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Ethical Oil

GB Geo-Blog

Ethical Oil

A few weeks ago I skimmed an article in the Globe and Mail Report on Business that summarized the political situation and state of democracy in the major oil producing countries. Two observations stood out.

A number of the countries in North Africa and the Middle East encountering protests and outright revolt are on the list. The dictators in these countries have been able to prop up their regimes and to enrich themselves and their cronies with oil money. If oil were not an important commodity and/or oil prices were in the $30 a barrel range, many of these dictators might have long ago been overthrown.

Second, there has been no political backbone in the West to stand up to the dictators – protecting oil companies and the steady flow of oil appear to have been much more important than human rights and freedom. Nor is there any political backbone to introduce substantial carbon taxes to destroy our dependence on oil and despots.

Instead, we periodically pay the ransom of sharply higher oil prices, which only reinforce the wealth and power of most of these countries and their leaders, and threaten our economic recovery. Better to pay ourselves through a carbon tax, which would lead to a collapse in oil prices and a permanent erosion in our dependence upon oil, than to pay the likes of Saudi Arabia, Iran, Venezuela, the UAE, Libya and Russia.

Today I read another article in the same newspaper that examined the “ethics of oil”. The gist of the article was that oil from Canadian oil sands are a reliable source, especially for the US, and a source from a country with a long history of support for human rights, freedom and democracy. The Canadian oil sands are ethical by comparison.

Nowhere in the article is there any discussion of the fact that to move the oil from the oil sands, pipelines have to be built, and these pipelines will traverse the lands of First Nations. Thus far, it does not appear as if the oil companies or provincial governments are willing to share the wealth with the First Nations and pay them a significant share of the revenues that will be generated. Ethical indeed!

Moreover, nowhere in this article is there any discussion of the alternative to developing the oil sands ; namely, a substantial carbon tax. Of course, the author, Gwyn Morgan, the retired CEO of EnCana, has no interest in such a tax since this would destroy much of the energy wealth in Canada and the world and the need for the oil sands. Indeed, he has little interest in toppling dictators either.

He refers to a nightmare scenario where the Saudi “royal family” is overthrown and oil production in that country collapses resulting in a dramatic spike in oil prices with an ensuing global recession. Why continue to face such “nightmare scenarios” periodically? And why tolerate  dictators and corruption? Have we forgotten the oil for food scandal in Iraq?

Are we not better off just ending our dependence on oil once and for all?

The best way to do so is not through endless subsidies to develop alternative energy sources, but rather through the price mechanism. Unfortunately, politicians in the EU, US and Canada would rather tacitly prop up dictators than risk defeat by subjecting consumers/voters to a carbon tax that while painful initially, would ultimately lead to more economic and political stability worldwide.

The opinions expressed in this blog are personal and do not reflect the views of either Global Brief or the Glendon School of Public and International Affairs.


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