Alberta's Polluter Pay Principle

This episode of The Gravity Well centers on the critical issues of environmental responsibility and economic reform in Alberta’s oil and gas industry. Regan Boychuk emphasize the need for enforcing existing laws to ensure that oil companies are held accountable for environmental cleanup and reclamation. You hear highlights of the historical context of Alberta’s regulatory framework. The financial mechanisms that have allowed foreign shareholders to profit at the expense of local resources, and the potential for job creation through responsible environmental practices. The conversation also touches on the broader implications of financial imperialism and the importance of public awareness and engagement in driving meaningful change. Regan advocate for a fairer distribution of Alberta’s natural resource wealth to benefit all citizens to ensure sustainable future.

Welcome & Regan Boychuk Introduction

Alex:

Welcome to The Gravity Well where we break down heavy ideas into small buckets anyone can handle. Our mission is simple, to work through our differences and collaborate with others through conversation and processes. Together we can face our dilemmas and make our world a better place for everyone.

Jenny:

In the spirit of reconciliation, we acknowledge we are in Blackfoot Treaty 7 territory and Métis District’s five and six lands. We take reconciling action by seeking the wisdom of elders and individuals who aim to restore water, air, land, life and community. A healthy living-relationship with our homeland and each other is our guide. Okay, so I’m going to say a quick welcome, but Alex is going to lead us off today.

Alex:

Last time we spoke with Regan, we spoke about sourcing news and the importance of being able to fact check and back check information that may be sort of advertised in the mainstream and also how there are discrepancies in terms of interprovincial media. Some things will be overly reported in Alberta, and under reported in Central Canada, and Eastern Canada. Some things will be overly reported in Central and Eastern Canada that are under reported in Western Canada. We see these bifurcations, in terms of information that people are being flooded with, and it leads to these miscommunications.

What we’re setting out to do in this second conversation is based on the previous one and that understanding. Is there anything that you’ve discovered since in terms of being able to source media where the discrepancies in communication and lack of information that the general public and population has access to?

Regan:

Well, these are the issues, these discrepancies that I started to come across in my research 25 years ago are what motivate me and interest me and there’s so many to uncover. They’re everywhere. But I have started to see a pattern to how much is missing and how systematically different things work. Over time you see these patterns and the biggest insight that I’ve had is I’ve studied these kind of the shadows, the taboo subjects so much that you realize how big a part they are of the world. Whether we think about them or know about them or not, there’s trillion dollar infrastructures in many countries all setting to work on these things for many decades and they haven’t accumulated impact, an invisible force that if we can start to make sense of, I would say that that force has grown to such we can’t make sense of the world without appreciating what’s not there, the missing pieces.

That’s my biggest and inadvertent insight as I’ve studied these taboo subjects. I found some issues that are genuinely censored. So we know that they’re not there at all. The way that they do that, one of the main ways they censor things is they keep the dates out. When I started to look back at the history books, even the history books in Canada had the strange thing when I went to go look for important events, they wouldn’t include the date. Or I’d have to check four different sources and find in a footnote on page 800 that there would be the date and how difficult it would be.

And I realized that’s one of the main tools to keep us confused is to not have things in chronological order where things make evolutionary sense. And the biggest research insight I’ve had in the last year is taking all these facts I gather from all these and simply putting them in chronological order. And it makes it perfect that it doesn’t take anything more than common sense that any roofer has, that you can see quite clearly what’s happening.

If your theory of the world, if your worldview doesn’t include the unknown, but in a way that can factor it in and help explain it, then if you’re just floating on the surface, you can’t help but be confused. You can’t help but be led by the nose into the next, you have to have a basic understanding and realizing how they do that, just obscuring dates.

And what that’s basically come down to, my biggest insight is that there’s no truth without context. That any fact or any date or anything, you put it over here and it means nothing. You put it in its context, it could mean everything. That’s the main trick of the media of concision. Now, now it’s got to be, it’s over. I got to go, I got to go next one, next one.

Media Not Providing Relative Scale Or Impact

Jenny:

Yeah, [media] normalizes…it makes everything equally important, and it doesn’t, like you said, help us understand the context. In fact, Alex and I were having a conversation yesterday about something Jordan Peterson spoke about. Which was the changes in temperature related to concrete. You know how when people talk about temperature sensors on the earth, “Well, there used to not be concrete there, and, therefore, we can ignore it because now there’s concrete.” No, the context is that is the concrete is part of the warming.

That’s a part of our addition to [the planetary crisis}. That’s an example, I think, of what you’re describing of this, the lack of context and what he’s saying so that people can ground that in [context].

Regan: Yeah, that’s absolutely true.

Jenny: And also that’s part of the cumulative impact problem that we have and the temperature rising based on those activities. So it’s that…

Alex:

Yeah, we need those sensors in urban areas, especially because we need to know how much this heat bubble created by all this asphalt and all this concrete is affecting the stratosphere and how storms behave and where they move. If you create a microclimate like this heat bubble over top of the city, then you’ll see. And, I’ve seen it because I’ve lived in Calgary my whole life. We used to get wicked storms in the North West and now they all just like split around the city and they go to the urban or rural areas around the city. The storms split because of this unnatural environment that the cities create.

Jenny:

Yeah, perfect example.

Alex: I’ve been watching the jet stream [for] 42 years now.

Regan: You can just split the jet stream with a wave of the hand.

Jenny: Alex hasn’t heard your back story. I heard it when you went on Ryan Jespersen, but can you just remind us and our audience why you’ve gone down this research path that you have? I recall you had a well on your family’s land. I thought that’s how this started. If you can just give us a little bit of your history, it’d be awesome.

Regan:

There is a well on my grandpa’s farm that came at a much later date, came in with the current premier. But I grew up in northern Alberta in Grand Prairie and my dad was a heavy duty mechanic with Nasco, working on the oil patch, during the boom up there in the 70s and 80s. We moved to Calgary when I was in high school and I had started getting interested in news and studies, eventually leading to journalism school, from reading newspapers. That’s where I got hooked on this disconnect between what I’d read in the newspapers. I’d get see something interesting, see something happen. I’d go and try to learn more about it.

And there was always a huge disconnect between the scholarly study, the history and the way the story is being told in the paper. It was a constant disconnect that I ended up studying International Relations, the Middle East, and Canadian foreign policy. And I worked in the oil patch during the summer when I was going to university, on a service rig, out of Brooks. Living in my van outside a friend’s trailer, learning about how things worked in the field and got to ask lots of questions and became more curious.

After I finished grad school away, I moved back to Alberta, I thought I should study the oil and gas industry. It’s obviously so big and important. I wasn’t aware of anybody seriously looking at it. I started poking around, started volunteering with the Parkland Institute and the University of Alberta, just kind of sharing research and contributing. There was a royalty review in 2007.

Turned out to be, I didn’t appreciate how unique, a moment it was in Alberta where there was a real genuine public debate. There was a government genuinely committed to trying to raise royalties. It set the scene and took a run at it. It was an incredible time where there was a real genuine public debate. That’s what got me hooked. I was doing research for a service company in the oil patch at the time. I started working on the royalty review and get onto something, get a little bit of understanding about the industry, and that disconnect. It’s so huge when it comes to oil and gas.

Later working for the Parkland, I started studying the economics of the oil and gas industry. They asked me to look at quarterly reports, try to figure out how much money the companies were making. And it turned out to be impossible to tell who makes money where, let alone try to add it up. But I found industry statistics where the federal government makes them report their costs and their revenues. I’m not an economist and I’m just silly enough that if I subtract those two, doesn’t that tell me how much profit they have? Or couldn’t I figure that out?

I didn’t even know how to use the spreadsheets, but I typed in all the numbers by hand and quadruple checked them. And then, Parkland sent it to professors in Norway and elsewhere. And it turned out it was right. It was, the profits were really that big. We had no real explanation why or how why no one else was studying it. But there was enormous profits being made. And we published that. It made news across the province. Every newspaper, radio station, and TV reports it. And the next day, [the hype] is gone.

It’s like it never happened. It’s never mentioned again. Nobody mentions it. Nobody seems curious or wonders why we give away so much money. And it’s a target rich environment here in Alberta. I start poking around in the oil industry and there’s just so many skeletons in the closet. I’ve never stopped poking around, never stopped accumulating this data and all of these facts, never stopped questioning because it makes no sense.

I don’t know who would do this to themselves. Who would give away 95 cents of every dollar that comes out of the ground? Why don’t we make them clean up stuff? Those are the questions that have puzzled me for decades. I still trying to make sense of them, still trying to answer those questions. Whether or not I have an answer, all those things are true. I just can’t ignore them, can’t forget them. I can’t pretend I don’t know these things.

MORE ON THIS: Regan shared with us the Australian Institute study released on Aug 6, 2024, outlining Australia’s great gas giveaway: “Australia has ten facilities that export gas as liquified natural gas (LNG). Six of these projects—both of the Northern Territory’s facilities and four of the five operating in Western Australia—pay no royalties, either state or federal. These facilities represent 56% of Australia’s gas export capacity. This means that all the gas exported from the NT, and more than half the gas exported from Australia, is given for free to the companies exporting it.

The monetary value of this gas is enormous. The total value of LNG exports over the last four years is estimated at $265 billion Australia-wide, $37 billion of which was exported from the NT. All of the NT’s LNG exports were royalty-free and Australia’s royalty-free exports totaled $149 billion. To put this another way: in the last four years alone, Australians have given away the gas that made $149 billion worth of LNG, for free.”

Regan: I’m trying to find the string of logic that ties them all together and explains them all. Because if we do, that amount of money that’s coming out of the ground in Alberta is more than enough to take care of everybody, solve all of our problems. It’s absolutely enormous. That combined with the financial capacity it gives us to finance an equivalent amount of our wealth at any given time. If there was some way we could bring that under democratic control, then some way we could have the rule of law. I think there’s a lot of hope there, right?

The Orphan Fund History, Industry Created

Alex:

I just finished listening to you speaking with Mark Dorin about the Orphan Fund. I find it ironic that the Orphan Fund was created by the oil and gas industry and ratified into law by the provincial government. Everyone sat that down and then agreed that the Orphan Fund would provide a safety net in terms of reclamation and restoration of land to usability. But there’s 4,700 wells that have just been [orphaned]. They were [orphaned] by companies that have since folded and gone insolvency.

It ends up these orphans are left to be repaired on the taxpayers’ dime. When 95% of that money that was made by these producers was just taken out of the optionality. Nothing was actually put back into that safety net. And what’s interesting is we don’t even need any new laws. We don’t even need any new legislation. We just need to uphold them.

Jenny:

We just need to enforce them. I can offer from somebody who is in industry. I was in [the Oil and Gas] industry for 22 years. And the story that you hear is if we charge more, they’ll leave. As a Geoscientist that knows the quality of our oil, and the difficulty of how little volume we get from wells, you get convinced that because of those lower quality things and those difficult choices, that if we say no, they’ll go somewhere else. If we ask for more, they’re gone.

But to me, the thing that I experienced too, where it seems there are things that are obvious. And then when you actually get down to it, it’s never actually meant to happen. That’s what it appears like, right? We’ve created this safety net, but we’re going to make it as impossible to actually pull the trigger on that safety net. That’s the impression I have. And I’m sure you can say it better than I just did.

Regan:

No, you’re both right about some of the quirks of Alberta’s history that here in the practical world of where are we and where do we go? Two of our biggest advantages are there was a period in the 70s and 80s where we had a real, committed, patriotic, local government that wrote all those wonderful laws that are still there on the books, that give the remedies for each citizen and each scenario. We knew this stuff. We have the best laws, they’re sitting there. They’ve fallen out of use. It’s not being enforced today. And instead, there’s a charade. There’s a regulatory facade up in front of that. A nice curtain. Say, “don’t look behind the curtain.” Don’t look behind it. And it looks wonderful.

Jenny: “Best regulations in the world”, right?

Regan: Absolutely.

Jenny: “Best laws”, “Most responsible”. Right? That’s the curtain. Right.

Alex: Interestingly, though, they would be if they were actually just enforced.

Regan:

That’s the low hanging fruit. That’s the jiu jitsu, where we could turn their charade against them. They want to pretend it’s real. Let’s do it. It does look great. We can do it. And what are they going to say about it? We don’t have to listen to their complaints. They designed it, it’s theirs. Those same laws that are hiding there are unused, unremembered, like the Orphan Fund. It’s unique in Alberta. One of those disconnects…

Everyone hears about orphans all the time. And then what? How do all these guys get to just walk away from this mess? And how in every state and province across North America? How is it the taxpayers? Why is that? It makes no sense.

Alex: It’s an insolvency thing, right? They just…

Regan: Exactly. We wait till it’s too late.

Jenny: But we are different.

Regan:

Not all of us were born yesterday. There are some people somewhere that have some [money]. Alberta fixed this, at least on the surface. We have one of those charades. We have the Orphan Fund, one of the curtains, the first curtain they put up before we had the charade of regulatory programs. The first curtain was we’ll have a fund. You don’t need to enforce the law. You don’t need to regulate us. We’ll have a fund. And later, later, later, when stuff happens, we’ll pay for it. So you don’t need to worry about it. So we have this fund and that’s our safety net.

And its unique in the world. It’s unique in North America. Everywhere else falls to the taxpayers. What are you going to do here? Falls to the taxpayers. What do they do? We say, pay up today. You’ve got 4,700 orphans. The industry, according to the law, is supposed to pay for 4,700 orphans.

It’s your system. You designed it. You implemented it. It’s time. And now they make up stories and they whine. They can’t do it. There’s no money. They don’t want to. But it’s there. We could use it against them. That law is sitting there. That’s our safety net. That’s what we should be calling for. But we can’t get any journalist to mention it. We can’t get the law professors to admit that it’s there. We can’t get them to read that section out loud. That we can, we read English. That’s what it means. No one’s allowed to talk about it. And that’s one of the clues. And that’s how you know you’re on to something.

All of this stuff, this shadow, the unknown, the way you know you’re on to something is that disconnect. If they say they’re trying to do something and they design a system to do something, and then it doesn’t do that, and they don’t say it, and nobody even mentions it. Nobody has a problem with it.

That’s it. There you go. You’re on to something right there. That disconnect.

The Clean Up and Restoration Job Opportunities

Alex:

There’s also something really important that you’re touching on there, Regan, in terms of potential job creation. Right? Like if we can hold these…

Jenny: A $260 billion economy.

Alex: Right. Just in reclamation and restoration and like bringing these wells, capping them properly responsibly, preventing the leakages, restoring the land to usability and functionality, preventing the leaks, all those types of things. There’s huge money to be made in this restoration.

Jenny:

Many people employed. People like myself. It’s one thing I test with my friends in the industry, I say, “I’d go back in the industry in a heartbeat if I can be focused on cleanup and reclamation.” I would love to map contamination instead of mapping a reservoir for the hundredth time. I would love to be deciding where we should be protecting water and where we should be investing in our Eastern Slopes, for example. Absolutely, Alex.

Alex:

Wouldn’t that be a funny thing if we could convince these rich folks that they could make even more money and do the right thing at the same time?

Regan:

There is a huge market for that. Everyone below the producers, they have the license holders who take the revenue. That’s a tiny, tiny fraction. But the vast majority of employment, the vast majority of jobs in the service sector, which is cleanup. And so irrespective of production, whether we’re responsible or not, whether we being responsible means we’re responsible for the environment. We don’t have production in 10 years. Regardless of all that, it is the same amount of cleanup. It’s going to cost the same amount of money. It’s going to create the same amount of jobs. And so just committing to polluter pay means full employment in the oil and gas sector in Alberta for decades, no matter what. Whoever wants a job has a job, a good job.

We can [give] them fantastic jobs. We can make them local. We can make them reasonable. We can make them safe. There’s more than enough money. We’re not idiots. It could all be done.

Jenny: Yes.

Regan:

At no cost. This is mother nature’s bounty. This is money that comes out of the ground. If we stop giving it away to foreign shareholders, if we start using it in the public interest, there’s no more austerity. There’s no… I grew up in Alberta in the 70s and 80s when we had, we were building roads, building hospitals. It was hope and progress. And ever since I’ve come of age, since Klein in the 90s, it’s been austerity and decline. I look at the oil and gas. I look at the numbers. I don’t understand the disconnect and nobody’s interested. You’re not allowed to talk about it. It makes it more difficult, but it’s a hint that you’re onto something important.

Alex: No one was interested in a smartphone. Right? Blackberry was humming and hawing about, “Oh, no one wants a touchscreen. No one wants a touchscreen.” And Steve Jobs came along and he was like, “everyone wants a touchscreen.” He came out with a smartphone and it completely revolutionized that industry. So if we can look at cleanup and restoration with the same…

Regan: No one’s talking about it, which means that we’re headed in the right direction if we start.

Alex: Yeah.

Regan: … allies in the industry, everyone below the producer, all the locals, this is their only future.

If we stick to the regs, there’s nothing left for the little guys. Cleanup is their only future.

Jenny: Yeah, it is all of ours.

Regan: They’re not in charge.

How Did We Get Here?

Jenny: Can you take some time now and just back up for us and offer who are the problem owners?

Can you offer…How did we get here? I know you touched on we had the Lougheed years, we had where we actually had responsible development and a plan for the future, the highest royalty rates. But can you give us from your perspective, what are the key decision points in Alberta’s history that you think we need to be aware of if we’re somebody that’s coming in and wanting to know how are we giving away 95% of our resource? If that is something that you can highlight for us.

Regan:

The royalties are somewhat of a mystery. Alberta has the lowest royalty rates on earth. And we had a royalty review in 2015 and we lowered them further. And it’s not really up for debate. The numbers are pretty clear. But when it comes to cleanup, that wasn’t an issue until more recently. In the old days, when it was just big companies, there was nobody going broke and disappearing.

That was kind of a more modern development in the 70s and 80s when local companies started developing and then the prices crashed in 85. That’s when we were first faced with this issue of cleanup. And nobody really knew what to do or how to do it. And they put aside some money for orphan wells and they struggled with pipeline accidents. But eventually, whether it was genuine or not, whether it was a charade or not, the system they came up with it is still the right system. It’s focused on solvency.

And so to protect against industry running its course and there being no money left at the end of the game to pay for cleanup, the way they were going to control that is, the way you get there is you sell wells to some little guy who’s not going to have the capacity to clean them up later. And so the first thing we did was try to control those license transfers. There’s been very few rules, very few controls. But starting in 1989, when you wanted to sell wells, they would pause and take a look at the health of the companies and make sure you weren’t just dumping something in the shell that was going to end up in taxpayers. That sort of monitoring is absolutely essential because of the nature of the game. There’s no money for the mess at the end. You got to keep an eye on them.

And so that approach is what we should be doing. We expanded it in 2000. We had a system that monitored each well and their production and their profitability in their life. So we could collect everything ahead of time. And so that’s still the way we should do it. Monitoring solvency is the only way to do it. The benefit of that is you also you’re monitoring the profits. So you can also calculate the excess profits, all the extra money that the industry didn’t earn. And they don’t own the oil and gas that belongs to the citizens in Alberta. Those extra profits belong to the public. And that’s what we can fund a decent society with is the resource front of our resources. It’s enormous. It’s in the hundreds of billions of dollars a year in Alberta. It gets transferred to mostly foreign shareholders for nothing.

Like the oil sands. Just think about it for a moment. What do we do with all of our American dollars? We must have so many American dollars. There’s all these American companies here. They’re buying all of our oil. What do we do with it? We must have so…There are no American dollars. We don’t have an American dollar. There’s not one American dollar. They don’t invest here.

Alex:

Do you think of a pay it forward type thing? If you’re going to be extracting our resources and capitalizing on them, and then leave a mess. Should there be? “You’re going to have to invest in infrastructure.” So that we have the opportunity as a people to have better hospitals, have better schools, have better things. Should there be a corporate citizenship fund that they have to pay forward if they want to extract from us?

Regan:

One way or the other, there’s one source of money. It’s our oil and gas. It’s coming out of the ground. The choice is how do we share it? Do we leave it all in industry’s hands and beg them to be nice boys and girls and to do some nice things for us? Or, do we collect our money when it comes out of the ground and we decide what we’d like to do with it as a democratic society and go ahead and do it? Right now our system is leading their hand. But the same thing applies to cleanup. We can ask or demand industry to clean it up. They don’t have any money in the bank. They have tomorrow’s revenue, same as us, to pay for it. And so we can either make industry pay for cleanup. Or we can simply just collect all of the profits at extraction, give them a return on their investment, and we can use it to pay for cleanup. Because whether we make them do it, or we pretend like we nationalize it, we just clean it up ourselves.

It’s the same pile of money coming out of the same holes. And we have enough experience. I think we should be pretty cautious about the good faith of industry, whether we can rely on them for anything, let alone something so important and get over it.

The Licensee Liability Rating (LLR) and Alberta Liability Disclosure Project (ALDP)

Jenny:

This is something that I’ve expressed to you in the past when we’ve talked about the industry. The way the regulations are written, in my view, say that they want to hand over the keys. When you read the regulations, it says when, as you said, when the LLR…Let me back up and explain that, what LLR was.

There was a Licensee Liability Rating. They looked at the asset value, which was a simple linear calculation, which is problematic in itself. But a calculation of asset value, three years production estimate, and that’s your calculation of your asset value versus this Directive 11 values …we know at Regan’s work, with ALDP, that are four times lower than what it should be, in terms of representing the actual liability. We have this great formula. And when you read the regulation, it says, “When this asset value reaches this liability value, we stop. We take the keys and we collect deposits.” That’s how it’s written. They want to give deposits. It never says anywhere in the regulation that the oil company is actually going to do the closure work.

It says the regulator needs to take deposits at that point, or the orphan program and that gets taken over that way. But either way, none of it suggests that the oil companies want to have a plan and are ready to do this reclamation work. Do you see it differently?

Regan:

The Alberta Liabilities Disclosure Project.

Alex: Okay.

Regan: A group of stakeholders, academics and environmental groups and landowners that got together trying to estimate the cleanup involved with oil and gas. And our estimates came, started coming out in 2019, started making use of some of this data to try to inform the debate around how much is actually going to be involved in cleanup. But that is what the LLR program did. It monitored solvency, and it’s been a great effort. Solvency. But that tells you how strange the regulator is operating. That at one, at the point of insolvency, when the debts equal the assets, when there’s zero dollars left, that’s when you mail them a bill.

Alex:

How’s that working out?

Jenny: Yeah, we get that perfectly right. In a market that we know does this (signal up and down) in terms of prices on a given day, people come back to life in a $10 swing. I was joking earlier, I tweeted about this discussion and said, “[Where is] this perfect instance where the regulator is just going to say, “Oh, thank you. On this day is when we decide that…Well, let’s pick a company: Obsidian. Right now, we have a real company that’s on the verge of bankruptcy and is looking to develop still. It owes some money to some, I don’t know if it’s shareholders or contractors. And now there’s an environmental concern, potentially from cutting corners.

I’m speculating here, but these are the real-life issues that are happening because of the regulator not stepping in and saying it’s time for us to take the keys and make sure that these assets are back with Albertans. Ultimately, whether it’s held by the provincial government on our behalf. Do you have any thoughts on that, Regan? What it would look like for you if they were to pull the trigger, what you would expect to see? Or is that just details at this point?

Regan:

We’ve run the numbers, we’ve calculated the solvency and projected the solvency for every license in Alberta. A vast majority of them are already gone, well past the point. There are very few companies holding anything of any real value. They’re just operating outside of the law, outside of economics. And if we enforce the rule of law, hundreds and hundreds of companies disappear. That’s portrayed as something bad. It isn’t at all. They’re robbing us. Every one of them, every day, every dollar they spend or do, they’re just robbing from us, creating a bigger mess that they’re going to leave for us. And so them shutting down is a good thing.

And it doesn’t lead to less jobs, it leads to more jobs because of the cleanup. It doesn’t matter how you have the Orphan Funds. You have Section 11 of the Oil and Gas Conservation Act, industry has to pay for them. These companies failing isn’t a bad thing if they’re not paying for it. If we have the rule of law, because the only thing that makes it a bad thing is because there’s an obstacle that the regulator doesn’t assign obvious orphan wells that don’t have a viable owner to the orphan fund. The reason they don’t do that is because once they’re there, industry is supposed to pay for them to be cleaned up.

Alex: Okay, so in terms of who’s who in the zoo, like who’s lining their pockets? Like in the regulatory commission, like who’s… greasing their wheels so they look the other way, right?

Regan:

It’s a problem across North America. It’s absolute standard operating procedure across North America. These… the way they pocket the money and leave it for taxpayers is you sell garbage to a crappy little company and he may run on fumes for a couple months, a couple years, and then he’ll disappear.

And he’s the guy holding the bag and he’s the only one you’re allowed to look at. And that happens because the regulators, as a rule, across North America, rubber stamp every license transfer. I can sell 4,000 wells to my mother-in-law for a dollar. Rubber stamp approved.

If my mother-in-law goes bankrupt, she’s a villain, put her picture in the paper. [Canadian Association of Petroleum Producers] CAPP will say we need to go after these little guys. The problem is that transfer, and it’s not just here, it’s not just here. And it’s not just here. It’s an industry standard. And that’s actually the root of the problem. We don’t control those license transfers. We could, we should, we have. We know how. It’s not complicated. But we don’t.

That’s strange, but it leads directly to this consequence that all… We have all these stones with no blood to pay for anything, but it’s not a mystery. And the sort of data that the regulator has that should all be public in the public interest, we could trace all that. We could trace the history of every one of these companies, every one of these wells. We know every dollar, every person made from every well every year. And we could go down the list, pay up, pay up, pay up. The law’s on our side. It’s totally doable. Those companies are…

Jenny:

I’m going to expand on that a little bit for you. I recall that the expiry on look backs is two years in Alberta legislation. What I mean by that is, you can only look back for two years. And by the time most transactions are through the regulator companies operating and actually through their initial capital is two years. Essentially anybody can pretty well stay afloat for two years. If you hand something down, then they’ve got two years to basically hold onto it. And if they make it through those two years, then there’s no prior owner, according to the way the law is written. Is that correct, Regan?

Regan: From an accounting perspective in bankruptcy, there is the three-year look back. And so that’s three years is a popular timeline for a number of things in the oil past for just such a reason. If you want to stop paying all your bills, your company’s running to the ground, you can also get away for a few years, not paying your property taxes. You can just stop paying those. Nobody’s going to…

Just three years, you can put that money in your pocket and then go bankrupt, just add it to the bill.

That same sort of thing is happening.

Jenny: Yeah, that’s true. That’s the property taxes or the surface lease rentals. Those are the ways that companies can get away.

Regan: As far as the law goes, we can look backwards. We can’t look to previous owners. We do know who they are and they are supposed to look for them. We know from freedom of information requests, the regulator doesn’t look backwards. They don’t try to go after other people. They don’t try to look them up and find the previous owner. Even if we know who they are, even if there’s somebody huge with but loads of money, they never look backwards because they promised not to in 1991.

That’s the root of it. If you never look backwards, you sell it to a sucker, no blood from the stone.

Jenny:

And then buyer beware, right?

Regan: It was always buyer beware. How many million times are we going to be told that story before we wise up? Stakes are pretty high. Taxpayers are beyond the hook. Also, it’s just the little guys who are actually trying to do something good or start a business or whatever. They buy these liabilities in good faith, right? Trying to make a good go. Trying to make a good go and they end up being on the front page taking responsibility for regulatory arbitrage and corruption that supersedes anything that they’re even aware of remotely, right?

Alex: They’re really like squishing little guys trying to make go with things. And I think that’s that if anything’s criminal, it’s that.

And it gives us and it puts us the rest of us to sleep. It gives the facade of accountability, the facade of somebody cares, somebody’s paying and we can move on. But yeah, it’s not the whole story. And we don’t have time for anything that doesn’t get to the root of any problem. There’s no, “You can’t.” That’s part of the trick. If we just play around and waste our time, we lose. If we’re distracted, time is the central.

How to Address the Problem of Liability Dumping

Jenny:

Yeah, absolutely. To me, it’s not just about reform. Regan and I are part of a group that’s looking at regulatory reform, trying to make sure that we have a regulator that is actually representing the public to some degree. It’s supposed to be at least be different, at arm’s length from the industry, and arm’s length from the government. It’s not we don’t have that separation between those three entities that we’re supposed to have.

Instead, they’re all sort of in the same bucket working with each other rather than understanding those separation of responsibilities.

Alex:

I think one of those scary realities, too, is that if you get a regulator who’s actually willing to regulate the laws that are already on the books, they’re going to go the way of Serpico. I don’t know if you’ve ever seen that film?

It was about a cop who actually enforced the laws that were on the books and everyone called him a rat because he couldn’t be bought. They all went against him because he couldn’t be corrupted. He couldn’t be bribed. He couldn’t be bought. He couldn’t be bullied. He couldn’t be negotiated with when it comes to skirting the law. He was actually there to serve a specific function, which was the laws that were on the books. And they killed him for it in the end.

Regan: And history’s littered with examples of these people who are actually just trying to do the right thing and enforce the laws that are on the books, you know, and properly represent the people.

Alex: They get squashed. Sometimes they get assassinated or they get the reputation smear. That’s that’s the name of the game. These days with social media, let’s just sling mud and destroy a person’s reputation. So it will never work again. You know what I mean? Those like scarlet letters, scarlet letter. They just throw scarlet letters at people who aren’t going to play ball. And this is a really, really challenging environment to be in when you’re just simply trying to set out to enforce the laws that already exist and properly represent the people who need respectful and accurate representation who deserve it.

You know, be it landowners, be it small companies, be it Ma and Pa stores that are trying to make a go of it, be it, you know, Polluter Pay Federation or any anything like that. It seems as though there’s a construct that goes on sort of behind that that veil, that curtain that we’re being presented with that’s constantly trying to stifle good people from trying to do the right thing.

And I’m not sure if there’s a way around it or through it, but I think lifting those veils slowly is helping like in the process anyways because eventually you see the little little guy running the illusion on the machine behind the curtain and you discover that he’s not that powerful after all. He’s just a small little dude with a big shadow.

I think there’s more people reaching that state of critical mass where there’s like a general openness to maybe understanding that these games have been played against us for much too long. And it’s time to put a stop to it. A Game Stop.

Jenny: Absolutely.

Regan: This is a moment in history where that is catching on like wildfire everywhere. It’s a huge opportunity and a danger that there’s two sides, two ways the political spectrum that can break. It’s an opportunity for change. It’s an opportunity for critical insights and things are unstable. There’s a chance for change. The change isn’t always good. It can go in a couple of directions and it’s an opportunity that we need to seize on to make the best of to because there are there are big opportunities and the stakes are big.

It’s that understanding and with a little bit of context, it’s really hard to find these days and the vitriol makes it really hard to step anywhere outside of your safety zone. And that’s that’s the point. That’s what citizens need. They need the access to information so they can figure out what their interests are and they need to be able to have the confidence to engage in stuff. I don’t know where you find that information anymore that has been so fragmented from authoritative news, books, magazines of real standards that you couldn’t simpler to make sense of some of the bigger things than it is today. But it is that background and that confidence that you’re going to need.

The world’s hard enough to figure out the natural world is hard enough to make sense of. But in the human world, there’s a whole layer of bad faith and manipulation and power distorting everything that’s complicated enough on top of that. But appreciating and understanding it…

I’ve come to appreciate something really amazing about reformers 200 years ago before all this math stuff to deal with the complexity of the world. It goes back to class interest and breaking society up into different classes that have different interests because of different sources of income. It’s an incredible way to simplify really complicated math that we do today to deal with that complexity and the distribution. But it’s a really simple way to group things into meaningful and then you can see their shape and their size and their relation to each other over time. You can see the rentier part of the piece grow in size and power and influence.

It’s a really good shorthand for understanding different part and what those different interests, capitalists and rentiers and laborers, what they have as a group is a certain sort of logic that motivates their interests and their behavior that certain things benefit them. They’re going to tend towards and capitalists and rentiers, they have different interests and they go in different directions. And that’s a really good shorthand for making sense of the world when you see people talking in the media and they’re all going to look good and sound good and say nice, they’re all going to sound good.

But if you have some sense of the interests, some sort of the logic that kind of drives them through the world, you can take it with a better grain of salt. You can maybe know what they’re after or why they’re… Those sort of need some sort of way to make sense of the world. And just thinking that crudely of just basic interest is a really good filter to cut away because everything looks so good these days.

Alex:

It’s funny too, in that you recognize the patterns. I think one thing that I’ve noticed in our previous conversation and watching your conversation with Mark and having this conversation right now is you’re very good at recognizing patterns. There’s another shorthand I discovered pattern-wise too.

The Romans took over the world with roads. They developed trade routes, short-cutting the conmen essentially so that they could trade spices and goods with the East and bring them back and stuff like that. And then the British did the same thing with the Navy. Right? Then they started bringing pirate ships through the Mediterranean, through the Gulf of Aden, through the Gulf of Oman, right? And into the Indian Ocean and the Bay of Bengal and they would trade spices so they didn’t have to go all the way around Africa.

Now flashing forward, the same region is still fighting over the same trade routes. So we’ve been fighting the spice wars for almost 500 years. But all of a sudden now in today’s 24-hour news cycle, it’s new. We’re fighting in the same war. Genghis Khan, Alexander the Great was after those shortcuts, those trade routes. Everyone since the dawn of recorded history was after the same region.

Regan:

And those tricks, those hacks, those big jumps forward. And I’ve discovered one. The British had one, a financial trick. And I’ve discovered that Alberta is at the heart of the Americans. Very similar trick. Imperialism is not all about smashing some guy over the head and taking his stuff. It gets a lot more sophisticated over time.

It’s financial. And financial crimes are tricks, mostly of timing. That’s why economists “Can’t do time. They would see all the crimes.” But the British greatest trick ever, the way they stole, literally just stole $40 trillion from India with a piece of paper called the bill of goods. They would go to India and they would take your stuff. Instead of paying you money, they give you a bill of goods. You say you take that to your local tax office and they’ll give you some rupees. Don’t worry, he’s there. He’s got the rupees and it’s 64 rupees. You’ll go get it. You’ll get your 64 rupees.

Stop. That’s a crime. That’s been wrong. What happened was the British have your stuff and they’ve left. You don’t have any of their money and they’ll sell your stuff and they’ll have the silver and they’ll take that back to Britain and spend it. And what you have is the piece of paper that you take to your local office and he pays you with yesterday’s tax revenue.

Alex:

And if you want to go to test that you have to go to Britain, it’s going to cost you 264 rupees but they only paid you 64.

Regan:

Nobody even figured out until 100 years after it was over. But they stole 40 trillion dollars in that way. The very same thing is happening here. And it’s so simple it doesn’t even make sense. We don’t even see it. But if you stop and think about it, every dollar we lend to an oil company is a straight theft. Every dollar we give them. And this year, it’s 140 billion dollars.

Canadian banks, because the way banking actually works in the real world, they created 140 billion dollars out of thin air. They hit a button on their keyboard and 140 new billion dollars show up in oil companies’ bank accounts. And they say, “Thank you very much.”

We’re going to buy back some shares. We’re going to pay some dividends. And there’s a big debt that has to be repaid. And it’s repaid with tomorrow’s production of Canadian’s oil. It’s out of tomorrow’s oil, we will repay the principal and the interest and whatever else.

Every single dollar we lend them, they’ve stolen. It was 140 billion dollars this year. That’s the financial capacity that Alberta has. We have the financial capacity to create 140 billion dollars out of thin air at no cost to anyone. That’s the value of the carbon we’re digging up. That’s 45,000 dollars for every person in Alberta. Basic income we could have given had no cost to anyone. But what’s happening is we let foreign shareholders not only control our production and take the real profits. We let them control the reserves that they don’t own and they never paid us for. And that’s true of the oilsands. There’s 175 billion barrels of oil. Where’s that big pile of money? Did somebody pay for that?

We must have one hell of a savings account. No, there’s no money.

Alex: It should be going into the Heritage Fund at least, right?

Regan:

Where’s the money? They never paid for… That’s imperialism. They take your stuff, gratis. That’s imperialism. In the 50s, the oil industry had zero debt. They couldn’t borrow money. Nobody meant them since the 20s, since the great crash. They never borrowed any money. But in the 70s, they started borrowing money. Oil started to be collateral. You could start creating money out of thin air because of oil in the ground.

It was a new thing. Never happened in the world. That’s why there’s so much money there.

J