1/ Thread, since many of you are asking my position on Notley’s decision to use government intervention to curtail production. First, Scheer, is right. This never should have happened. He outlines why here mailchi.mp/conservative.c…, & I outline it here
2/ To be very clear and reiterate the point, the levels to address the crisis are in Trudeau’s hands. He can say this is Harper’s fault all he wants, but he is wrong and needs to be a leader and fix the situation. I outline some points on how to do so here
3/ However, to the proponents of using provincial government intervention to curtain production, I ask the following questions. Any advocate of this course of action who can’t answer these questions should be deeply concerned about supporting it.
4/ Does this decision evenly benefit all players in the patch? Those who are vertically integrated (refineries, etc) likely did not need this intervention to retain their profit model in the same way that non integrated players do. What are the impacts & corp interests at play?
5/ How quickly will existing inventories be able to be cleared, over what timeline, and at what loss? How does this analysis compare to a non intervention scenario? Who benefits from this?
6/ Will the Americans (or how quickly will they, or simply be able to) increase their production supply such that our reduction in production becomes moot? Is this a factor, if yes, over what time period, and what is the long term impact to the North American supply side model?
7/ What typically has happened in other jurisdictions where the state controls the levers to production levels? How does this affect investor confidence in the long term in Canada?
8/ How does this affect investor confidence over the long term in investment in refining capacity in Canada?
9/ Will any of th factors I mention above create more job losses in the short, medium, or long terms?
10/ Is the comparator, “well Lougheed did it” an adequate justification for doing the same? Is the supply and demand side model for our product the same as it was back then? Was Lougheeds decision what changed the climate for energy investment and prices in Canada?
11/ Is supporting this decision a populist reaction to a tens of thousands of workers who might not be thinking about all the economic factors I mentioned above? Is it in THEIR best interest over time, or is it just a distraction from pushing for the changes actually needed?
12/ Trudeau, build the pipe. You could get shovels in the ground tomorrow morning if you wanted to.
