"I don't think Canadians want us to sell out important Canadian values -- our belief in democracy, freedom, human rights. They don't want us to sell that out to the almighty dollar.'' -- Stephen Harper talking about relations with China in 2006

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Just a couple of weeks ago the Wall Street Journal inadvertently explained Prime Minister Stephen Harper's extreme bitumen jingoism, the dismantling of domestic environmental legislation as well as Ottawa's promiscuous overtures to Communist China's authoritarian capitalists, including the perfunctory approval of CNOOC's takeover of Calgary-based Nexen.

In language that no petro politician would use, the Journal boldly announced the obvious: Canada's bitumen was "suddenly, not a sure thing." Or even a smart one. The boom was over.

(Or as the cliché and debt-ridden Alberta government recently noted in a dreary fiscal report, "uncertainty clouds the global outlook.")

Due to volatile global prices, rising construction costs in the tar sands and massive overproduction (Canada has flooded the U.S. Midwest with bitumen), the Journal reported that oil companies were rethinking their investments in the world's most costly hydrocarbon.

The Journal didn't mention China, but this totalitarian global economic engine is also slowing down while gaining political instability.

In other words tar sand developers, who have always viewed China's reckless growth as a mirror of Fort McMurray's crazy expansion, can now see icebergs on the horizon and are looking for Chinese lifeboats.

Now, the Wall Street Journal wasn't alone in sounding these warnings. Even Paul Boothe, the former deputy minister of the environment who left government six months ago, penned a commentary about Canada's bust and boom bitumen economy for the National Post.

"We can stop listening to those who proclaim the promise of the current boom and ignore the volatility that is part and parcel of staking our future primarily on natural resources. Developing our natural resources in an environmentally and socially sustainable way makes good sense. Betting the farm on them does not," wrote Boothe, an economist.

These musings on bitumen's dimming prospects from a major U.S. business paper and a former deputy minister no less shed light on Harper's abrupt conversion from Chinese critic to Chinese puppet.

They also clarify why the Harper government bluntly ignored public opinion and rubber stamped the CNOOC buy-out of indebted Nexen for three times more than its actual value. CNOOC, by the way, reports to the Communist Party of China. As such the firm has little regard for transparency, human rights or offshore oil spills for that matter.

Bitumen's ailing prospects also explain the government's secretive negotiation of a one-sided investment treaty with China that could make China's highly subsidized and corrupt state owned enterprises the nation's number one foreign investors by 2017.

Harper's disregard for democratic sentiment on these issues (Canadians and Albertans in particular remain opposed to a CNOOC sell-out, let alone the trade deal) ultimately spell one word: desperation. And desperation in a bust and boom petro state, as any North African can tell you, is not a pretty thing.

Everything must go

Economic desperation, for one, also explains why the prime minister has seemingly abandoned his own conscience on China. Several years ago Harper criticized China's human rights record and its totalitarianism. He even refused to attend the Beijing Olympics.

But with bitumen's fortunes falling faster than the NHL's prospects, Harper now proposes to sell the whole Canadian bitumen farm to Chinese state-owned corporations. Why? Well, they have enough almighty yuan to keep the overheated engine going.

Harper's singular desperation has thoroughly infected every government department. The country's new foreign policy document, drafted by Foreign Affairs Department, a new branch plant for Big Oil, not only calls for more trade with China (which consumes half the world's coal and one-fifth of its oil), but the abandonment of ethics at home or abroad in the name of the almighty dollar.

"To succeed we will need to pursue political relationships in tandem with economic interests even where political interests or values may not align." It's what Harper and other Orwellian robots smugly call "Responsible Resource Development."

Some damning Wall Street math also elucidates Harper's growing vexation. At production rates of 1.7 million barrels a day, bitumen now accounts for nearly a third of the country's export revenue, nearly one-tenth of its GDP and one-tenth of the nation's climate change emissions for which there is no effective action plan. (It took 40 years and $200 billion, by the way, to create this carbon spewing engine and unhealthy dependency.)

According to rosy growth projections by the Canadian Energy Research Institute, bitumen could (and it's a very big could) generate nearly $500 billion in tax revenue over the next 25 years. The majority of these petro dollars (70 per cent) will flow to Ottawa in the form of corporate taxes.

Without unbridled bitumen expansion now largely funded by China, this sizeable oil loot (now $5 billion a year) would slow to a trickle and thereby deprive Harper of funding for his right-wing revolution.

Bitumen revenue is to Harper what the North Sea oil loot was to Margaret Thatcher, a slush fund to politically restructure the country along libertarian principles. Thatcher, of course, didn't save a penny and Harper won't even discuss where the petro loot is going or why Canada has no sovereign fund.

But there is more dismal math. The Canadian Energy Resource Institute (CERI), an agency partly funded by Ottawa, estimates that bitumen production could increase to three million barrels a day by 2025 based on current project approvals and what's under construction.

But CERI says there will be little bitumen growth without the approval of embattled hazardous liquid pipelines to ferry bitumen to coastal ports either west, south or east.

If built (and there are no more guarantees on Canada's bitumen rollercoaster) Keystone XL, Northern Gateway, Trans Mountain and Line 9 Reversal would propel tar sands production to six million barrels by 2035. That's a three-fold expansion without any public debate, carbon accounting, federal savings plan or risk analysis.

America's dwindling oil appetite

Such cancerous growth would make the tar sands the generator of a fifth of Canada's GDP and more than one-third of the nation's greenhouse gases. It would triple the project's land reclamation liabilities from $20 billion to $60 billion. It would also turn Canada into a bitumen plantation economy of oil, for oil and by oil.

But to Harper's growing consternation there is no real market for this explosive carbon revolution. Canadian oil consumption remains flat while U.S. gasoline consumption has declined five years in a row by nearly a million barrels. Americans not only own fewer cars but drive them less.

New U.S. fuel efficiency standards combined with the Great Economic Stagnation will ensure further declines in oil consumption by one per cent every year. Meanwhile U.S. domestic production has temporarily ballooned thanks to unconventional shale plays in North Dakota and Texas. And the Chinese economy, the world's number one oil consumer, has lost its speed. (Its highly subsidized state-owned oil companies answer to party politics and not to the marketplace.)

As a consequence Harper and the nation's elites have developed nervous ticks and authoritarian visions. Alberta and federal regulators, who have never said no to a bitumen project or even considered the risks of rapid development, now find themselves pushing a Hummer-sized vehicle up a rising slope by slashing environmental laws.

Meanwhile rising oil costs and failing economies are shrinking the pavement bitumen development can navigate. Peak oil is not about running out of oil; it's about running out of dollars to buy a commodity that has increased five fold in price over the last decade.

In such an environment the economics of bitumen looks more fragile by the day. According to Houston-based RSK (UK) Limited it takes just $8 billion to bring on stream a million barrels of conventional oil in the Middle East. But Alberta's tarry bitumen, a tell-tale declaration of peak oil, requires capital investments of $45 billion just to dig the badly degraded junk out of the ground.

It then requires tens of billions more dollars to upgrade the low grade stuff into a marketable refinery product.

A recent NRCAN memo, released by the CBC, suggests that Canada has already begun running out of money in the highly inflated tar sands. The memo notes that in 2001 a company could build a 100,000-barrel-a-day project with $3.3 billion. Today the same enterprise requires a massive capital infusion of $7.3 billion. (Bitumen, a recipe for global bankruptcy, not only requires five times more money than conventional oil but returns less energy than many biofuels.)

Moreover most bitumen mining projects aren't viable without a global oil price higher than $75 a barrel. "Ever-increasing capital and operating costs could make this price insufficient to support oil sands development at forecast levels," adds the memo.

As a consequence the world's largest industrial project, a testament to the vulnerability of bigness, won't be able to support growth to three or four million barrels a day without "at least $100 billion in up-front investment."

Canadians subsidizing China

Such black math explains Harper's grotesque dealings with the Chinese, the farcical approval of the CNOOC/Nexen buyout as well as the systematic gutting of Canada's most significant environmental legislation (from the Fisheries Act to the Navigable Waters Act to the Canadian Environmental Assessment Act). Harper's radical environmental surgery amounts to nothing more than an overt subsidy to Chinese state-owned enterprises and other proponents of raw bitumen exports to Asia.

Like many of Chairman Harper's political guard, Alberta Conservative MP Leon Benoit boasts that Canada's economic stability now depends on "faster green lights" for bitumen. Adding value to the resource is a silly notion he told the Vegreville Observer:

"There's already a refinery in China that makes more refined oil than the whole country actually uses and another in India that refines more than all of our refineries put together. It makes more sense to ship it out and refine it elsewhere because we already refine more than we use here."

So here lies Harper's economic dilemma. Tar sands production can't grow to fill proposed pipelines or fund his right-wing revolution unless it attracts more money and the only money available comes from the coffers of the Communist Party of China.

Harper has now banked the future of bitumen expansion on a corrupt state that employs virtual slaves in its factories, jails dissidents, disparages the United States and flouts the rule of law.

Born of Exxon

But Harper's desperation also owes something to his narrow-minded upbringing. His father worked as an accountant for Imperial Oil, an arm of ExxonMobil. It's one of the world's most powerful corporations. It is also one of the largest players in the tar sands. Exxon's big visions also inform Harper. The oil man, whom even the Economist defines as a "bully" with a "habit for secrecy", fantasizes about making Canada a "superpower" with Chinese backing.

Not surprisingly Harper's governing style incorporates many traits of Exxon's distinctive corporate culture. As U.S. journalist Steve Coll documents in Private Empire, Exxon managers are not only secretive but intolerant of compromise. Like Chinese state-owned oil companies they rarely talk to the press. The company does business with unsavory regimes simply because that's where the almighty dollar lies.

Harper's distaste for climate change science may also have an Exxon connection. Exxon campaigned against climate change science for more than decade, knowing full that climate change is as real as New Jersey's rearranged shoreline. (The company even used climate change modeling to plan new Arctic exploration efforts.) Like Harper the company also hates government.

So, the economic math on bitumen adds up to some desperate equations. To save bitumen from a production glut and a global economic reckoning (and that reality check is still coming), the Harper government has sold out Canada, debased democracy and fouled the nation's reputation.

It has allowed CNOOC, a company with one of the lowest transparency rankings in the oil patch, to buy out a Canadian firm with the some of the highest scores. It has gutted environmental legislation so that Chinese state owned enterprises and pipeline companies can build without democratic barriers. It has ignored climate change and energy security for Canadians. It has devoted millions in public funds to bitumen and pipeline lobbying abroad for Big Oil. It has attacked environmental groups and treated First Nations like Tibetans. It has bombed Libya and rattled sabers with Iran to keep oil prices high or high enough to sustain unsustainable bitumen production.

It has neglected all fiscal accountability with oil revenue and used petro dollars to lower taxes knowing that a people who are not taxed will not be represented. It has suppressed public reports and censored scientists. It has avoided democratic debate and accountability. And according to Elections Canada Harper's oil-fueled political party may even be guilty of massive electoral fraud in more than 50 ridings.

So Canada's bitumen Titanic has now left the dock and the chief pilot, an Imperial guy, does not believe in icebergs or lifejackets. However, he has hired a Chinese band as well as some Communist Party engineers to bail water. Everyone except the obsessive captain expects an explosive collision with the bergs of global public opinion, the Canadian electorate, carbon taxes or intemperate oil markets.

And that's generally what economic desperation reaps in a feckless petro state: a voyage of the damned.