Editorial: Greasing the wheel of life

Cartoon by JK.Cartoon by JK.

Big Oil roared back into the headlines in Canada and across the world, once again showing how, compared to mining, the oil industry is in a league all its own when it comes to societal impacts.

• In Canada, there was of course the Lac-Mégantic tragedy in Quebec, with some 50 locals killed on July 6 when a 73-car train carrying crude oil from North Dakota’s Bakken fields on its way to Irving Oil’s refinery in Saint John, N.B., slammed into the centre of town at over 100 km an hour, and exploded in a series of fireballs that burned for hours and destroyed 30 buildings. It’s the worst rail disaster in Canada since 1864, when a passenger train drove into the Richelieu River in Quebec, killing 99.

Canadians were shocked to learn of just how shoddy the safety standards and practices are in the federally regulated rail transport of hazardous materials through populated areas, with the derailed train in question having been left completely unattended on the main line in the middle of the night, even after local firefighters had extinguished a major fire on-board one engine.

The operator of the railway — U.S.-based Montreal, Maine & Atlantic Railway Ltd. (MMA), a subsidiary of the privately held Chicago-based holding company Rail World — represents the worst of twenty-first century North American capitalism, carrying out leveraged buyouts of marginal assets, and then paying for them and generating short-lived corporate profits and executive bonuses by cutting operating staff and maintenance well past any reasonable point, having used aggressive lobbying to get exemptions from long-established regulations that were put in place for good reasons.

Could it be any clearer that the villagers of Lac-Mégantic paid with their lives for MMA’s cost-cutting and cavalier operating procedures?

At press time, MMA had just laid off a quarter of its Quebec workforce with no advance notice, with the affected workers including those who inspect and maintain MMA’s rolling stock.

The tragedy has also put a whole new perspective on the raging debate over building new oil pipelines in North America, as ordinary people now see that there has been exponential growth in transporting oil by rail due to the rapid rise in oil production in Alberta and the U.S. Northwest, far from established oil refineries farther south and east.

• On a grander scale, oil was a pivot point in the military coup in Egypt that unseated the Muslim Brotherhood from power and deposed the much maligned Mohammed Morsi as president, and installed General Abdul Fattah al-Sisi as leader.

While Egypt may be widely regarded as the intellectual centre of the Arab region, Gulf oil money has strong voice in political affairs, too.

Egypt isn’t a major oil exporter, but it does have the Suez Canal and the Sumed (Suez-Mediterranean) pipeline that allow for the transport of oil from the Red Sea to the Mediterranean Sea, and onwards to customers in Europe and North America. Any threat to the canal or pipeline — the latter co-owned by Saudi and United Arab Emirates interests — will put a cramp in the Gulf states’ cash flow and spike global oil prices, as we saw in early July — much to the chagrin of mine operators already grappling with falling metals and mineral prices.

And so we saw the governments of Kuwait, the UAE and Saudi Arabia pledging US$12 billion in aid for the new military regime in Egypt, instantly relieving the economic pressures that had plagued Egypt over the past year.

Muslim Brotherhood-aligned Salafist guerillas in the northern Sinai blew up the gas pipeline to Jordan and carried out small-scale attacks on Egyptian military personnel in early July. But the military has secured the oil-related assets in the country, and the oil flows on, business almost as usual, at least for now, even as the political risk premium weighs on global oil prices.


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