This is an expansion of my last piece on the tar sands. The expanded form was republished as a Bullet at Socialist Project. I’ve decided to post the new bits here as they can stand alone.
On a path to nowhere
One way to see how this happens is to turn to the concept of path dependence from the language of mainstream economics. Path dependence is the idea that history matters and reverberates strongly in the present; more metaphorically, economic decision-making (whether about production or consumption) can follow increasingly well-worn grooves. Indeed in many ways, path dependence is actually a powerful challenge to parts of the mainstream framework, undermining equilibrium and efficiency as paths can diverge from the “optimum” – and also potentially undermining rational choice theory as decisions viewed in isolation now seem irrational.
Even if the tar sands account for but 2% of our economy, getting off this path may be difficult. Taking seriously the idea that a large percentage of fossil fuels will have to be left in the ground to prevent even more dangerous levels of global warming, path dependence becomes even clearer. A recent report notes that 40% of “high-cost” oil projects planned over the next 10 years (requiring a high per barrel cost to break even) are in the tar sands. Despite the potential for volatility in commodity prices, even higher extraction costs or serious political intervention on climate change, the tar sands may continue to expand, a furrow that requiring we dig ourselves deeper and deeper into a climate hole.
The mechanisms are various. Canada’s history of staples-based resource extraction lays the foundation. Expanding infrastructure and expanding extraction reinforce each other: “if we have the pipes, we might as well fill them!” The existence of vocal lobby increases the chance that the now almost $1 billion in direct subsidies, low royalties and significant externalized costs remain absorbed by society at large and encourages further growth of the industry. High profit expectations (until 2009, operating profit as a percentage of sales was significantly higher in the resource sector than in other sectors of the Canadian economy) and an insular boom town mentality also contribute. (more…)