Why not shale gas? Part 73

I don’t have any new points to make on this but in light of the protest and media coverage I think it is worth restating that as far as I know there are only three jurisdictions in the world that have banned shale gas exploration and one of them, New York, is reconsidering its position.

So the question remains, why New Brunswick?  Why should one of the poorest and least developed provinces (from an economic perspective) join the club of three (maybe soon to be two)?

That report out a few weeks ago from David Suzuki was critical of shale gas – but basically acknowledged it was here to stay and called for good regulations.

As you know there are certain politicians trying to whip up populist furor over this to put ideological daylight between themselves and their competition but that is a callous way – IMO – to get votes.

As I have reported here – the drilling companies are having well water tested before drilling and if there is a hint of problems, the government is well within its rights to shut things down.  So why preemptively ban it?  That is the question.

Some folks treat this like any other left/right or common man vs. big industry debate but it isn’t.  Every single ‘have’ province in this country generates a significant amount of its government revenue and overall economic activity from natural resource royalties (mining and oil and gas mostly).  New Brunswick generates less revenue from these sources than all other provinces with the exception of PEI.

If there is a viable industry there, we should try and responsibly develop it.  In addition, we should be looking to find ways to use the gas to further economic development.

I’ll conclude with this.   As I have said, the NB populace is cranky these days.  Like Twisted Sister, they are not going to take it anymore.  We saw this with toll highways, auto insurance, NB Power sale.

If you go back to the McKenna years he basically froze government spending for five years, he amalgamated municipalities, forced the RCMP on municipalities and a host of the tough measures and got elected with three strong majorities and, if I recall, left office with a 70 percent approval rating.

If Premier Alward thinks that shale gas will bring him down, I am not sure he will fall on that sword.

It’s realpolitik circa 2011.

7 thoughts on “Why not shale gas? Part 73

  1. People are usually pretty generous with ‘approval ratings’. The reality is that with each successive election McKenna was getting fewer and fewer votes. So there’s that.

    The central problem with the shale gas issue, besides the most obvious-that its ‘bad’, and why WOULDN”T you protest against something that’s ‘bad’-is that at least a sizeable population simply doesn’t believe the NB government is CAPABLE of ‘regulating responsibly’. And in this they are mostly right, and like I’ve said before, bending over and begging for jobs is no way to get concessions. The government never said anything about this issue until protest began. There was no profit sharing until protest began. There was no regulation requiring gas companies to divulge what was in their sludge before the protest began.

    So to throw that argument back, how can an intelligent man who runs a blog which basically daily chastises the NB government for having virtually the opposite of what could be called ‘good economic development policy’ actually look at all these facts and say “sure, I trust the government to regulate this industry”. Particularly when the NB government has NO track record of regulating ANY industry particularly well?

    So there’s that. There is also the simple point that in this case it is the irate populace that is correct. Canada has a deeply dysfunctional economic system. Canada is virtually the only developed country whose economy is essentially owned by foreign powers. We have the worst record on environmental protection per capita, and per capita we are the least efficient, with a quickly deteriorating health and educational system.

    And virtually EVERY think tank in the world has said to Canada that it MUST develop a more potent knowledge economy, because resource extraction is no guarantor of, well, anything except eventual decline.

    That doesn’t even get into the numerous other issues, like that natural gas is more expensive in NB than anywhere else, and all expectations are that this gas will head to the states as fast as Irving’s gas does. So people are quite right to say “well, whats the benefit?”

    But to state the obvious, this shouldn’t be a provincial decision at all, but a local one. If I own rural property I should be the one to decide whether drilling is done next door, not some people in Fredericton who will never be affected. But in the end, while there was a good sized crowd, it is not the majority of even a significant minority. So we simply have no idea about what the ‘populace’ thinks. It’s highly doubtful that Alward will cave though, don’t fear that. If you recall it was Hydro Quebec that pulled the plug on the NBPower deal. Without a gas industry, Alward’s chances of re-election will be nil in a spiralling economy. He certainly isn’t an ‘ideas man’ and is no Frank McKenna. But then, he is a tory, and the rural vote is their backbone, and its mostly rural people complaining (native people don’t vote so there is no issue there), so who knows.

    Oh yeah, and given that the only test they’ve done has come back negative with results so bad that one of the major partners pulled out-it may be a moot argument anyway.

  2. We knew when we started there was no uranium; only Inco pushing it’s share price going into the sale to Vale. But there really is gas, and we will tap it when we are back to living in the pre-LJR tar-paper shacks that went north of Moncton as far as you wanted to drive in the early ’60’s. It’s those ‘good ole days’ we want back, I guess.

  3. There are many very vocal opponents to this process for fear of what it could potentially do to their (our) water supply, and the surrounding landscapes.

    From what I have read and heard so far, the potential damage to peoples ground water supply seems very small, and seems to be more related to bad business practice, and negligence than to contamination from the process. As someone who lives in a rural area, I don’t think urban dwellers have a deep enough understanding of rural development or proper planning. You don’t plan industry beside a school, for example,in a city, so maybe you don’t frack in certain rural areas. Local municipal councils usually decide those things. Why shouldn’t local rural communities have the same ability.

    It does bother me that the process uses fresh water supply by the thousands and millions of gallons, which is then contaminated with chemicals and they stay down there, removing the water out of the natural system entirely. On a micro scale it may not be a big deal, but on a Macro scale, who really knows?

    I don’t believe its the most intelligent or logical use of a resource that is more important to life than natural gas will ever be, and natural gas is only popular because, as a fossil fuel, it is less harmful than to the environment than other fossil fuels. It’s still harmful, just less so. We are still destroying our atmosphere, just not so quickly.

    It seems counterintuitive to me to destroy a resource as important as water to extract something that harmful as fossil fuel to run our technology. It some ways it feels arrogant, and in others just plain stupid. But it’s not like the human species has ever done anything stupid before. (Investment banking for example). But relative to everything else going on in the world, like the water they use to extract oil in the oil sands, the way I see it, the risks are manageable.

    However, experts claim there are natural gas reserves hiding in the shale all over the place, and the price of natural gas is quite low, which makes our timing to develop the industry in a competitive market, with other jurisdictions equally hungry for investment, at the worst time. In other words it’s a buyers market, and we’re selling.

    My fear is that we will again sell our natural resource cheap, in desperation, because our provincial government is starving for revenue, and we can’t afford to wait for a better market.

  4. To be fair, one thing the market is looking at-at least in the states, is recycling their ‘water’ that is used to frack the shale. Not sure exactly how this is done, but according to online sources-which may or may not be valid, the amount of water needed is going down, and in a couple years it may be possible to simply recycle the ‘water’ over and over again. The bad side of that is that I would assume this makes that recycled ‘water’ more and more toxic, and as Paul says, who knows what the macro effect of that is (since I assume the end result is to leave the sludge way down in the earth). It’s one thing to wipe out a species, its quite another to mess around with the earth’s crust.

    And to be fair to the protest, there are NO regulations setting limits on how much water can be used by the industry, and as far as I can find, there doesn’t seem to be ANYBODY with information on where the recycled water that has already been used is located and what is being done with it. If ANY of those issues are brought up by government, its a direct result of the protest. So again, these guys are getting the results that ‘armchair’ critics want (and think will come from government ‘naturally’)-and don’t even get thanks for it.

    And to address Jim Kitts, experts say a lot of things. They said there was gas under PEI, and their government set up co-ops and all kinds of investment vehicles and discovered-no gas. In NB, like I said, the first real test results resulted in a major partner pulling out of the project entirely. Those who remained have maintained that the problem was the ‘recipe’ in the frack, as well as the depth and location. But for some reason, the ‘experts’ with that other company determined that it wasn’t worthwhile. Just remember that LOTS of people were saying there was Gold in Rawdon Hills long after the gold rush.

  5. I just had a thought. Ever think of joining the protest and making a demand of your own? This blog has often berated the government for not using energy to foster economic development. Well, what about lobbying now while the government is listening to get some of that gas to stay in the province for economic development initiatives.

  6. It is easy to protest cuts or potential new revenue streams when there is a misconception that the status quo is sustainable.

    Borrowing a billion a year to twin highways, and build more hospitals and schools is not sustainable for a stagnet population of 750,000. Servicing the current debt at today’s interest rates is challenging enough; add in some interest rate increases and a few more years of borrowing before we are balanced and the outlook is bleak.

    New Brunswickers may be more open minded to economic development if there was more widespread understanding of our fiscal situation.

  7. Thats probably what was said in the seventies and nineties. It is ‘sustainable’ depending on how the finances of the country stand up. And again, its hard to convince NBers of financial instability when MLA’s and those at the top refuse to even consider raising taxes. It was interesting in the Irving rags yesterday that an editor made a direct US correlation-yet he called the Tea Party ‘irrational’ for rejecting tax hikes, yet for Alward he just said ‘sometimes you have to make tough choices’. He never called Alward ‘irrational’ for essentially having the same ideology as the Tea Party.
    And while the deficit is bad, when you look at the Greece, Ireland and even US’ of the world, its not as bad as all that. Payments are still made on debt charges, and if economists can go around saying that corporate income taxes should be reduced to zero, then the public certainly is correct in doubting the sky is falling.

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