There is no good reason for governments to intervene in the oil sector even as much as they have. It has nothing to do with the gibberish of "decarbonization" or whatever the greenies will yell down next to the peasants from the ivory tower.
It's just bad business.
And bad business is the same as bad policy.
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When Husky shut down the West White Rose expansion, that should have been a clue the company was in serious financial difficulty.
SRBP pointed it out plainly. Husky's financial statements confirm it. Announcement of the sale of Husky to Cenovus came as no surprise.
It was also no surprise that the current owners of North Atlantic Refining are exploring the idea of turning the refinery into a tank farm. Rumour around town was that Irving was more interest in the storage potential than in using the refinery for anything more than a tank farm.
Neither of these stories will lessen demands from the local oil patch, from companies, and from the politicians for the federal and provincial governments to prop up this company or that project.
Cenovus may well come to government with a revised proposal. The news from Come by Chance will likely increase the pressure for government to put taxpayers' money into the project.
The best policy would be - in both cases - for government to stay out of it. Globally, the oil industry is going through a period of major change an re-valuation. Best to let the companies and investors sort themselves out. Best in the short-term, although it will be painful for some, but certainly best in the long run for the people of Newfoundland and Labrador. Even if the provincial government had the money, there is no more reason to put money into the oil industry than it was in any of the mining companies that have gone through shifts, changes, and even closures, without getting hand-outs from the public accounts.
The markets will take care of companies like Husky and North Atlantic without any risk to taxpayers. There is no good reason for governments to intervene in the oil sector even as much as they have. It has nothing to do with the gibberish of "decarbonization" or whatever the greenies will yell down next to the peasants from the ivory tower.
It's just bad business.
And bad business is the same as bad policy.
There are good reasons for Cenovus to continue with West White Rose Good business reasons. But if the company needs to slow the project or decides to sell off its interest, then that is the best choice for the resource owners - the people of Newfoundland and Labrador - as well.
And if North Atlantic turns into a tank farm then that represents the best choice, determined by the people who have their money invested in it. Government bureaucrats and politicians never make good choices at running businesses. They make a hash of running governments as the current financial state of Newfoundland and Labrador attests.
Why anyone thinks politicians and bureaucrats can run businesses is a mystery. The only ones who seem to think so are business owners - local and foreign - looking for a sucker.
We've been suckers one too many times.
Let government protect the public interest, as they are supposed to do. Make sure there are solid programs for workers affected by job losses and layoffs. Protect the environment, for once. And make sure that taxpayers get their full measure of royalties and rents.
Everything else, inevitably, winds up being loss and that's bad business and bad government.
-srbp-