Let’s not be too quick to cheer for the market as oil prices slump

Another title for this piece could be oil prices and politics. The last few weeks have been full of worries about the fate of Canada’s oil sector. Global oil prices are falling, pipelines are stalled and a few prominent tar sands investments have been canceled. All of these stories have been accompanied by cheering from the barricades representing those who want to Canada ween itself off its high-carbon fossil fuel industry as quickly as possible.

I, too, won’t be shedding any tears for the tar sands but it is good to keep things in perspective. Questioning the market for allocation of investment towards more fossil fuel development and more climate change, the lesson of the week is not to cheer too quickly for the market’s changing fortunes. Here’s a few charts that provide some of that perspective. (more…)

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Kshama Sawant talks socialism in Seattle and beyond

Last year, Kshama Sawant shocked the continent by winning a seat on Seattle’s City Council. She defeated an incumbent Democrat to become the first openly socialist city councillor in Seattle in a century. Sawant, an immigrant from India with a background as a software engineer and an economics professor, is a militant socialist activist who played a major role in the 2011 Occupy protests. Not your typical politician to say the least.

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Sawant’s surprise electoral win in Seattle has sparked discussion across North America. Last week, she made her first speaking appearance in Canada, addressing a fundraising event organized by the Coalition of Progressive Electors in Vancouver. I sat down with her before the event for a wide-ranging discussion touching on everything from her background in economics to the minimum wage compromise in Seattle and the role of transitional demands in fighting climate change to the history of sectarianism and building today’s left.

Side note: you can now subscribe to Political Eh-conomy Radio on iTunes. Follow this link.

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Climate catastrophism and building a climate movement

This will be a weekend of global climate activism. Marches and forums are planned around the world, with the largest set for New York City: the three-day Climate Convergence and the People’s Climate March on Sunday expected to draw hundreds of thousands. I spoke with Arun Gupta, co-founder of The Indypendent, author and journalist living in NYC for a critical but constructive take on the weekend’s events and climate politics more generally.

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Paths old and new: beyond the tar sands

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…)

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The outsize (un)importance of the tarsands

It’s easy to overestimate the importance of the tar sands to the Canadian economy. Tar sands and their pipelines are after all hailed by the ruling Conservatives, sections of the business press and the ever-present oil lobby as this young century’s “nation-building” project. Yet, a survey recently making the rounds highlights the relative unimportance of the tar sands to Canada’s overall economy: while most Canadians overestimate the importance of the tar sands and 41% are guess that the tar sands account for 12 %to 48% of Canada’s GDP, the reality is that they directly contribute a mere 2% to our domestic output.
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What’s the risk? Climate activism aiming at supply and demand

One way to think about climate activism is to see if it focuses on the supply of or demand for fossil fuels – pipelines or cars, hydrocarbons or carbon emissions. This distinction is not a new one, is doubtless very simplistic and has often been used to chastise activists. Here, I hope it will draw out some potentially useful thoughts that centre on the aims of activism and the idea of risk.

In an article published yesterday in The Nation, Chris Hayes makes an interesting analogy between the struggle for climate justice and abolitionism: despite numerous differences, both assume the destruction of potential future income streams – abolition by freeing slaves, climate justice by leaving fossil fuels in the ground. The weak link that climate activism can exploit is the capital-intensiveness of fossil fuel extraction. This is a re-framing of the supply side of the story. (more…)

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BC’s resource economy: is it sustainable?

Today’s focus is on British Columbia’s resource economy. Although I’ll be talking about British Columbia in particular, the same issues come up in various guises across North America wherever the large-scale extraction of natural resources is economically important.

My two guests are Marc Lee, Senior Economist with the BC office of the Canadian Centre for Policy Alternatives, and Karen Cooling, long-time labour and environmental activist retired from Unifor. My first conversation with Marc focuses on the current state of BC’s extraction economy, looking in particular at LNG development. In the second part, I speak to Karen about the relationship between unions and the environmental movement in BC, partly from a personal perspective.

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Where’s the tax in BC’s carbon tax?

British Columbia’s carbon tax has been getting some high praise lately. A recent article in the Atlantic called it “the crown jewel of North American climate policy”. Such assessments need some tempering. BC’s carbon tax can tell us important things about the limits of fiscal policy today, which in turn questions the potential it has for fostering significant environmental change.

Tales of the tax’s effectiveness focus on its environmental impacts. Almost six years since its introduction, it is indisputable that the carbon tax has had some impact on resource use and emissions. This is clearly a good thing. There is debate about the extent of this impact and where it is concentrated but it’s there – see these charts.

The carbon tax is presented as not being as problematic as other “market-friendly, eco-friendly” measures such as cap-and-trade. These end up being largely corporate giveaways – new sources of commodification and profit. BC’s carbon tax has been hailed as a policy that rather than giving money back to corporations brings revenue back to the people.

Yet as opposed to those who make the carbon tax out to be an unqualified success, I think any hurrah-optimism needs to be seriously qualified. (more…)

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Selling prosperity in a time of austerity: Budget days in BC and Quebec

Two very different provincial governments tabled their budgets this week. The freshly-elected BC Liberals and the seemingly election-ready Parti Quebecois both delivered what they termed “responsible” budgets. While the two governments identify with opposing ends of the political spectrum and face distinct political climates, these differences did not prevent their budgets from displaying some eerie similarities. Since these budgets tell the same stories, they are laying the ground for a common response. (more…)

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