Oh, Canada. The land of snow and mountain and maple syrup.
The people are bluff and good-natured — and not American.
I’ve never been there. I’m told it’s lovely.
Except, it has a problem.
There’s a secession movement brewing! Something is off in this fair land.
You’ll know why you should care shortly.
It is not yet the stuff of the US civil war.
But there’s growling and discontent in the western territory of Alberta.
Some of the natives here, according to The Economist, are prepared to give the rest of the country the flick and go their own damn way1.
Their grievances might be familiar if you’ve listened to the bellyaching of Western Australia over the years.
Both Alberta and WA are rich with natural resource wealth…
They have a genuine gripe when they say they subsidise the rest of the country.
Now, in the case of Alberta, they’re not even appreciated for the sacrifice.
You see…Alberta produces oil.
If that’s not bad enough, in today’s green conscious world, the oil is from tar sands.
That’s a heavy, dirty type of crude that requires massive amounts of energy to convert into something useful.
Even international oil companies are distancing themselves from the tar sands game.
The oil industry in Canada has been in a bad way for some time.
Their major customers are all in the US.
That makes them dependent on the whims and fancies of refiners there.
That can drive their oil into deep discounts to the world market.
Today, a barrel of West Texas crude goes for US$59.
The equivalent national benchmark for Canada is US$39.
There’s a glut of oil in Canada because the pipelines to the south are full.
The alternative to this is to ship by rail — at much higher costs.
That means the selling price from the wellhead must be lower to account for the higher cost of transportation.
For years the province of Alberta has battled to build extra pipelines to the US to transfer more oil.
The battle has been long and largely fruitless.
There’s been a further insult…
Sweden just decided to dump bonds from Alberta (and WA) over its high emissions.
Canadian Prime Minister Justin Trudeau is paying a political price for this.
He was wiped out in Alberta at the recent election. He only just snuck over the line for the whole country.
And, pray, why do we care?
Australia’s addiction to coal won’t end easily
Australia receives a similar bounty of jobs, royalties, and export income from coal.
That has the same reputation as tar sand oil — a climate disaster.
But for every city liberal appalled by the environmental implications of these two commodities, there are workers and towns dependent on their ongoing production and use.
The inference is obvious…
Australia is primed to split along the same lines as Canada because of climate change.
Western Australia and Queensland produce staggering amounts of natural resource wealth.
The positive is the huge levels of capital investment, profits, jobs and taxes these generate.
But a substantial percentage of all this is gas, oil and coal —fossil fuels.
It’s not as if gold and iron ore mining are benevolent to Mother Nature, either.
That means there’s a showdown brewing.
Any potential attack on the natural resource industry in either WA or QLD is a threat to their standard of living and state industries.
And yet the voters in unrelated industries and states want action on climate change.
Cake: you can’t have it and eat it
Victoria’s government, for example, has just taken an axe to the logging industry — and thousand of jobs will likely go.
They may find work elsewhere — but what of the communities they will leave as ghost towns?
That’s not all. Both major political parties know they must cater to the modern concern of the environment…while also knowing that Australia’s entire economic strength is built on exploiting the natural wealth of this continent.
Those two facts cannot, in a very real sense, be reconciled.
That means the two parties can either vote for action on climate change or stand with the natural resource industry.
They cannot have a foot in both camps — like Labor is currently attempting to do.
As of now, both parties are attempting to wobble along some kind of middle we-can-have-our-cake-and-eat-it-too.
It won’t work. Pressure will keep bearing down on the federal government from both its voter base and international diplomacy.
That means we can expect commonwealth harmony in Australia to fracture in the same way it is in Canada.