The 2014 Edelman Trust Barometer is here and it’s good news—unless you work in government or business in which case you’re facing what Edelman delicately calls “a significant trust deficit”.
Edelman is a global public relations company that surveys trust levels across 27 countries by asking the public who they trust and how much they trust them. It surveys four sectors—non-governmental organizations (NGOs), business, media and government—and assigns each a trust rating.
It sucks to be government
The only sector Canadians trust less than business is government. The Edelman Trust Barometer clocked trust in government at a pathetic 51%. (Mind you it could have been worse; the Americans gave government a score of 37%). The media ranked slightly higher at 58%. Business came in at 62% and NGOs retained their “most-trusted” position for the seventh year in a row with a 67% trust rating.
Canadians are getting increasingly nervous about the government’s lack of regulatory oversight over business. Fifty-four percent of Canadians say there is not enough regulation in the energy sector and want even more protection from the negative consequences of unbridled resource development. This is an 11 point increase over last year.
Is this lack of trust justified?
Are the “drill baby drill” Albertans as fussed about a lack of regulatory oversight as the rest of Canada? They should be. Look no further than the Alberta Energy Regulator’s (non) response to CNRL’s Primrose problem.
Bitumen has been seeping to the surface at CNRL’s Primrose site since 2006 but it wasn’t until July 2013 that the Regulator finally ordered CNRL to suspend high pressure steaming, enhance monitoring, accelerate cleanup and drain a 53 hectare lake to mitigate the impact of the bitumen release.
In light of these regulatory restrictions CNRL decided to convert 80 high pressure steam injection Primrose wells to low pressure steamflood wells.
CNRL has consistently downplayed its difficulties at Primrose; however Peters & Co, a major investment house, is not so sanguine. Peters says “the single biggest issue facing the company is at Primrose and this will…take time to resolve”. Consequently Peters has taken a more cautious view of the company’s expected performance than the company itself.*
It’s a sad statement when an investment banker is more frank about a major energy player than the government that regulates it.
Who do we trust?
Edelman surveyed who we trust to tell us the truth and make ethical decisions. The results for government leaders and CEOs were abysmal. Government leaders scored a 36% trust rating. CEOs were marginally better at 43%.
Instead of turning to those with firsthand knowledge of the industry and how it’s regulated we turn to academics (67%), technical experts (66%), people “like ourselves” (62%), financial/industry analysts (53%), NGO representatives (52%) and regular employees of the company (52%).
If the public loses faith in CEOs like CNRL’s boss who go to great lengths to promote the company’s interest, what happens when the company’s interests run counter to the CEO’s interests?
Consider the case of Rex Tillerson, CEO of ExxonMobil, the largest fracking company in the US and a major player in Alberta. Mr Tillerson owns an opulent home on an 83 acre spread in Texas. The town plans to build a 160-foot water town in the area to supply water to nearby fracking operations. Mr Tillerson says he’s not opposed to fracking but he is opposed to the increased traffic and unsightly water tower which will negatively impact his property value. So much so that he joined in a lawsuit to stop the water tower in its tracks.
Mr Tillerson makes over $40 million a year. It’s fair to say that he can take the hit on his property value more easily than the rest of us. However he doesn’t see it that way.
Well here’s how we see it. A water tower or fracking operation is fine when it’s in public’s backyard, but it must be stopped at all costs when it’s in the CEO’s backyard. How’s that for hypocrisy?
What does this mean for Albertans?
Edelman issued a pointed warning that signals the end of Ms Redford’s “trust industry” strategy. He said:
“Government is the least trusted institution and there is no business besides energy that relies more on partnership with government to get things done in terms of basic operations…The suboptimal level of trust creates a difficult dynamic — a potentially crippling one.”
A “potentially crippling” lack of trust is not necessarily a bad thing for Albertans if it puts the brakes on reckless development and insufficient regulatory enforcement and encourages the other political parties to formulate an energy policy that is more nuanced than the brainless “rip and ship” policy we’ve endured to date.
These political parties will unfurl their energy policies and fiscal and social policies soon. It’s likely that these policies will sound alike (no one campaigns on being fiscally imprudent and socially irresponsible, do they?). And in the end it all boils down to trust.
So tell me. Who do you trust and why?
***Daily Oil Bulletin Feb 28, 2014