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Neither Here Nor There

What wonderful news it was to hear that Red Bay, Labrador had been chosen recently as a UNESCO World Heritage Site. It joins the two other sites in this province — Gros Morne National Park and L’Anse aux Meadows — which have already been granted this global honour.

Despite the resignation of Kathy Dunderdale last winter and the comedy of errors that ensued, the government remained calm.  When the contest to replace Dunderdale spun out of control, the government of Newfoundland and Labrador could still smugly point to the never-ending bucket brigade of cash from offshore oil that continued to overflow the public coffers. Not knowing what lay ahead, our government continued to chuckle to itself ” The opposition may claim we behave like fools, but we’re rich.”

By mid August a barrel of oil had dropped $12 to $100 U.S.  By late September it declined to just below $90, by mid-October it was at $83.  In November it was below $70, in early December below $60 and 10 days ago the price of a barrel of oil was below $50 dollars.  

The public is thrilled at how much cheaper it is to drive a car and heat a house, but the government’s income from the oil industry is less than half of what it was only six months ago.  

So it’s goodbye to a balanced budget and the pre-election goodies it can buy, and hello hard times deficit.  Smug chuckles from the top floor of the Confederation Building have not been heard that often in the opening days of 2015.

This column was written a number of days before you are reading it, so it is entirely possible that the price per barrel of crude oil has changed.  It may have rebounded to the July price of $112 or higher.  More likely however it will continue its slide.  

What is causing it do you think?

There is a word to describe the reason.  


It is a German word that first entered common use in 1914 at the time of the Great War.  It is made up from the two words “Real” and “Politick”. 

“Politick” in German means politics, like in English, but “Real” is not a direct translation.  It means something like “actual” or “things”. ReaPolitick is the strategy of a nation which behaves based on what it needs and the way things are.  Ethics and morality are not a factor.

Realpolitik, the way we spell it today, was dreamed up to explain the cynical manoeuvring of the great powers that led to the monstrous blood bath between 1914 and 1918, best remembered by Newfoundlanders for the massacre at Beaumont Hamel.  The grandfather I never knew was plucked by Britain from a remote homestead in Manitoba answering the call of “king and country” just as so many in outport Newfoundland did.

The mother country needed manpower to wage its war, and the colonies were there to provide it.

But what’s this got to do with the price of oil?

Saudi Arabia is a major player in the oil business.  Their oil is cheap to harvest, of very high quality and comes in a seemingly endless supply.  Their government is not troubled by conferring with its citizens before making public policy.

When upstart players in the oil business began muscling in on Saudi Arabia with projects like fracking in the U.S.A, Tar sands in Alberta, and offshore drilling on the Grand Banks, the Saudis took note.

If Saudi oil is cheap to produce, fracking, offshore drilling and tar sands oil are much more expensive.  When the price of oil is $112 a barrel, everybody is making a good profit, the Saudis the best of all.  

But the competition is eating into the Saudi market share, so the time has come for realpolitik.  The Saudis begin pumping more oil, flooding the market and selling at a lower price. Capitalism being what it is, everyone in the oil business must match the Saudis. As oil prices plummet, frackers, tar sands operators and offshore drillers are reaching their break-even point and then dropping below it.  One by one they will have to close up shop. 

This is RealPolitik, a special Saudi version.

The currency in Saudi Arabia is called the Riyal.

So this manipulation of the world economy should really be called RiyalPolitik.

According to leaks out of Washington D.C., RiyalPolitik will not likely go unanswered.  Stand by for 28 pages of classified documents linking Saudi Arabia and 9-11……


Peter Pickersgill is an artist and writer in Salvage, Bonavista Bay.

His column returns in two weeks.       

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