Mini Recession: Expected to Temporarily Shrink Activists' Treasuries

By: Heather Douglas, President and CEO. Strategic Public Affairs Ltd. 

Article originally published in the June 2015 edition of the Roughneck magazine: https://www.northernstar.ab.ca/the-roughneck 

Tongue planted firmly in cheek – or maybe not, it’s a bit hard to tell – non-governmental organizations (NGO’s) report that the environment is actually hurt during times of recession and they wish Canada’s energy produces a speedy recovery economic recovery.

These good wishes come in response to the Conference Board of Canada’s recent pronouncement that Alberta, Saskatchewan, as well as Newfoundland and Labrador have sunk into a mini-recession caused by the falling price for a barrel of crude oil and ongoing bargain sums for natural gas.

“Alberta’s economic performance will be underwhelming this year and next, especially compared with recent years,” reports the Ottawa-based think tank. “Oil prices remain well below break-even levels for most new projects in the oilpatch and conditions are not expected to turn around until sometimes in 2016.”

This study did not attempt to forecast the probable impact of higher corporate taxes or a hike in royalties, both pillars in the election platform of the newly elected NDP government. 

ANTI-ENERGY CAMPAIGNS 

Opposition to all forms of oil and natural gas transportation and trade has been fierce in Canada, with campaigns aimed at blocking pipelines, oil sands production, hydraulic fracturing, rail transportation, shipping by tankers – the list is seemingly endless.

While some of these campaigns are funded by private donations, foreign governments, like Saudi Arabia, to further their public policy interests, endow other. Canada’s federal government is apprehensive about the success of the American foundations, like the Tides Foundation, working with the U.S. White House, to prevent approval for the Keystone XL pipeline and other energy projects.

NGO’s, notably Greenpeace and Friends of the Earth, enjoy framing the energy discussions as a very simple narrative. “Our work of environmental protection is good and noble versus those big, bad oil companies and their exorbitant profits.”

What these activists do not want to consider is that 2.5 billion people – men, women and children – are living in poverty because they do not have access to sufficient energy. They refuse to acknowledge that getting them the energy they need necessitates the fossil fuels they are determined to keep buried. “Hold the tar sands in the ground,” says Bill McKibben, environmental crusader. “Say not to fossil fuel exports,” begs the Stop Coal Coalition. Export natural gas? “Over my dead body,” states a B.C. protester.

Yet Canadian energy should be sold nationally and internationally to improve lives at home and abroad. But it is hard to see this happening with antipathy to this country’s oil and natural gas production.

IMPACTS OF ECONOMIC SLOWDOWN

While this mini-recession has created a lull in oilpatch activity – with job losses, falling incomes, frozen credit markets and depressed producer confidence – it has also shrunk the treasuries of some strident activists intent on shutting down, or at least severely curtailing, the energy industry. Sometimes NGO’s similarly suffer layoffs, dwindling revenues, cold creditors and unresponsive donors.

According to a report entitled Quiet Crisis: The Impact of the Economic Downturn, authored by two American NGO’s – Civic Enterprises and the Democratic Leadership Council, cash-strapped environmentalists continue to provide core services by using more volunteers to get their work done and through collaboration with other like-minded groups to reduce overhead costs and maximize limited resources.

The good news is that recessions usually have a positive impact on consumers and their lifestyles, the report states. This ranges from a huge reduction in domestic waste going to local landfills to a substantive drop in sales of cellular phones; from fewer people spending money on holidays abroad and failing to pay for their large carbon footprints to decreased purchases of SUV’s and plasma TV’s.

The bad news is that economic slumps also have a “profound impact on the actual environment,” the report adds:

• When major corporations receive lower prices for their oil and natural gas production, they tend to reduce their investment in conservation programs and slash their R&D budgets;

• When small and intermediate companies find that money is tight, they quit buying more expensive green products;
• When there is less money invested in the Toronto Stock Exchange (TSX) and the Venture Exchange, start-ups cannot get funding to launch breakthrough, ecologically-sound goods and services; and
• Governments respond to voters who want their tax dollars invested in stimulus spending to jumpstart the economy. 

Recessions can and do have both short-term and longer-lasting impacts on individuals, families and consumers, start-ups and established companies, the economy and environment. They also have the ability to shrink the treasuries of activists and curtail their campaigns to shut down fossil fuels. 

For the sake of the oilpatch, we too wish Canada’s energy producing provinces a speedy economic recovery.