ABCtech #44 28AUG15 Time for Leadership and Is the price of oil predictable

ABCtech #44 28AUG15 Time for Leadership and Is the price of oil predictable

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” ~John Quincy Adams

Time for Leadership

“Creating the new Alberta” is our mission, pursued through inspiring and insightful messaging, managing of timely and engaging events, developing networks for shaping public policy, and the day-to-day initiatives of 13,000+ people sharing a common interest in the commercialization of emerging technologies across the broad spectrum of Alberta arts and science, business and government.

We are now holding our breath to see how governments and industry leaders respond to recent shocks, and whether they are “short term” warranting patience or “long term” warranting change: change in royalties, change in stewardship of the environment, change in diversifying the economy. But energy-based economies are the hardest to change. Why? The production and transportation infrastructure is capital intensive, energy-based economies entwined with government regulations and governments grown dependent on energy royalties. The revenue in good times is extra-ordinary. And there is always faith that the good-times will return, that shocks must be tolerated as an inherent feature of a cyclical economy. So why change? We wait.

We wait for government deficit budgets and their implications on jobs, pensions, and public social services of health and education. We wait for volatile markets to settle and good times to return. We wait for geo-political events to resolve issues of access to markets. We wait for environmentalists to get weary and for the public to tire of climate change. But for Alberta, waiting is not an option.

Alberta is right smack in the middle of a global realignment and integration of energy and environ-mental and economic policies. Alberta’s and Canada’s economies are overly-concentrated on the energy industry. This makes Alberta and Canada, particularly vulnerable to crude shocks, shocks beyond our immediate control. Government’s can’t be  blamed or fix the oversupply and declining demand for our commodities. They can mute the pain, through savings for buffering any  shocks on public services. And they can be held accountable for not adopting policies for developing industries that would diversify the economy.

Is there a silver-lining in the current convergence of shocks including Alberta’s recent change in public leadership? Of course. But only if leaders take a longer term perspective than their former leaders.

We know that change doesn’t come easy, that it is not driven by intellect or promise, but by pain and a sober commitment to prevention. Extended prosperity breeds confidence, even a sense of deservedness, call it entitlement and for some even greed, and – in the extreme, corruption.

Leaders are change agents capitalizing on crises by: seeking new relationships – the converging of Alberta’s rich arts and science talent comes to mind, diversifying their sources of support – reducing “NGOs” dependence on Government grants, breaking down institutional silos – converging isolated research institutes, and erasing of cultural barriers – engaging Alberta’s aboriginal population also comes to mind. Architects as change agents design buildings and public space for people to congregate, to share ideas, to innovate and create. Industry architects do the same.

Tis time for corporate minds to “think big”, to reach out seeking new markets for export and new products for our commodities.  Tis time for governments to resist reflexive short term shrinkage and stir the vision of Alberta’s post-carbon, knowledge-based economy. Tis time for public institutions of advanced education and research to rethink their dependency on government patrons and cultivate their relationship with their alumni. And tis time for us all to “think” like entrepreneurs, innovators and small businesses, embracing new ideas – creativity, and new relationships – convergence. Therein lies the formula for a new, exciting – more diversified, more resilient, Alberta.

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Creativity & Convergence
Creating the new Alberta

SAVE the DATE – November 30th
  Downtown Campus – 
University of Calgary

Stay tuned as we fine-tune the design of our fall Conference in Calgary:

AM – Workshops plus a Luncheon speaker/panel … insightful and creative for deriving actionable plans contributing to “creating the new Alberta” … engaging and converging

“U-Who Reception – meeting others who you’ll want to meet again … fun!

Membership. Our insightful events and influential networks contribute to creating the new Alberta. Deep event discounts. FOR MORE A question: Should we introduce a Corporate Membership category?

Amazing Sponsors and Policy Patrons. Reinforce your brand – making a difference for those sharing an interest in “creating the new Alberta” HERE

Diversification Index.  Developing a “weather-like” report for monitoring Alberta’s resilience to crude shocks. HERE

Conference 3-hr. Workshops.  Got a stirring and insightful proposal for conducting a workshop at our November Conference in Calgary? HERE

Editorials/articles. QuikTech Notes distributes insightful messages for ABCtech’s network of 13,000+ sharing an interest in the business of emerging technologies. HERE

Seeking Network Administrators/ librarians for filtering moral, legal and honest communications between members in ABCtech’s various networks.  FOR MORE

Got a job, a task, the need to engage another? Stay-tuned, as we’ll be introducing a job find service for ABCtech shortly.

Honest Broker.  Suspect business fraud or worse? You may not be alone.  Contact us HERE

Colleagues in the Alberta Clean Tech Sector,

The Government of Alberta is seeking input on how it can improve its climate change strategy — and the voice of our sector is unrepresented.

The Government recently launched its Climate Change Leadership Discussions and named an expert panel, led by Dr. Andrew Leach of the University of Alberta, to provide recommendations as Alberta prepares for the international climate conference in Paris in December.  The consultation process includes an opportunity for Albertans to submit comments on how this province should approach action on climate change.

The survey is available HERE

While it is appropriate to be skeptical about the value of these types of surveys, the critical factor is numbers.  It is vital that the Government of Alberta receives a significant number of responses encouraging policy change that would enable or accelerate clean tech investment and deployment. The relative ranking from concerned Albertans who put the thoughts into the survey will be a meaningful factor in the panel deliberations and the political calculations.

Would you take 10 minutes to complete the survey and to share it with your contacts? The province’s commitment to seek input from Albertans on this important issue is helpful, and ACTia is working to have the opportunity to provide direct advice.  As you know, climate change and associated policy responses to it, both here and in our key export markets in the US, China and EU, are among the most significant risks to Alberta’s economy, as well as offering some of the greatest growth opportunities. Setting the right policy framework could help Alberta to become a global leader in innovative technology deployment and export. Climate policy is a good place to start.

It’s very important for the panel to hear directly from the entrepreneurs, financiers and customers here in Alberta. Numbers matter. So, please take a few minutes to voice your support for stronger climate change action, and for support for clean tech development and deployment in Alberta.

Thanks in advance for your help.

Rus Matichuk, Chair

Alberta CleanTech Industry Alliance

 Is the price of oil predictable? By Robert Lam  Follow Me

The negative consequence of the downward shift in oil prices will be felt across the country – in the long term consider, nearly 30% of the supply chain supporting Alberta’s oil industry comes from other provinces.  As the lower oil prices persist, it will significantly slow down or even stop new investments in exploration and development projects in the oil industry. A prolonged low oil price will be especially bad for the Canadian and specifically the Alberta economy as the average production cost for the oilsands is $50 plus per barrel. The lack of new investments also means less or no demand for goods and services across the supply chain that supports Alberta’a oil industry, resulting in lower job growth and incomes across multiple regions. The logical question is whether we can predict oil prices, and thus formulate mitigation strategies?

Several factors have converged, contributing to the dramatic slide in oil prices that started about a year ago.  The slide was predictable. Predicting is part art and part science – it is all about understanding and distilling signal and noise. What we can do is to create multiple lenses of the key forces at play: economic, political, technology, environmental, and help to uncover and magnify the underlying signposts.

Economic lense.  Demand for oil in many regions including Japan and Europe are decreasing due to slower economic activity, China is actively signalling to the world since in 2013 that it would deliberately slow its previously exceptional rate of economic growth. Beijing has done so, in order to put a lid on spiralling debt and to head off an inflation spectre. Another of China’s major trading partners, Japan, is still trying to recover from a 24-year-long economic malaise. In sum, the oil supply simply is greater than there is demand, and is having a predictable effect on the downward slide in oil prices.

World oil production has been growing steadily; the United States has seen boom in shale oil production, thanks to the advancement in horizontal drilling technology which allows access to hydrocarbons deep beneath the Earth’s surface. Canada and Russia have also experienced increased oil production. Nigeria and Venezuela haven’t pulled back, in fact Saudi Arabia has increased production to try and drive high cost producers out of the market. Add in projections that Iran will soon resume production and the glut is understandable.

Political lense. The Organization of the Petroleum Exporting Countries (OPEC) – a group of significant oil producing nations including Saudi Arabia and Iran that holds tremendous supplier power; exporting 40% of global oil supply. OPEC has consistently decided not to adjust the output quota to meet the decreasing demand, resulted in the over-supply on oil in the market driving the oil prices continuing the dramatic slide.  Also, of a geo-political nature has been the reluctance of the US President to approve the Keystone pipeline, adding uncertainty to capacity of Canada to increase exports of oil from Alberta and North Dakota to and thorough refineries in Texas.

Technology lense: Conventional wisdom might suggest that the collapse in the price of oil must be impeding the development of renewable power. The U.S government’s chief energy analyst has said that low oil prices won’t hurt renewable energy because tax incentives are more important than the price of oil on the development of renewables and that oil is not in competition with renewables for electricity production. Technological advancements are continuing in wind turbine and solar panel manufacturing. The dramatic cost reduction in manufacturing in the last decade allows the industry to continue to invest in R&D and further improve mass production cost.

Environmental lense.  The public continues to be bombarded with alarming forecasts and illustrations of the impact of climate change on the environment.  The environment is on everybody’s agenda. This December in Paris, representatives from 190 countries will attend a summit on climate change.  The summit is to negotiate an international agreement on measures for cutting greenhouse gases.  Note. Express your views on Climate Change to the GOA  HERE

Call to Action

Can we predict oil prices? The forces that have led to the recent decline in prices – Economics 101 that supply greater than demand drives down prices, seem to hold true. However, there is one difference from the situations that led to previous declines. This time, it is likely that low prices will persist for a prolonged period of time – based on the above mentioned forces. All key stakeholders; major producers and consumers, and policy makers (government) will have to re-calibrate their strategies and economic policies to align to these disruptive changes in the global energy landscape.

Different markets.   Observe, oil does not compete with renewable energy directly. They target different segments of the market – oil supports transportation while renewables generate electricity. So the oil price does not directly affect the market that renewables are operating in.  Consuming countries employ a portfolio approach and diversify their energy mix – reducing the share of carbon fuels and increasing the share of renewable energy: wind, solar, biofuel, nuclear, etc.  This is to mitigate the risks of an unstable energy supply and the impact of climate change. The International Energy Agency (IEA) forecasts that by 2035, wind and solar will account for 45% of new power generation expansion.

Making a deal. The low price of oil and prediction for it to stay low for some time, and global economic slowdown will complicate discussions in Paris to obtain an agreement to reduce greenhouse gas emissions.

Taking the holistic view. The long-term trend is clear. The rapid and frequent technological advancements in renewable energy are pushing manufacturing costs down, and in particular solar power generated electricity, ways of storing it, making it ever cheaper and better. It is a renewable source; sustainable development of solar, wind and even nuclear contribute to reducing greenhouse emission, and help to manage global warming.

In addition, lower oil prices will help boost growth in consuming countries in the coming months. Depending on how deep is the economic slowdown, European governments especially should feel confident enough financially to take further action on climate change policy.

Expect emerging government policies to take this opportunity to support renewables – for diversifying the economy and for building a better future – economically and environmentally.

Oil prices have plunged in trading to below $39 per barrel, a price not seen since the global financial meltdown some six years ago. This dramatic oil price slide trend started in 2014, from the high of over $100 per barrel as recent as June 2014.

The Bank of Canada has been providing economic updates on the current affairs of the Canadian economy.  Rhys Mendes, an economist at the Bank of Canada said, “The rapid fall in oil prices will have both positive and negative effects on different sectors of the Canadian economy.”  What does he mean?

On a positive note; anticipated economic growth in U.S. and a weaker Canadian dollar will serve as a stimulant, boosting non-energy Canadian exports. Lower oil prices and other commodities will also lower input cost; thus reducing the production cost of many things. The impacts will be positive for manufacturing sectors, resulting in lower prices for consumers and translating to higher disposable incomes in general.