Saturday, 31 January 2015

Understanding oil demand, oil prices and climate

It is amazingly difficult to get people to understand that if humanity acts seriously to reduce CO2 emissions, the price of oil would fall to very low levels - and stay there. In this op-ed in the Globe and Mail in December 2014, I explain the competitive drivers of oil prices, and why these prices have been really low for most of the past 100 years, even though human self-deception has most people thinking otherwise. In future op-eds and blogs I will present our research of the last two years on the path and level of the price of oil.

Oil Prices: A Lesson in Markets

Mark Jaccard
Globe and Mail, December 1, 2014

For 27 years in my graduate energy seminar, I’ve struggled to convince bright master’s and PhD students that oil prices might actually result from competition rather than a price-fixing conspiracy of oil companies and the Organization of Petroleum Exporting Countries cartel. But this year, my task was easier.

We start by reviewing several commodity prices – potash, lumber, copper, oil – which show that the oil market is not atypical. We see that all oil producers receive the same price, which is usually at or above the production costs of the most expensive suppliers, such as Alberta’s oil sands and North Dakota’s shale and tight oil. Low-cost producers, like Saudi Arabia, get more profit from each barrel.

Monday, 10 November 2014

Vancouver’s municipal election and pipelines

It seems ironic that people who argue vaguely that we should all do our part against accelerating carbon pollution will then react to specific efforts by saying “sorry, wrong jurisdiction.” The Canadian government cannot act because climate change is a global problem, so we must wait for all countries to act simultaneously. Nice. And even though we know that carbon pollution goes up as we expand fossil fuel infrastructure, like oil pipelines, the government of B.C. should not try to stop the Kinder Morgan oil pipeline because this is federal jurisdiction. Ditto municipal governments, like that of Vancouver and Burnaby.

We know where this leads. Everyone shirks their responsibility, and we stay on course for a catastrophe.

This is why the municipal elections in Vancouver and Burnaby are important. In both cities, we have municipal governments that understand their responsibility. In both cities, these governments are challenged by opponents who are saying “sorry, not our jurisdiction.”

If you want to stop oil pipeline expansion to metro Vancouver as part of the climate effort we must have, remember to blame yourself next Saturday if you waste your vote so that the pro-pipeline parties attain power.

Wednesday, 15 October 2014

My invited review of Naomi Klein’s book in Literary Review of Canada

My review of Naomi Klein’s book is now up on the website of the Literary Review of Canada, and will appear in the November 2014 print edition.  Please distribute by e-mail, twitter (@MarkJaccard) and Facebook to people who might be interested.

Below is my blog that provides some elaboration.

Notes to accompany Jaccard review of Klein book: This Changes Everything

October 14, 2014

What is Klein’s thesis? What is the contribution of her book? I think she would say that her book demonstrates that we must change capitalism if we are to succeed against the climate threat: “system change, not climate change.”

But to convince us of her thesis she needs to show: (A) why efforts that do not involve profoundly changing capitalism have not worked and will not work; and (B) why her proposals will work and why they “change everything about our economic system.”

Friday, 8 August 2014

Energy: Consider the global impacts of oil pipelines

Please follow the link to get free access to our Commentary in Nature calling for a moratorium on new oil-sands development and transportation projects until better policies and processes are in place. 

Canadians deserve honest climate talk

In 2007, Prime Minister Stephen Harper’s government asked me and four other economists if we agreed with its study showing huge costs for Canada to meet its Kyoto commitment to reduce greenhouse gas emissions by 2010. We all publicly agreed, much to the chagrin of the Liberals, NDP and Greens, who argued that Kyoto was still achievable without crashing the economy. It wasn’t.

As economists, we knew that the Liberal government of Jean Chrétien should have implemented effective policies right after signing Kyoto in 1997. It takes at least a decade to significantly reduce emissions via energy efficiency, switching to renewables, and perhaps capturing carbon dioxide from coal plants and oil sands. Each year of delay jacks up costs.

Mr. Harper’s government knew this too. Years later, when environment minister Peter Kent formally withdrew Canada from Kyoto, he charged the previous Liberal government with “incompetence” for not enacting necessary policies in time to meet their target.

Monday, 4 August 2014

Is B.C.’s LNG another pipe dream?

This blog first appeared as an op-ed in the Vancouver Sun on July 23, 2014:

Proposal looks good on paper but could fail in practice

During B.C.’s 2013 election campaign, at a conference of energy economists in Washington, D.C., I spoke about how one of our politicians was promising huge benefits during the next decades from B.C. liquefied natural gas exports to eastern Asia. These benefits included lower income taxes, zero provincial debt, and a wealth fund for future generations. My remarks, however, drew laughter. Later, several people complimented my humour.
Why this reaction? The painful reality is that my economist colleagues smirk when people (especially politicians) assume extreme market imbalances will endure, whereas real-world evidence consistently proves they won’t. For B.C. Premier Christy Clark to make promises based on a continuation of today’s extreme difference between American and eastern Asian gas prices was, to be kind, laughable.

Wednesday, 25 June 2014

Our Comment in Nature calling for oil sands moratorium

Here is the press release for our Nature paper, released June 25, calling for a moratorium on oil sands expansion. This means no loss of current jobs in the oil sands. But it does mean a return to sanity from this selfish rush to accelerate global warming, ocean acidification and ecological destruction - events that will lead to huge economic and social costs according to a just-released study by the World Bank. It does mean that we should not build new pipelines like Keystone XL, Northern Gateway and others.

Press release:

Scientists call for a Halt to Oil Sands Expansion Until Policies Address True Costs and Global Impacts.

A Comment published today in the journal Nature calls for a moratorium on new oil sands projects in Alberta, Canada due to flaws in how oil sands decisions are made. The authors are a multidisciplinary group of economists, policy researchers, ecologists, and decision scientists. They argue that the controversy around individual pipelines like Keystone XL in the US or Northern Gateway in Canada overshadows deeper policy flaws, including a failure to adequately address carbon emissions or the cumulative effect of multiple projects. The authors point to the contradiction between the doubling of the rate of oil sands production over the past decade and international commitments made by Canada and the US to reduce carbon emissions. “The expansion of oil sands development sends a troubling message to other nations that sit atop large unconventional oil reserves,” said lead author Wendy Palen, Assistant Professor at Canada’s Simon Fraser University. “If Canada and the United States continue to move forward with rapid development of these reserves, both countries send a signal to other nations that they should disregard the looming climate crisis in favor of developing the most carbon-intensive fuels in the world.” The authors point out that oil sands development decisions (e.g. pipelines, railways, mines, refineries, ports) made in isolation artificially restrict public discussions. Debate in the news media and during hearings for individual projects are limited to evaluating the short-term costs and benefits to the local economy, jobs, environment and health, and do not account for the long-term and cumulative consequences of multiple projects or of global carbon pollution. Co-author Joseph Arvai, Professor and Research Chair in decision science at the University of Calgary, explained the problem. “Individual projects – a particular refinery or pipeline – may seem reasonable when evaluated in isolation, but the cumulative impacts of multiple projects create conflicts with our commitments to biodiversity, aboriginal rights, and controlling greenhouse gas emissions. Though we have the knowledge and the tools to do better – to more carefully analyze these tradeoffs and make smarter long-term choices – so far governments have not used them.” A moratorium would create the opportunity for Canada and the United States to develop a join North American road map for energy development that recognizes the true social and environmental costs of infrastructure projects as well as account for national and international commitments to reduce carbon emissions. Anything less “demonstrates flawed policies and failed leadership”, the authors state.


Wendy J. Palen
Department of Biological Sciences
Simon Fraser University
Burnaby, BC, Canada

Thomas D. Sisk
Landscape Conservation Initiative
School of Earth Sciences and Environmental Sustainability
Northern Arizona University
Flagstaff, Arizona

Maureen Ryan
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada

Joseph L. Árvai
Department of Geography
University of Calgary
Calgary, AB, Canada

Mark Jaccard 
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada 

Anne Salomon
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada

Thomas Homer-Dixon
Balsillie School of International Affairs
University of Waterloo
Waterloo, ON, Canada

Ken Lertzman
School of Resource and Environmental Management
Simon Fraser University
Burnaby, BC, Canada