investment in the region. Just three years ago, it cost $35 
dollars to extract a barrel of oil from the tar pits. Now the price is $50.

     Higher material costs, inflation, labor crunches, uncertain 
government policy -- while none alone breaks the bank -- are in 
aggregate damaging, narrowing profit margins to the point where 
companies will pass on future endeavors. "Expected rates of return on 
these projects for the most part are probably sub-teen now," says 
Friesen. "When you consider cost and risk of executing a project -- that 
begins to become marginal." If no new projects are breaking ground in 
five years, the impact on Alberta's economy (and on Canada's) will 
devastate.

What's missing from this picture?

Could it be the lack of any mention of how extraordinarily energy 
intensive the process of extracting oil from the bitumen deposits of 
Alberta is? So much so that there's been talk of building nuclear power 
plants just to provide energy for the oil sands industrial complex. Or 
what about the problem that as the low hanging fruit -- the deposits 
that are reasonably close to the surface and accessible -- gets picked, 
the cost of going after the harder-to-reach stuff explodes?

And not one word about the immense environmental costs of oil sands 
extraction, which usually involve the wholesale destruction of vast 
tracts of land, along with the diversion of huge quantities of water. 
(And we won't even bother to complain about the failure to internalize 
the long term costs of the greenhouse gas emissions produced by 
Alberta's heavy industrial activity. That would just be silly.)

Does it cross anybody's mind that the rising price of doing business in 
Alberta constitutes clear proof that cheap oil's days are over? That 
this is, in fact, a textbook case illustrating the principle of peak 
oil? As supply tightens, the pressure to go after more 
difficult-to-exploit sources of energy will rise, and so, accordingly, 
will the cost of that energy.

Nope, much easier to blame labor for picking a bad time to demand a 
bigger piece of the action.

-- Andrew Leonard


-- 
Macdonald Stainsby
Coordinator, http://oilsandstruth.org
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