Resource communities and the Plan B question
By Peter Ewart
The NEBC Resource Municipalities Coalition based in Northeastern BC has called for the development of a sophisticated natural gas processing industry in the region that could include gas to liquids, methanol production and the manufacture of petrochemical products from natural gas (1).
This comes in the wake of stalled provincial plans to build facilities for exporting huge amounts of Liquid Natural Gas to Asia and other international locations. The provincial government made major promises in the last election regarding LNG production and shipment, including the creation of 100,000 jobs, a billion dollar Prosperity Fund, and $1 trillion in economic activity. However, since then, there has been a major downturn in the oil & gas industry as a whole, as well as corporations ramping up their LNG export capabilities elsewhere and a glut of production on world markets (2).
Towns like Fort Nelson, Dawson Creek, and Fort St. John have been hit hard by this downturn with rising unemployment, municipal revenue problems, and business closures. As Kathleen Connolly, director of the Dawson Creek Chamber of Commerce describes it: “There’s a recognition we have stranded assets here. Our markets are diminishing, so what do we have to do to capitalize on that resource?” (3)
However, some coalition members feel that the province has put too many eggs in the LNG basket. “There is no Plan B in place,” says Bill Streeper, the mayor of Fort Nelson (3).
Certainly, the natural gas resource in northeastern BC has tremendous potential in terms of processing and manufacturing. Literally hundreds of products can be derived from natural gas, including fertilizers, paints, solvents, and plastics (4) (5). Yet, with a few exceptions, this side of the gas resource remains undeveloped in BC.
So, it is positive that northeastern communities have taken on the issue of developing a Plan B, not a small task given the nature of the globalized economy today. In effect, they are tackling one of the greatest problems facing our provincial and national resource economies.
For example, many BC communities depend on resource extraction such as forestry, minerals and metals, natural gas, and energy. Much of this is exported to foreign markets in raw form. There is some processing, especially in forestry, but even that is mostly at the primary or semi-processed level.
However, these local economies have long been plagued by boom and bust cycles which often cause serious economic and social disruption, a recent example being the northeastern region of BC which has a dependence on natural gas extraction and export.
That being said, boom and bust cycles are a component part of capitalist production. However, with the development of a globalized economy, new factors have come into play which are exacerbating the problem further.
The development of a world market has taken place over the last couple of centuries. However, modern day globalization has ramped up the mobility of capital to an enormous degree. Huge amounts of capital from multinational corporations and global financial oligarchs, often fueled these days by central bank liquidity, can swoop around the world at rapid speed in pursuit of the highest return on investment and the highest rate of profit.
But for every action, there is a reaction. Capital that flees one jurisdiction for higher yield somewhere else in the world, often leaves in its wake stranded facilities, unemployed workers and broken communities.
As Charles Hugh Smith points out: “The mobility of capital is an enormous benefit to the owners of the capital, but it creates extraordinary instability for those who are not as mobile.” Or as, Michael Pettis puts it: “If there are imbalances in one country or region, there necessarily must be the opposite imbalances in another” (6) (7).
It also creates a race to the bottom for communities and regions which are forced to compete with others in the world to attract corporate investment by slashing wages, cutting taxes and reducing regulations in their jurisdictions (8).
Even profit-making enterprises can be threatened if multinational corporations can achieve a higher rate of profit elsewhere.
The result of this financialized globalization and pursuit of the highest rate of profit is perpetual instability, aggravated boom and bust cycles, and economic bubbles. No jurisdiction is safe or secure. Even regions that are highly industrialized, like the U.S., Europe and parts of Canada, can have their manufacturing and processing sectors hollowed out, resulting in massive unemployment.
This issue has been brought up again and again in the U.S. presidential race especially by Donald Trump and Bernie Sanders who have repeatedly criticized U.S. based corporations for outsourcing and fleeing the country for other jurisdictions in the world where the rate of profit may be higher.
Their solutions revolve around imposing tariffs of some kind to punish these corporations if they move abroad and then attempt to ship products back into the U.S. market.
At the core of the problem is whether global multinational corporations and the financial oligarchy will be allowed to roam the world like pirates or whether restrictions will be imposed on them which favour the interests of workers, local businesses and communities.
International trade is not a bad thing in itself, nor is the export of raw resources. But in an increasingly globalized world, it becomes imperative to build resilient, well-rounded and diversified local and national economies that are sustainable and have a healthy balance between manufacturing and resource exporting.
That should be the aim, but to achieve it is not easy . Indeed, it is one of the most difficult questions of our time. Imposing tariffs seems like a simple solution, but opens up a whole host of other problems, including possible trade wars.
We need new ways of addressing the issue that are consistent with the times we live in. But, as a first step, we need to discard old dogmas, including the ones that the highest rate of profit must always rule, that multinational corporations should roam the world relatively unrestricted, and that corporate interest should be allowed to trump the national and public interest as in various so-called free trade agreements.
Above all, we need to recognize, as the communities in northeastern BC are doing, that a “Plan B” is not only possible but a necessity, and that we need to have conversations about solutions, not just at the national and provincial levels, but also at the local level.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: firstname.lastname@example.org
- “Press Release – NEBC Resource Municipalities Coalition holds meetings with Province.” NEBC Resource Municipalities Coalition website. July 19, 2016. http://www.nebccoalition.com/about/coalition-reports/1747-press-release-nebc-resource-municipalities-coalition-holds-meetings-with-province
- Travis, Dermod. “The LNG bubble bursts.” 250 News. July 24, 2016. https://www.250news.com/2016/07/24/the-lng-bubble-bursts/
- Bennett, Nelson. “BC has no Plan B for LNG.” Business in Vancouver. Alaska Highway News. August 3, 2016. http://www.alaskahighwaynews.ca/regional-news/lng/b-c-has-no-plan-b-for-lng-1.2315680
- Ewart, Peter. “Rejecting dogmas about petroleum and climate change.” April 15, 2016. https://www.250news.com/2016/04/15/rejecting-dogmas-about-petroleum-and-climate-change/
- Ewart, Peter. “The role of manufacturing in attaining a renewable-based economy.” 250 News. April 14, 2016. https://www.250news.com/2016/04/14/the-role-of-manufacturing-in-attaining-a-renewable-based-economy/
- Smith, Charles Hugh. “Globalization = Permanent instability.” Zero Hedge. October 29, 2014. http://www.zerohedge.com/news/2014-10-29/globalization-permanent-instability
- Smith, Charles Hugh. “Forget free trade – Focus on capital flows.” of two minds. com. October 28, 2014. http://www.oftwominds.com/blogoct14/free-trade10-14.html
- Parfitt, Ben. “Why BC needs an LNG Plan B.” The Tyee. June 25, 2013. http://thetyee.ca/Opinion/2013/06/25/BC-Needs-LNG-Plan-B/
The province was not going to build anything but rather private industry was going to, and still may if we can keep the NDP out and commodity prices go up enough. Also need all stake holders to be on side, as long as one is not investors get nervous.
Peter for some reason you left out the part where manufacturing followd cheap energy. Countries that have been taken in by the climate change scam and shutting down cheaper energy sources for very expensive inefficient wind and solar are seeing their energy costs rise dramatically.
“Peter for some reason you left out the part where manufacturing followd cheap energy”
So how do you explain Venezuela, Kuwait, USA, Saudi Arabia, and others ….
And on the other end of the scale, the countries with the highest cost of gasoline – India, Pakistan, Philippines, Nigeria, Egypt, etc.
Those are all measured by the % of the average daily wage of the workforce spent on a US gallon of gas.
I think manufacturing follows cheap labour, not cheap energy. energy costs about the same the world over until taxes are factored in.
Various countries have incentives to set up shop. Some operations are movable more than others. Once the incentive are gone, they move to the next place with incentives ….. You might recall the incentives for the call centres in PG. A fleeting moment in time.
Industry is bailing out of high cost energy areas for cheaper energy. Examples of dramatically rising energy costs are Alberta, Ontario, California, the US in general, England, Germany, Portugal, Spain, Australia. Industry gravitating to China, India Malaysia who see the climate scam for what it is and are taking advantage. Laughing all the way to the bank.
“Industry gravitating to China, India Malaysia”
All low labour countries with some high technical skills to boot.
Latest wind installs = 2 cents per kWh . Latest major solar farm install in Chili = 2.91 cents per kWh . Cheapest source of energy in the world . So in some people’s minds all industry will leave for Chili . I wonder why all the worlds industry has not relocated to Saudi Arabia ? After all they’ve had the cheapest oil for a hundred years . What an idiotic notion . There’s a little thing called low wages and suppressed workers . But that’s about to change in a dramatic way . Disruptions are coming faster than some can even imagine .
Gotta laugh, Chile solar farm investors signed a contract to SELL power at 2.91 cents a kWh – they are losing money as the costs are higher than they can sell it for right now. They are not PRODUCING electricity for 2.91 cents a kWh. There is a difference.
They have a solar farm Abengoa 1 in the construction stages that will have a capacity of 210MW peak capacity between solar and thermal for 1.1 billion dollars estimated initial investment. This plant has half the lifespan of Site C (for example), and will produce about 1/5 the power (Site C has a peak capacity of 1,100MW)- costs are comparable per MW to Site C which is considered expensive hydro by many.
There is a place for solar but when you lose your shirt selling the power it kind of puts a damper on your investors – you should know this – you say you are an investor in the market.
Um Ataloss just what is the percentage of renewable generation in the mix? Your figures are not realistic. How come areas investing in inefficient renewables have the highest rates? Countries are cutting back in renewable subsidies and wind and solar that can only exist on heavy taxpayer subsidies are screaming.
Hey right now Alberta is only generating 1\4 of its installed wind energy, the majority from coal and gas.
Australia only 1/3 of its installed capacity
Ontario hardly any.
Most of Asia’s bankers ignore climate risks. Hmm. Rich and dumb, or rich and skeptical?
Ataloss read and weep
China 72% coal 3% wind, 1% other, and that is installed capacity not what is generating coal being 98% available compared to less than 30% availability for what renewables there are.
Twenty five percent of Australians have solar panels on their homes . The kiwis are catching up . So why haven’t all industries relocated to Saudi Arabia ? Following your logic this should have happened a hundred years ago .
So those in Australia with solar where does their power come from when the sun don’t shine? Here is the energy make up in Australia, notice roof top solar is only 2% and that is only installed capacity not real world output. Whats the biggest source of generation, coal. Coal always available.
Seamutt, you ask “where does their power come from when the sun doesn’t shine?”
This article, which Ataloss ignored when I questioned him on it, might provide you with the answer that I am sure you already know!
Chris Mooney, the Washington Post – August 11, 2016: Turns out wind and solar have a secret friend: Natural gas
In Ataloss’ case, I suspect that the natural gas comes from his unicorn farts, haha! Phhfft!
I wish Hydro would allow people to put solar array’s on their house with the power grid as backup without it costing you more than buying it from them in the first place but that reality hasn’t hit yet.
Hydro is not stopping you, where did you get that idea from? But if you look into the costs, equipment, hookup, maintenance your tune will change. What kind of shape is your roof in? Solar in a northern latitude just not make sence especially when there is much cheaper, efficent power at the flick of a switch..
Maybe ataloss can tell about his system, oh wait that was a story about unicorn farts.
You misunderstand, with the regulations and protective systems that Hydro has in place it is prohibitive to buy a solar array. The costs far outweigh any savings to be had.
The dealers in Aussy Land are like snake oil salesmen going door to door with the 0 down 0 percent schemes, I wonder if anyone actually saves anything.
Well there has to be regulations and protective systems in place for any generation you may install. It’s in the provincial electrical code. The main reason safety, not as an hinderance. Follow the rules and go for it, check the equipment procurement cost first will be a shocker. What’s the payback? Ongoing maintenance?.
Think our costs are high check out the provinces dumping money into wind and solar.
Reality has already hit . Merit FNs are leading the way in the caribou . First their school . Next their residences . Pay back time for the school 10ish years depending upon hydro increases .after tenish years it’s all free money . The increases over the next ten years will be substantial . Specially if Christy wins another term . She’s the queen of corperate give always . Some one has to pay and that’s the rate/tax payer .
Sure government agencies can apply for energy grants, but I can’t personally apply for a grant except for a solar water heater
OK so a 4 kW pole mounted system will cost me about $19,000 installed without rebates give or take, will net me about $502 in energy savings the first year of operation (2015 prices). My end of life savings for this unit would be $8,300 to $23,000 or about $15,060 if all goes well in 30 years…??? So I will go in the hole or if we have some super summers I might just be lucky enough to break even???
LOL, they are not allowing me to post, I was making the Christy Clark Government look bad… oh well.
Clicking on the link, we can all plainly see that the Christy Clark Government is bought and paid for by the Oil and Gas Industry. So how are we going to get them to develop options, or a Plan B, that does not include Oil & Gas?
Show us a con that hasn’t been owned and operated by big fossil. I think you’ll have to go back to John A. He was owned and operated by big fur and railroad . First PM to screw BC out of a promise . Twenty one million was too high a price for us joining confederation . That was the price of a fixed link to vansle , as promised . How many billions would that be in today’s dollars .
The history of Ottawa Conservative cons goes all the way back to 1873 . Only the numbers and names change . Every one gets regress , the Chinese , the Japanese , the Indians , the First Nations . Everyone wronged get apologies , money , correcting of wrongs , Except The province of BC . Why ? Because of overwhelming stupidity and historical ignorance in Victoria .
Agreed, did you scroll down to the bottom of the page, because there is a page two (2). Got to hand it to Spectra Energy, they are a serious Donor to the BC Liberal Party. News today is Enbridge has just bought out Spectra Energy, making Enbridge the Biggest Pipeline Company in North America, just watch the money start pouring into the BC Liberal re-election coffers now!!!
In rapist like fashion, it seems we have company that won’t take “No” for an answer when it comes to their proposed 1,170 kilometre pipeline that will cross more than 700 BC rivers and streams.
So with the BC Liberals in bed with these companies, what chance have we got to diversify way from fossil fuels?
There is of course a “solution” to this problem, leave it up to a left leaning Alberta NDP Government to implement that solution!
Sure with the NDP also in bed with these companies, guess they are all owned by “big oil”
More than a Quarter of a Million Dollars to the BC Liberals compared to $51 thousand to the NDP? Spectra Energy, now aka Enbridge Inc., donated more than five times more to the BC Liberals than the NDP. Wonder how many $10 thousand dollar a plate dinners that would be for the “privilege” of sitting next to Christy?
No, like I said in my last comment you chose to ignore, the Alberta NDP have the solution to this problem, pass legislation to ban corporate and union donations… problem solved.
So, because the NDP are heavily chasing corporate donations you are saying what exactly?
Backtracking now you are saying there is a line to where donations per year amount to being in bed with a corporation? What is that line exactly?
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