FINANCIAL POST COLUMN: Keep oil in the ground? What’s the upside?

Oil pumpjack unit in Saskatchewan, Canada

“My dad volunteers at the food bank in town. And food bank usage had gone to all-time highs in 2014 and 2015 and then fluctuated somewhat and then just continued to climb.  He would never give me any names, but he said Tim, there’s people coming through the food bank now that you know.”

Tim Cameron, a project manager from Drayton Valley, Alberta shared that sad anecdote with SecondStreet.org recently when we spoke with him about how the oil and gas industry slowdown is affecting his community.

He described the town as being a bit like the TV show “The Walking Dead;” many residents are unemployed and struggling to get by – even those who are highly skilled workers.

As our federal election gets underway, energy issues will no doubt be part of the discussion. Canadians may want to reflect on two facts concerning Canada’s oil and gas industry and how families like the one in Tim’s story are affected.

First, environmentalists may not like it, but the world is forecast to continue using oil for many years to come.

On BP’s website (formerly British Petroleum) you’ll find a graph that shows six different forecasts for global oil demand up to the year 2040. Of the six forecasts, only one suggests oil demand will drop before then.

One forecast put forward by the International Energy Agency (based in France), noted something interesting – electric cars may lead to a slowdown in gasoline use, but petrochemicals and jet fuel will still drive overall demand higher. (Petrochemicals are derived from oil and are used to make cell phone parts, bicycle tires, running shoes and many other household and industrial products).

Thus, the question facing our nation is – should Canada provide the world with the oil it wants to purchase or should we let some other country provide it and enjoy the significant economic benefits from that opportunity?

As it stands right now, decisions by the current federal government have led industry representatives to believe it is “highly unlikely” that proponents will want to build new pipelines in Canada; infrastructure that is desperately needed to export our oil.

The second point to consider in this discussion is of course the environment.

If Canada simply kept all of its oil in the ground tomorrow, as some environmentalists would like to see, would that actually help the environment? If Saskatchewan kept a barrel of oil in the ground to “reduce emissions” is it reasonable to assume Saudi Arabia or some other country wouldn’t extract an extra barrel to replace it? Of course not.

In fact, one could argue the environment is actually worse off by shifting production from Canada to countries that have lower environmental standards.

Recently SecondStreet.org spoke with Dennis Giesbrecht about this point. Dennis is from Kamloops, B.C. and has worked on oil and gas projects all over the world. He told us he’s routinely surprised by the weak environmental rules in other countries. For instance, while he was stationed at a worksite in Chile, a diesel truck had a large spill and no one was tasked with cleaning it up. In Canada, such spills are required to be cleaned up and reported immediately. Further, great precautions are taken to ensure they don’t happen in the first place.

Even our federal government, which has mused about phasing out the oil sands, notes Canada’s environmental regime is actually quite stringent. The federal government’s website notes:

“Oil sands development is subject to environmental standards that are among the most stringent in the world.”

The web site also explains that oil sands companies can’t simply walk away when they’re finished, they’re required to return all of the land they use to a natural state that is a “self-sustaining ecosystem with local vegetation and wildlife.”

The strict rules aren’t surprising. Canada ranks 25th in the world in terms of environmental regulations while the world’s other top oil-exporting nations ranked between 27th and 152nd according to the global Environmental Performance Index and calculations by Canada Action.

For Tim Cameron’s family and others in Drayton Valley this issue is simple – as long as the world is going to consume oil and gas products, Canada should get a piece of the action. If we don’t, we would not only miss out on enormous economic benefits, we could actually hurt the environment.

 

Colin Craig is the President of SecondStreet.org, a new think tank that is focussed on how government policies affect Canadians at the grassroots level.


This column was published by the Financial Post on September 24, 2019

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Prevention – reduce demand in the first place

If Canadians lived healthier lives, we could reduce demand for emergency services, orthopaedic surgeries, primary care and more. 

For instance, if you visit the Canadian Cancer Society’s website, you’ll read that “about four in ten” cancer cases are preventable. The Heart and Stroke Foundation notes that “almost 80 percent of premature heart disease and stroke can be prevented through healthy behaviours.” A similar number of Diabetes cases are also preventable. 

Many joint replacements and visits to ERs and walk-in clinics could also be avoided through healthy living. 

To be sure, not all health problems can be avoided through healthy living – everyday the system treats Canadians with genetic conditions, helps those injured in unavoidable accidents and more.  

But there is an opportunity to reduce pressure on the health care system through Canadians shifting to healthier lifestyles – better diets, more exercise, etc. 

To learn more, watch our Health Reform Now documentary (scroll up) or see this column. 

Partner with non-profits and for-profit clinics

European countries will partner with anyone who can help patients. 

It doesn’t matter if it’s a non-profit, a government entity or a private clinic. What matters is that patients receive quality treatment, in a timely manner and for a competitive price.  

In Canada, governments often delivery services using government-run hospitals instead of seeing if non-profit or private clinics could deliver the services more effectively. 

When governments have partnered with non-profit and private clinics, the results have often been quite good – Saskatchewan, Ontario and British Columbia are just a few examples of where partnerships have worked well. 

Canada should pursue more of these partnerships to reduce wait times and increase the volume of services provided to patients.  

To learn more, watch our Health Reform Now documentary (scroll up) or see the links above. 

Make cross border care more accessible

In Canada, citizens pay high taxes each year and we’re promised universal health care services in return. The problem is, wait times are often extremely long in our health system – sometimes patients have to wait years to see a specialist or receive surgery. 

If patients don’t want to wait long periods, they often have to reach into their own pocket and pay for treatment outside the province or country. 

Throughout the European Union, we also find universal health care systems. But a key difference is that EU patients have the right to go to other EU countries, pay for surgery and then be reimbursed by their home government. Reimbursements cover up to what the patient’s home government would have spent to provide the treatment locally. 

If Canada copied this approach, a patient waiting a year to get their hip operation could instead receive treatment next week in one of thousands of surgical clinics throughout the developed world. 

Governments benefit too as the patient is now back on their feet and avoiding complications that sometimes come with long wait times – meaning the government doesn’t have to treat those complications on top of the initial health problem. 

To learn more, watch our Health Reform Now documentary (scroll up) or this shorter video. 

Legalize access to non-government providers

Canada is the only country in the world that puts up barriers, or outright bans patients from paying for health services locally. 

For instance, a patient in Toronto cannot pay for a hip operation at a private clinic in Toronto. Their only option is to wait for the government to eventually provide treatment or leave the province and pay elsewhere. 

Countries with better-performing universal health care systems do not have such bans. They allow patients a choice – use the public system or pay privately for treatment. Sweden, France, Australia and more – they all allow choice. 

Why? One reason is that allowing choice means some patients will decide to pay privately. This takes pressure off the public system. For instance, in Sweden, 87% of patients use the public system, but 13% purchase private health insurance. 

Ultimately, more choice improves access for patients. 

To learn more, watch our Health Reform Now documentary (scroll up) or watch this short clip on this topic. 

Shift to funding services for patients, not bureaucracies

In Canada, most hospitals receive a cheque from the government each year and are then asked to do their best to help patients. This approach is known as “block funding”. 

Under this model, a patient walking in the door represents a drain on the hospital’s budget. Over the course of a year, hospital administrators have to make sure the budget stretches out so services are rationed. This is why you might have to wait until next year or the year after for a hip operation, knee operation, etc. 

In better-performing universal health systems, they take the opposite approach – hospitals receive money from the government each time they help a patient. If a hospital completes a knee operation, it might receive, say, $10,000. If it completes a knee operation on another patient, it receives another $10,000. 

This model incentivizes hospitals to help more patients – to help more patients with knee operations, cataract surgery, etc. This approach also incentivizes hospitals to spend money on expenses that help patients (e.g. more doctors, nurses, equipment, etc.) rather than using the money on expenses that don’t help patients (e.g. more admin staff). 

To learn more about this policy option, please watch our Health Reform Now documentary (scroll up) or see this post by MEI.