I couldn’t care less about oil!

My MEI colleagues and I have signed, in recent years, a number of texts explaining among other things the merits of oil and gas development in Canada, and of transporting oil by pipeline.

This is enough for some to accuse us of being a part of the “oil lobby.”

However, what concerns us at the MEI is economic rationality. Not oil, or margarine, or such and such an industry. Economic rationality, period. Yet at the moment, and for the foreseeable future, logic and common sense (as well as the laws of physics) still come down in favour of this resource.

People can oppose pipeline projects for symbolic reasons, but as the National Energy Board reminded us all recently, even in a scenario in which absolutely no new pipelines are built for many years, Canadian oil production will increase significantly from now until the year 2040. Indeed, this production will reach 5.6 million barrels a day by then, well above current production levels, independently of currently low world prices.

Therefore, in practice, opposing pipelines simply means transporting this oil by train or by tanker truck, methods that are a little less safe than pipelines, although still quite safe. Stating this does not mean that one is “right-wing” or “pro-pipeline.” It’s just a factual observation. Personally, I would be thrilled if we could run our automobiles effectively and inexpensively on dandelions or carrot juice.

Indeed, if an energy source is the most abundant, reliable, and affordable—however ugly or smelly it may be—economic common sense dictates that we not block its development or its transport. For now, and for the foreseeable future, fossil fuels are and will continue to be a part of our energy mix. This is not an opinion; it’s a fact.

Of course, major technological innovations can sometimes change the rules of the game all of a sudden. I obviously have nothing against this, if it happens. In such a case, a rapid transition would be economically rational. But this is not yet the case with renewable energy like solar and wind power, which are neither efficient nor profitable, and which must still be heavily subsidized.

Finally, since the question of our funding never seems to go away, let me take this opportunity to point out three things on the topic:

1) The funding we receive from companies active in the oil and gas sector represents less than 3% of our total annual funding.

2) The causal link between our writing and our funding must be set in the proper direction. This is essential for anyone who wants to be fair-minded about this topic. To be clear: We don’t say what we say because company X or Y gives us money. Rather, company X or Y gives us money because we say what we say. But we say it independently of this funding, and more often than not, we were saying it well before we got the funding in question.

3) For 15 years, we have been consistent, intellectually coherent, and independent. The conclusions of our studies have always rested on rigorous economic analysis, regardless of who might be upset by this.

As I have already explained, over the years, we lost the financial support of two aluminium companies that did not appreciate our criticisms of preferential electricity rates for their industry. We also lost the support of an aeronautics company that did not like our criticisms of subsidies to its industry… and also the support of an oil company that found us too hard on environmentalists! And finally, we also lost the support, which was quite substantial, of a company in the telecommunications sector that did not like our writings on the spectrum allocation process for cellular telephony.

Our independence and our principles are simply not for sale, and we have proven it time and time again.

Indeed, it’s rather amusing to be called “ideologues” on the one hand, and on the other, unprincipled “hired guns” at the beck and call of big, bad corporations. The two being mutually exclusive, critics should really pick one and stick to it!

A free and democratic society needs vigorous debate and clashes of ideas in order to flourish and evolve. Instead of constantly questioning people’s motives and accusing them of bad faith, we should all concentrate on fundamentals and debate the facts and principles that will lead us toward a just and prosperous society.

For my part, I’m convinced that such a society requires entrepreneurship, freedom of contract, the distribution of income (as opposed to its redistribution), and respect for property rights. Some believe the opposite? No problem. Let’s debate it respectfully, without impugning each other’s motives.

Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this op-ed are his own.

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