Column: A Stake Through the Heartland – Inflation and Supply Chain Issues Are Greatly Stressing the Country’s Producing Class

From BOE Reports

May 3, 2022 Terry Etam

The other week, I visited my mom in Saskatchewan, in a little town up in what is called the province’s northeast but really isn’t. It is the parkland border between farms and forests, no farther north than Edmonton. The region is sparsely populated; if you drew a circle around Momstown with, say, a 40 mile radius, that circle would include maybe ten thousand people. 

Out of that circle comes, every year, thousands of head of cattle, enough for, give or take, a million steaks and five times that many hamburgers. Enough grain comes out of that circle to feed a decent sized city. Enough lumber comes out to build hundreds of houses. I’m being lazy with these numbers because I did enough basic research to know that they are, statistically speaking, easy understatements.

At coffee row on a Wednesday morning, 40 heads popped up and swivelled to see who came in; gazes lingered because it was a new guy. The place was a small sea of plaid and hoodies and plaid hoodies and curved-peak hats, a place that would vacate into the street in ten seconds flat if someone outside needed help.

I sit down to order breakfast. The menu is short of granola and yogurt. I go with the flow; I’m not about to make any waves in bacon and egg country. (The next morning’s server, a burly guy with bald head and not-cute tattoos, told me what he said to a customer recently that had hollered at him impatiently from across the restaurant and I won’t be doing that.)

I noticed that I was the only one eating; everyone else was there only apparently for the bottomless coffee cups that prize quantity over quality. The menu board helped explain why; the breakfast special that was $8 on the printed menu from maybe a year ago is now $12 on the sandwich board sitting squatly and unavoidably by the entrance. Around the corner at a grocery store, a 4 litre jug of milk is $8.50. Inflation may be 8 per cent in the government’s eyes, a number that is helpful only in the sense that it actually quantifies the obscenely large gap between the bureaucrat’s theoretical and the working person’s reality.

My brother lives in the same small town; he was stranded at home waiting for a new alternator for his truck. Parts that used to be in stock are now “on order” and the simplest thing can grind one’s mobility or an industrial process to a halt immediately. There is no public transportation, there are no taxis, and supply chains become more fragile the further one gets from large centres.

True, it is a small community, but anyone that cares to venture more than a few hours from a major urban centre will know these places are the backbone of the country, and the output of goods per person is a staggeringly high number. Sit down with a farmer one day and learn how many loaves of bread come from 3,000 planted acres at 50 bushels per acre and you will be stunned (fine, I’ll save you the math and even go health conscious: that farm would produce about 13,500,000 loaves worth of whole-wheat bread per year).

The place is hurting. Restaurants charge outrageous new prices because they have to, so few eat out. People are hunkered down and spending on essentials (coffee row appears to be the extent of the social scene spending), so stores suffer. People travel less and do less, to a point. Fuel is a precious lifeblood for which there is no substitute.

Many have no love for oil companies, living the common fallacy of high oil prices being a plot by said companies to gouge consumers. This fallacy is a gift from a petroleum industry that seems totally and permanently inept at explaining itself. Winning a court case every few years where no one could prove you weren’t gouging consumers is not the backbone of a wise strategy, yet it goes on forever and no one learns. So here we are. These producers-of-things would ditch gasoline in a heartbeat if they could. But they can’t, and they know it, and, because they live in a region where self-reliance can be life saving, they are acutely aware of the value of their fuel system despite any grumbling. 

The imaginary circle from the first paragraph of r=40 would be about 5,000 square miles in area, or 13,000 square km, and in either instance is about 2 per cent of Saskatchewan. There are many such circles across Canada. Some produce no grain but a lot of minerals. Some produce no minerals but a lot of fish. Some produce a lot of vegetables. Some have small but vital manufacturers that keep big operators going.

These circles are in the background; the rural people, the truck drivers (I said it), the equipment operators, the welders. Most Canadians live in urban centres and only think of these places in the context of distant relatives or if someone in one of them snaps in a big way and the story makes the Big News.

These places do what they do as conditions allow. Condition ls are getting much more challenging. It is hard to get many basic things such as small and boring parts that equipment won’t run without. Costs are going through the roof but income is not keeping up. The squeeze on people and businesses is palpable.

More fundamentally, the lifeblood of all this, affordable energy, is disappearing. These are diesel- and gasoline-reliant places. They are more acutely aware of fuel costs, as are working class people across the country, particularly those on the lower end of the income spectrum. “Just go electric” is a very unwelcome suggestion, along the lines of “Let them eat cake.”

They would turn their backs on hydrocarbons in a second if there was an alternative that was as reliable and worked as well in ALL conditions and was there dependably. But they also work with batteries more than anyone, and know those limitations acutely and painfully. There is no blinding these people with BS. Things are accepted once proven.

The visit to the region is bittersweet. As a hydrocarbon worker, high commodity prices have brought a feeling of immense relief and corporate survival after several brutal years. But being here on the ground in the country’s heartland, seeing the impacts of those high oil and gas prices, is gut wrenching. Women with little kids putting $10 worth in at the pump. Businesses idle or shut. The grocery store selling an awful lot of pasta and spaghetti sauce.

Not everyone is in dire straits of course. Some are booming, like fertilizer companies that sell whatever they can produce for a fortune. Grain and beef will be worth a lot more and big strong financially stable farms will survive, as will entrenched businesses with sufficient reserves. But there is a whole thick layer of our country’s humanity that will struggle mightily. Inflation pounds hardest on those least able to deal with it.

And we live in Canada. These same food and fuel pressures are walloping billions in developing countries. As with LNG, the west wins bidding wars, and will with foodstuffs also. All those circles of non-degreed productivity around the world are on the ropes.

We ought to be flooding the market with fuel, and we should be receiving encouragement from governments to do so. Affordable reliable energy brought us here and is a necessity to keep us here. Here’s a paradoxical statement from someone who benefits: it would be fantastic to see fuel prices come down. Canada’s less populated circles won’t produce the vast quantities of things that they do, if prices don’t come down. 

But in urban centres far away, the laptop class is infinitely more interested in EVs and crypto and COP26 and cartoon villains. This divide between people that buy Carhartt because it lasts forever and those who buy it for the cool factor is dangerous and revolting and a harbinger of very bad things to come. The divide is nothing new, of course; rural and urban people have long had different concerns. 

But global mismanagement of the fuel system – following very bad advice that the old can be now starved of capital and dismantled because erroneous fanatics have led to believe that a new system is ready – is chilling proof that the balance of power has gotten out of hand.

Hordes of academic social scientists flood our government with hugely biased and ignorant energy policy advice, which lands in sympathetic ears because our governments are full of similar social scientists. But can any of them change a tire? And what do they produce? Let them eat policy?

Slava Ukraini! Find out how the world got into such a calamitous energy state, and how to get out – pick up  “The End of Fossil Fuel Insanity” at Amazon.caIndigo.ca, or Amazon.com. Thanks for the support.

Read more insightful analysis from Terry Etam here, or email Terry here. PS: Dear email correspondents, the email flow is welcome, but am having trouble keeping up. Apologies if comments/questions go unanswered; they are not ignored.

via Watts Up With That?

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May 4, 2022 at 08:49AM

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