Crude Observations

Groundhogs. Those rats again?

Last week I elected to chat a bit about a variety of things happening in the world at large that were affecting energy prices and that we should pay attention to as the year progresses. And less than a week later, we continue to see, during what is, to put it mildly, a rocky start to the year, events very much outside of our control that will continue to affect the oil and gas industry for years to come, including, as always, the actions of malign actors with sinister intent. Not to be outdone by central bankers frozen in place by fear of raising interest rates, OPEC+ left its schedule of increases to production intact, notwithstanding that they are woefully behind in hitting those numbers.


This of course continues to fuel the oil price rise as the broader market starts to realize that maybe, just maybe, this predicted oil supply crunch is coming sooner than we know going to become a crisis. Then what? Shale? Africa? Brazil????? Maybe, just maybe, oil sands.


Meanwhile, earnings misses are whipsawing tech giants. Facebook reported the first drop in users in 18 years and tepid growth and the market wiped something like $300 gajillion off its market cap. On the same day, Suncor reported record quarterly funds from operations of $3 billion – 1/10th the reduction in personal wealth lost by the Metaman Mark Z – on the day oil prices breached $90 for the first time since late 2014 and the stock went down 3.5%. Amazon then posted amazing Q4 results but negative free cash flow for 2021 and in after hours trading the stock is up 20%. None of this feels remotely logical or normal.


Closer to home, Canada remains weird. We have oil at its highest price since 2014 and the Canadian dollar lags. The market thinks we are screwed with a capital S. Why? Lots of reasons. Out of control debt for one. Unproductive asset bubbles for another. Chicken little central bankers and a government that JUST DOESN’T GET IT. Meanwhile, we have all been distracted for the past week by the “trucker convoy” that descended on Ottawa. Like them or loathe them, it is fair to say that they have had an outsized and distracting impact on the national discourse. Well at least on Twitter. I had my say last week. I agree with some, reject the rest and wish they would go home, especially the border blockers, because that is hurting their trucking brethren and a supply chain economy already living on the edge. That said, the fact that the “movement” is growing speaks to a level of frustration that many have with government in general, two years of pandemic and a perceived lack of leadership.


Speaking of a lack of leadership, one spectacle I didn’t anticipate happening this early in the year is the ritualistic defenestration of yet another Conservative Party of Canada leader as the CPC voted just this past Wednesday to evict Erin O’Toole from Stornaway (one of Canada’s official residences that isn’t falling down).


I will save my prognostications on which sacrificial lamb might enter the race to succeed the uber-bland Mr. O’Toole and serve as cannon-fodder for a seeming majority-bound Liberal juggernaut. But suffice it to say that IF the CPC picks the right person, and if that person can calm the party’s most self-destructive instincts until after an election, they do actually have a more than fair chance to take the Liberals down, especially as the realities of inflation, interest rate increases and energy insecurity continue to grow. As a reminder, the 2021 vote was a lot closer than people realize.


Remember. I said IF. And it’s a big IF.


Plus ça change, plus c’est pareil… as they say in that weird place that decides elections.


Speaking of elections and the ritualistic sacrifices of bland white conservative men who miss layups, I am reminded of the following paragraph from my Fearless Forecast that I wrote a mere three weeks ago and that I was mercilessly mocked about.


I’m not patting myself on the back, because it was clearly an off-the-wall prediction, but in politics especially, accepted norms can be flipped in a hurry. And the prediction was more about the need for political rejuvenation than anything else to address what is clearly a growing divide in our country as we struggle to emerge from a pandemic that has gone on for 15% of my youngest daughter’s life.


That said, in a year of volatility, it is nonetheless reassuring that some things can remain constant. CPC self-destruction. Trudeau animus. Putin being Putin. UCP doing… I’m not really sure what they’re doing, but lots of people are really mad about it.


Speaking of annual rites of passage, this is the time of year when I get to choose which two of my favourite traditions I get to revive – the tribute to Tom Brady’s GOATness or the annual Groundhog Day movie tortured metaphor reprise. And not just on TV, but in real life, here in this blog.


I say this because as I observe every year, over and over again, we seem to inhabit a real-world version of the movie Groundhog Day wherein we are destined to, like the character played by Bill Murray, relive the same day over and over until it feels like our heads will collectively explode.


It doesn’t matter if it’s politics, pipelines, the upstream oil and gas sector, the never-ending conflict between Alberta and the Federal government, the conservatives dumping their leader overboard, trucker protest convoys (does no one remember the 2019 convoy? Many of the same organizers!), Tom Brady dominating a news cycle or even successive waves of COVID, it’s real and we are living it.


And even though we are currently sitting at the magical confluence of $90 oil and $5 natural gas, the themes from the groundhog day meta(it will always be Facebook to me)phor remain relevant.


Don’t believe me? I wrote my first Groundhog Day blog 6 years ago talking about how Alberta was banging its head against the wall on the energy file and thematically, not much has changed.


I like to dig it up every year or so to point out that the more things change, the more they seem to stay the same. But at some point, metaphorically and actually speaking, it is time for a new day.




The first year I wrote this, Tom Brady and the Patriots were defending Super Bowl champions even though they missed the big game. Skip a year ahead and for the next three years Tom Brady and Patriots were in the Super Bowl and I periodically brought up the Groundhog Day metaphor yet again. Last year, I dusted it off again and guess what – Tom Brady and the anti-Patriot Buccaneers were heading to the Super Bowl. This year, Tom Brady is the defending Super Bowl champion and rather than heading back to the Super Bowl, yet again, he has managed, in true Phil Connors fashion, to finally break the chain and move on – grabbing the news cycle for a few days to announce the end of the most illustrious career in sports.


So, Groundhog Day (note to media – not “Groundhog’s Day”). What are we to think anyway? What does it mean? What’s it about?


Well first off, it’s a day of hope and a welcome break from drudgery of winter where some overfed wannabe muskrat lets us all know whether we will have hope or not for the renewal that is spring.


And who doesn’t love that sense of anticipation as overstuffed rodents across the continent poke their heads out of cages or holes and indicate to the huddled masses whether spring will be early or late, should they short natural gas, buy stock in rebranded social media networks, start a tech hedge fund or buy an NFT (which would not have actually been possible a year ago).


All that stuff. And in light of where we are in the pandemic, if Balzac Billy, or Calgary Clarice or Punxsutawney Phil could shed a little light on where things are going with vax passports, we wouldn’t object.


At any rate, I have polished the piece a bit over the years and today was no exception, but it does stand the test of time. So here you go.


Groundhog Day


“Well, what if there is no tomorrow? There wasn’t one today.”


Sound apropos?


For those unfamiliar with the movie this quote comes from, Groundhog Day tells the story of Phil Connors, the egomaniacal, self-absorbed TV weatherman trapped reporting from Punxsutawney, Pennsylvania on Groundhog Day, who finds himself inexplicably repeating the same day over and over again no matter what he tries to do to alter his situation. Intertwined within this existential dilemma is salvation in the form of the love interest – the sweet and gentle Rita, and we all know that once Phil figures out how to win her over, it will be the perfect ending.


For my purposes here, Phil is alternatively the energy sector or Alberta, and Rita is of course the Rest of Canada – expanded to be the “rest of the world”.


Think about some of the doom and gloom that always seem to dominate the Canadian oil patch discussion: single market price-taker, environmental laggard, lack of market access… each of these seem to be running on an endless loop with no progress on any front.


Ultimately though, the one topic that seems to dominate is that of pipeline projects being proposed and pushed back. Whether it’s Coastal Gas Link and First Nations protests, TransMountain and constant protest, Line 5 and spurious attempts to shut down a section, Line 3 and misinformed celebrity protestors, Dakota Access and lax environmental permitting, Keystone XL and Biden executive orders, uneconomic ideas like Energy East that just won’t go away, seeming Liberal indifference and resulting Conservative anger, it seems no matter what we do, pipelines and major projects can’t get a leg forward and move to the next step.


“Do you ever have déjà vu, Mrs. Lancaster?”

“I don’t think so, but I could check with the kitchen.”


Much like many sector participants’ current views of our government and politicians or even the views of those self-same politicians that they know best what to do – at the beginning of the film, Phil, secure in the superiority of his worldview, looks down his nose at the traditions and needs of the quaint town of Punxsutawney.


“This is one time where television really fails to capture the true excitement of a large squirrel predicting the weather.”


Then as the same day repeats and the eternal recurrence deepens and becomes more absurd, his mood changes, his despair grows.


“You want a prediction about the weather, you’re asking the wrong Phil. I’ll give you a winter prediction: It’s gonna be cold, it’s gonna be grey, and it’s gonna last you for the rest of your life.”


When you think of it, the parallels are interesting, starting from Stephen Harper’s “It’s a no-brainer” through the 2015 Keystone rejection to it being revived to it being cancelled again to the doom and gloom predictions for the Canadian energy sector, it seems that the quote above could be easily have been written as an opinion piece on the Alberta energy industry. In fact, it just might have. And those people who would bury the sector point to all the bad news as proof – the Alberta government losing its investment, the KXL project as dead as will likely ever be. It sure seems like things are bleak, but as always, there is a glimmer of hope. That hope of course is rising prices for both gas and oil ($90! 2014 anyone?), the realities of how the energy transition may or may not unfold and the impacts on privicial finances.


First though, our protagonist (hero?) needs to learn.


After Phil gets over the initial shock of reliving the same day over and over, he blunders around trying to figure out how he will get out of his mess. And in the process, he goes through his own version of seven steps. He tries to have fun with it and overindulge. He rages, he gives up. He gets rich, he steals, he buys ridiculous amounts of insurance (Bing!) and steps in the same flooded pothole seemingly every day.


He even kidnaps and kills the groundhog (“There is no way that this winter is *ever* going to end as long as this groundhog keeps seeing his shadow. I don’t see any other way out. He’s got to be stopped. And I have to stop him.”) and ultimately tries repeatedly to kill himself.


“What would you do if you were stuck in one place and every day was exactly the same, and nothing that you did mattered?”


And all the while, much like Alberta attempts to court the Rest of Canada and prove how important it is, he tries to hit the perfect stride with Rita, but again, because of his nature, he tries too hard to be his version of perfect. His efforts are contrived and because the days are short, he continually runs out of time with Rita and then with each subsequent reliving, he gets more anxious, more desperate, ultimately becoming almost manic, angry and bullying and ultimately pushes her further away.


Sounding familiar? Is this not reminiscent of the last (far too many) years of pipeline and oil and gas advocacy? Project supporters coming off as increasingly desperate as they are unable to make their case to the object of their desire and in their efforts to outsmart the situation revealing a part of themselves and a strategy that was best left in the idea box.


Phil Connors:     Who is your perfect guy?

Rita:                       Well, first of all, he’s too humble to know he’s perfect.

Phil Connors:     That’s me!


But the attraction is undoubtedly there – unbeknownst to her, Rita actually needs Phil as much as he needs her. Much as Canada needs Alberta, energy and pipelines and vice versa. There is a karmic connection, if only the conditions are made right to let it happen…


As the story advances, and his failures become more egregious and reactions more outrageous our hero isn’t static. Underneath all the noise Phil is adapting, he is learning. He is starting to understand that what it is that Rita wants is not necessarily what he is projecting on her.


So, after finally exhausting every last option and angle to get something for himself, bend Rita to his will and make it happen under his own terms, he finally lays himself bare to Rita, tells her his fears, his temporal dilemma and she sympathizes and she stays with him – to help. Phil learns that by giving something of himself and allowing events to unfold without attempting to control them, he is finally able to have the perfect day and get the perfect girl – redemption, transmutation, transmogrification, Nirvana… a new day – take that Nietzsche.


Phil:       Do you know what today is?

Rita:       No, what?

Phil:       Today is tomorrow. It happened


So, is Alberta/the oil patch really Phil?


I don’t know. Are we crusty on the outside but with a heart of gold on the inside once we let down our guard? Can it happen like that for us? Can we use the lessons of a ‘90s movie about a rodent to convince the rest of Canada that we are who they want? Who knows. But the traditional way hasn’t work in close to 80 years, so I like to think so.


Distilled to its basics, the most applicable lesson to be learned from the film is that the only way out is through and that we can escape from whatever situation we’re in by adopting the correct attitude and adapting to the environment instead of trying to make it fit our paradigm.


To get to the result we want here in Alberta and for the oil patch and ultimately for critical infrastructure projects that will secure our ability to supply ourselves and our largest trading partners with needed hydrocarbon molecules and derivative products, we need to allow the process to happen on its own and stop trying to force it, no matter how painful and no matter how frustrating or how often it seems like we are back at square one.


We also need to understand that the object of our desires isn’t simply going to do what we want them to do because we say so and on our terms. They have their own terms.


For Phil, Rita was worth it. He adapted to her and was able to move on.


Is it worth it for us? Absolutely. We need to send the rest of Canada a positive message, not doom and gloom – something like “I got you babe.”


And then maybe the clock changes over.





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