Category Archives: Energy

Oct 29 2014
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Economy, Energy, Oil and Gas

New Brunswick: Last stop on the trolly to the great hereafter

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And now for something completely obvious.

News flash: New Brunswick (Nova Scotia, too) is in the grip of its very own, made-in-the-Maritimes “death spiral”. The question, of course, is: what does the afterlife look like?

Former Premier and current Deputy Chairman of TD Bank in Toronto didn’t actually pronounce the time of this province’s passing – under the weight of its own inertia and all that sand that’s piled up around the hole into which its head has been stuck lo these many years – at a ballyhooed energy conference in Saint John last Friday. But he came darn close to pulling out the heart panels.

“Clear. . .zap. . .clear. . .again. . .clear. . .zap. . .clear.

In fact, Mr. McKenna said this: “Our regional economy is flatlining. We are depopulating. Our population is not just leaving; it’s getting older. It’s aging at twice the rate of Alberta’s. (Well, naturally it is, as that’s where capital markets and the current federal government encourage every mentally healthy, able-bodied young person in this country to go and become reliable, God-fearing taxpayers).

Here’s another snippet from Mr. McKenna’s all-too-familiar tirade against complacency:

“We are in an endless cycle of high deficits, declining population, higher interest rates and payments, a aging population, higher cost of services, less equalization, less personal income, higher taxes and consumption taxes. It’s a death spiral that we’re in if we don’t do something about it.”

Ah. . .and therein – as the Bard might have said, watching the surfer dudes ride the Pettitcodiac’s mighty tidal bore – lies the rub. What, indeed, is to be done?

We could eschew the costly histrionics surrounding shale gas development, based on a largely discredited “docu-drama” some years back, which featured (among other provocative absurdities) a guy lighting his tap water on fire (Reality check: the water table in upper Pennsylvania had been laced with trace amounts of methane long before fracking technology was the apple in the drilling industry’s eye).

We could concentrate on building the safest means – pipelines – of transporting crude oil from Alberta to Saint John and, in the process, create thousands of short-term, and hundreds of long-term, jobs for New Brunswick.

We might even work to leverage these energy opportunities to lure much-needed venture capital to the province for. . .oh, I don’t know. . .economic diversification away from natural resources and into educational centres of excellence that would pioneer commercially viable, sustainable, renewable, and exportable manufactures in the fields of wind, tidal and solar.

Or, we could go the other way.

We could put the province and all its lands and buildings up for sale to all those national and international bidders who boast the biggest coin in their pockets.

Dear China, the ad would read, “We, in New Brunswick, know how polluted your mega-cities are. Come on over to New Brunswick. We’ll treat you right fine. We’ll sell you our property, and we won’t even charge you minimum wage for the privilege of cleaning your kitchens and bathrooms – you know, the ones that used to be ours.”

Hey Alberta, we might exclaim, “We know you have our children in a ‘death-spiral’ of expanding expectations and blossoming debt. Someday, you know that bubble is going to burst. And when it does, you might like a safe haven to park your aging human capital.

“Consider New Brunswick as Canada’s preeminent retirement village. After all, as we never risked a damned thing on anything, including natural resources, our minds and hearts are clean. We are your last, best hope for a comfortable, easy death. . .Just bring your cheque books, because our B&Bs and private hospices are going to bruise those babies American-style.”

Indeed, given New Brunswick’s appalling fiscal condition, it’s dreadful demographic decline, its moribund economy, its listless and fearful political classes, it’s astonishing that this province has anything to offer the world or even its own people.

Of course, it is our own people – our entrepreneurs, in every shape, size, colour and stripe – who will (who must) save us from our collective inertia.

That, too, remains completely obvious.

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Oct 28 2014
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Energy, Environment, Oil and Gas

Drilling for common sense in the energy debate

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If all politics is the art of the possible, then the genre that inhabits New Brunswick is surely the craft of the calculating.

During the recent election campaign in the province, former Liberal Premier and current Deputy Chairman of T-D Bank Frank McKenna reportedly worked hard behind the scenes (and sometimes in front of them) to help the party’s fair-haired boy, Brian Gallant, comport himself well enough to hold on to the lead right into office.

Of course, that’s what political elders do: they mentor.

Still, given Mr. Gallant’s stand against shale gas development in the province, the pairing did seem odd.

In an interview, two years ago, Mr. McKenna told me in certain and enthusiastic terms, “We have in situ now, calculated by Corridor Resources Inc., 67 trillion cubic feet of gas. That’s bigger than western Canada. It’s a huge deposit! If 10 per cent is exploitable, that’s enough to create a revenue source for New Brunswick for decades to come. All in, it would result in about $15-20 billion in investment and 150,000 person years of work. And for governments, it would result in between $7-9 billion worth of royalties and taxes. . .The way I look at it, the real win comes when we take our indigenous shale gas in the province and hook it into the Canaport liquified natural gas (LNG) facility in Saint John.”

In other words, he said, New Brunswick’s shale reserves could change the conversation about the province’s anemic economy forever. They could transform the region into a jurisdiction whose wealth rivals that of Alberta, Saskatchewan, Pennsylvania or North Dakota.

“What we need to understand is that just by the roll of the dice, we have landed in exactly the best position on the board at this moment in time,” Mr. McKenna said. “We have a Canaport facility with massive storage and with a jetty, getting right into deep water. We have a port that’s ice free and has the capacity to accommodate the biggest vessels in the world. The West Coast can’t do that.”

The former premier was similarly straightforward about the province’s overall condition: “This isn’t just a problem of leadership in government. It’s also a problem of followership. Our citizens have to understand the full depth and breadth of the dilemma that we are facing, and they have to be prepared to face up to some inconvenient truths. It means that they have to become less reliant on government and more entrepreneurial. It means that they have to take responsibility for their own futures.”

Still, if Messrs. McKenna and Gallant stand far apart from each other on tight onshore gas (though they remain generally linked by shared political purpose), the division is not likely to last long.

By vigorously arguing for a pipeline – perhaps, two – to transport Alberta bitumen into Saint John, the current premier is actually, though unwittingly, eroding the rhetorical wall he has erected around the shale gas industry.

That’s because it’s getting increasingly difficult for the unaligned majority in this province to appreciate the logic of Mr. Gallant’s position on fossil fuels.

For reasons that resist trenchant examination, we are told that pipelines transporting crude into New Brunswick are safer, more environmentally responsible energy developments than is drilling for natural gas using only proven, contemporary technology under a regulatory regime that’s reported to be the toughest in the world.

Wouldn’t it make more sense to do as Frank McKenna has suggested: Permit both undertakings to proceed carefully, yet expeditiously?

In the alternative, if the issue is less about safety than global warming, shouldn’t we take a page out of New Brunswick Green Leader David Coon’s playbook: Stop both projects from happening?

Banning one, and not the other assumes expectations of harm and safety that may be mismatched. After all, pipelines have been known to leak. If we are being asked to assume that risk, however small, maybe we should take another look at the safety record of the shale gas industry before we eject it from the field of possibility.

It’s a tricky calculation, but it’s one we may well be forced to make make sooner than we once thought.

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Oct 22 2014
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Energy, Politics

Fighting a bad case of pipeline paranoia

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Time was when the Energy East Pipeline proposal was the least controversial and troublesome of all of New Brunswick’s options for fossil-fuel-based industrial development. In fact, it was a no-brainer.

Encourage line builder and operator TransCanada to reverse the flow in one of its existing pipes, build a bunch of extensions, including one into the Saint John refinery and, hey presto: instant construction jobs for at least a few years.

Those, of course, were the good, old days. Times change.

Last spring Maude Barlow, national chairperson for the Council of Canadians, told the North Bay Nugget in an extensive interview, “I want to let communities know not to be pressured to make a decision or risk not getting the benefits of the pipeline. I can tell you there are no benefits. There’s no argument for this pipeline. It’s an export pipeline and we don’t need it. . .We get the risk and (oil companies) get the reward.”

What’s more, she added, “I would like to know what are the big jobs, because this pipeline is for export. It’s about greed. They’re playing with a potential environmental catastrophe that environmentalists have been warning about. . .It’s so much more dangerous (than any other oil) and it’s crossing watersheds and many waterways around the Great Lake Region that are already being threatened. We certainly don’t need to add to that threat.”

To which TransCanada, ever sensitive to bad press, of which it sees a lot these days, replied on its own website:

“Quebec and New Brunswick currently import more than 700,000 barrels of oil every day – or 86 per cent of their refinery needs – from countries such as Algeria, Iraq, Saudi Arabia and Nigeria. At current oil prices, this is over $75 million drained out of the Canadian economy – every single day. Energy East proposes to connect Western Canada’s resources to Eastern Canada’s needs. Greater supplies of domestic crude would improve the financial viability of eastern Canadian refineries by giving them access to less-expensive, stable domestic supplies.”

That’s not all: “Once this primary purpose is served, Energy East will supply export markets. TransCanada has always been open about this and it is not something we are shying away from. Exports are a good thing for our country. They provide economic growth. They create jobs. They generate tax revenue that helps our provinces build new universities, resurface hundreds of kilometres of highways or provide our seniors with home care.”

None of which has prevented environmentalists from legally delaying the work in sensitive habitats along the St. Lawrence River.

Meanwhile, some major natural gas customers in central Canada want TransCanada to assure them they won’t be ripped off when (if?) the project is completed.

To some extent, this is part of national pattern of pipeline paranoia. Both the Keystone XL and Northern Gateway initiatives, which would send Alberta crude west to the sea and south to the United States, are mired in controversies and concerns about leaks and spills.

But the larger, existential issue is what these pipes represent. As the Green Party of New Brunswick’s election campaign platform explicitly stated: “Discourage increases in the production and use of fossil fuels by denying permits for new fossil fuel infrastructure such as the Energy East pipeline.”

That’s all well and good, but not especially practical. Our essential paradox is that we still need dreaded fossil fuels if only to help power our shift away from them – to drive many of the engines of ingenuity that will generate durable solutions to our sustainability problems.

Premier Brian Gallant should be commended for his sturdy support of Energy East. “I am quite confident we can do (this) in a very sustainable way,” he told a news conference in Saint Andrews, N.B., last week. “I’m also convinced the economic benefits are very exciting for our country and our province. So I am going to go around and speak to other provinces and within our province, to New Brunswickers, as to why this is important.”

Indeed, it’s a no-brainer.

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Oct 20 2014
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Economy, Energy, Oil and Gas

The perils of running a petro-economy

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Western oil magnates and their fellow travellers in government and media once crowed superciliously about their pride of economic place in Canada. They and they alone, they insisted, were responsible for the nation’s surging fortunes in global markets.

They still exult this way, though lately their gloating has become a tad muted thanks to the pounding the price of oil is taking on international commodity exchanges. West Texas Intermediate crude (WTI), the standard used to benchmark all grades, fell to $82 a barrel earlier this week. That was off by more than 10 per cent since the beginning of the month.

We wretched urchins on the East Coast may be tempted to indulge in a little schadenfreude when we witness the fear and loathing that cyclically descends on Alberta’s oil patch. Something about the best laid plans of mice and men rattle around in our brain pans as we watch yet another plane load of New Brunswickers abandon their unpromising, little towns for putatively greener pastures under big sky country.

But, in the broader context, when Alberta hiccups, all of us should worry.

For more than 30 years, economic planners and regulators at both the federal provincial levels have been slowly and deliberately transforming this country into an oil and gas giant. They have nurtured, with countless millions of dollars in publicly supported research and development and tax breaks, astonishing advances in drilling and extraction technologies. Now, we’re all dependent on this continued success, for without it, there’s precious little else to fall back on.

Today, Alberta companies employ nearly as many Maritimers between the ages of 18 and 35 – many of whom are the major breadwinners for their families back home – as do Atlantic firms. Over the past year, the bitumen-rich province generated all of the country’s net jobs growth, adding some 82,000 positions.

Currently, Alberta accounts for nearly a third of Canada’s GDP. According to Oil Sands Today, quoting figures compiled by the Canadian Energy Research Institute, “New oil sands development is expected to contribute over $2.1 trillion (2010 dollars) to the Canadian economy over the next 25 years – about $84 billion per year. According to Statistics Canada, $84 billion is enough to feed more than 90 per cent of Canadian households for a year.

What’s more, “The oil sands industry will pay an estimated $783 billion in provincial ($122 billion) and federal ($311 billion) taxes and provincial royalties ($350 billion) over the next 25 years.”

Meanwhile, “employment in Canada as a result of new oil sands investments is expected to grow from 75,000 jobs in 2010 to 905,000 jobs in 2035 with 126,000 jobs being sourced in provinces other than Alberta. . . .It is estimated the oil sands industry will purchase about $117 billion in supplies and services from Canadian provinces outside Alberta over the next 25 years – about $5 billion/year. For every direct job created in Alberta’s oil sands industry, approximately one indirect and one induced job will be created in the rest of Canada.”

All of which is swell, unless you’re an environmentalist worried about humanity’s rapacious ways with Mother Nature or, as the case may be in the current circumstance, an economist.

Although oil prices have been sliding globally for only a few weeks, the signs of steadily softer demand are everywhere, especially in emerging powerhouses such as China and India, where the pace of growth is slowing. And the causes of this bottoming trend are especially perplexing.

“Historical pricing has been affected by, and dependent upon, turmoil facing the Middle East,” writes Brigham McCown, a former government executive, attorney and public policy expert, in a recent commentary for Forbes. “In times of war and geopolitical instability, prices have historically increased rather quickly, often overnight. As turmoil eased, so too would oil and gas prices, albeit at a much slower pace. Based on historical data, one would expect prices to be dramatically spiking given current events in Syria, Iraq and Libya, yet for all of this instability, prices continue to drop.”

That they do suggests that something more systemic than routine price fluctuations is at work here.

Canada’s unequally booming industries may soon feel the brunt of a great, leveling downturn thanks entirely to Alberta’s outsized pride of economic place in this country.

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Oct 08 2014
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Economy, Energy, Environment, Politics

Fracking’s other, hidden challenge

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New Brunswick Premier Brian Gallant did himself an enormous political favour during his recent election campaign by sticking to his guns, insisting that he would follow through with a temporary ban on hydraulic fracturing in the province until experts convinced him that the drilling practice is broadly benign.

After all, the one thing a lightly informed voter can get behind is a candidate for elected office who successfully appeals to the public’s expectation of clean water, air and soil.

But whether or not you believe fellows like Gywn Morgan, a former Canadian energy executive, who recently argued in a Globe an Mail commentary that the “technology. . .has one of the most impressive industrial safety records ever compiled,” that “in the United States, where some 1.2 million wells have been hydraulically fractured over the past 60 years, the Bureau of Land Management and the Environmental Protection Agency have found no supportable evidence of fracture-induced water contamination,” and that, “here in Canada, more than 200,000 wells have been fractured in Alberta, British Columbia and Saskatchewan with a similarly sterling record,” another problem emerges – one that’s not so cut and dry.

The chief argument for permitting the development of tight, onshore oil and gas plays in New Brunswick is economic. In fact, proponents routinely insist, it’s a no-braine:  the province needs jobs and the government needs new sources of money (i.e., taxes and/or royalties from production companies) to balance its books and pay down its accumulated debt. If fracking, girded by effective regulations, is safe, then what are we waiting for? Drill, baby, drill!

But what if the economics of shale gas extraction – at least to the host jurisdictions – are not always as attractive or predictable as they appear?

Jeremy Scott of Forbes magazine recently examined various U.S. state budgets, noting that, for the third consecutive year, overall tax revenues have risen. Referencing some enlightening numbers-crunching by Todd Haggerty, a policy specialist in the fiscal affairs department of the National Conference of State Legislatures (NCSL), Mr. Scott reported “state tax revenues went up 6.1 per cent in fiscal 2013 to a total of $846 billion, says the NCSL. Personal income tax revenues were up 10.3 per cent, while corporate collections surged 7.9 per cent.”

In fact, those states that opened their doors to frackers some years ago, have been leading the boom in tax dollars. Says the Forbes piece: “In 2004 North Dakota’s severance tax (a levy imposed on producers in the United States for mining or otherwise extracting non-renewable resources) raised $175 million a year. In 2013, it raised $2.46 billion. West Virginia’s boom hasn’t been as dramatic as North Dakota’s, but its severance tax revenue increased from $204 million in 2004 to $608 million in 2013.”

On the other hand, “in Kentucky, severance taxes raised $172 million in 2003, rose to $346 million in 2012, but then dropped back to $269 million in 2013.”

And herein lies the problem. The oil and gas industry is notoriously fickle and subject to its own pricing, supply and demand cycles. The industry can reliably guarantee a certain amount of economic activity accruing from its ministrations, especially at the outset of full, commercial production, but those assurances become less dependable as time goes on.    

“Kentucky illustrates the problem with relying on severance taxes and the fracking boom for revenue stability,” Mr. Scott writes. “As traditional energy states like Texas have shown, taxes on the extraction of natural gas can fluctuate wildly. Texas raised $974 million from severance taxes in 2004, $4.1 billion in 2008, $1.9 billion in 2010, and then $4.6 billion. That’s healthy growth, but it’s hardly consistent. Colorado is an even better example. Its severance tax revenue rose from $37 million in 2003 to $285 million in 2009, before falling back to $71 million in 2010.”

Of course, to fracking’s true believers in New Brunswick (and there are still a few), such revenue instability is better than no revenue at all.

But it could become a nightmare for any premier who, once convinced of fracking’s safety, relies too heavily on its proceeds to balance the public accounts.

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Sep 18 2014
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Economy, Energy

Boning up on fracking 101

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The spectacle of an energy company’s CEO teaching the abecedarian facts about a drilling technology that’s been around for at least ten years to candidates for the highest elected office in the province is undeniably amusing.

Still, one or two of our premier wannabes might have cracked a book before showing up for class.

One can only imagine what crossed the mind of Corridor Resources’ Phil Knoll when he decided to pen a lengthy letter to the heads of New Brunswick’s five political parties essentially explaining that, no, gentlemen, it is not possible to extract gas from shale formations in this part of the Maritimes without fracturing the rock.

According to the letter, acquired by the Saint John Telegraph-Journal, Mr. Knoll is categorical: “There is no other method to release the natural gas from tight sandstone or shale other than through fracturing the rock. That is the reality.”

And if any political hopeful thinks that fracking (industry slang for hydraulic fracturing, the process by which water and chemicals, or, less commonly, gas, are injected under pressure into sedimentary rock to liberate the fossil fuel trapped there) can be restricted only to the production phase of development, he should think again.

“During the exploration phase, the only way to accurately determine the size of the resource and whether it can be produced economically is through the use of fracture stimulation,” Mr. Knoll explains. “Seismic research and the drilling of stratigraphic core holes can help evaluate the geological formations and their composition at different depths.”

What’s more, he writes, the debate in New Brunswick about hydraulic fracturing – whether, as its opponents claim, it will release vast quantities of methane into the drinking supply, enabling local farmers to literally light their water on fire – is largely misguided if not entirely moot.

In fact, over the past 10 years Corridor has used fracture stimulation to drill 43 wells with, as Mr. Knoll confirms, “no adverse impacts on potable water aquifers. . .Corridor operates some wells that were fractured 10 years ago and still produce natural gas without additional fracturing. Across North America, it is common to have wells producing more than 20 years after initial fracture stimulation.”

All of which suggests that fracking can, at least in this instance, be done safely. But that’s never really been at issue. The underlying quandry in the debate has always been: Will it?

That’s the question an article in Scientific American posed last year, to wit: “A new review article funded by the National Science Foundation and published in Science on May 16 examines what fracking may be doing to the water supply. ‘This is an industry that’s in its infancy, so we don’t really know a lot of things,’ explains environmental engineer Radisav Vidic of the University of Pittsburgh, who led this review. ‘Is it or isn’t it bad for the environment? Is New York State right to ban fracking, and is Pennsylvania stupid for [allowing it]?’ According to the review, the answer is no. ‘There is no irrefutable impact of this industry on surface or groundwater quality in Pennsylvania,’ Vidic says.”

Still, the article continues, “That’s not to say there haven’t been problems. That’s because there are many ways for things to go wrong with a natural gas well during the fracking process. A new well – or the 100,000 or so existing but forgotten wells – can allow natural gas from. . .deposits to migrate up and out of the rock and into water or basements. Leaking methane, in addition to being a potential safety hazard, is also a potent greenhouse gas that exacerbates climate change, although that environmental impact was not examined in this study.”

However New Brunswickers choose to chart their collective energy future, the wisest course will always begin with the self determination to obtain the best of all possible facts.

After all, to avert a risk, you must first understand it.

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Aug 22 2014
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Energy, Environment

Water, water everywhere and not a drop to protect

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It seems that the Alward government is bound and determined to pitch itself over the gunnels of the ship of state and drown contentedly in the political equivalent of Davy Jones’s locker.

For the second time in as many weeks, the ruling Tories (for now) are having to answer tough and humiliating questions related to their administration of shale gas development in the province.

The first controversy, indirectly but not tangentially related to water, involved its decision to proceed with an RCMP investigation of Calgary-based Windsor Energy in 2011. The Province claimed in a public statement that the exploration company had violated the Oil and Natural Gas Act by failing to obtain permission from the Town of Sussex before conducting seismic testing within its municipal borders.

The Mounties said the allegation was baseless and refused to lay charges. Emails obtained by this newspaper organization this month confirmed that a lawyer working for Communications New Brunswick at the time strongly urged the Department of a Natural Resources to back off days before government officials ultimately ignored the advice and decided to go public with its probe.

Guess who’s suing whom for libel, and to the tune of 100-million bucks? Hint: The grin on the face of Windsor’s CEO has achieved Cheshire Cat-like dimensions, of late.

It’s all priceless, given that the central worry among those who oppose tight oil and gas plays in the province is the degree to which the key extraction technology, hydraulic fracturing, might poison the water tables of largely rural communities, which still depend on wells.

To wit: If legislators don’t understand the scope of their own regulations, how can they be trusted to protect the public’s drinking water?

Now, the very same lawyer, Charles Murray, who told the government it didn’t have a legal leg to stand on three years ago, has issued a stinging indictment of the Province’s waterway protection policies. This time, though, he’s not a consulting factotum; he’s New Brunswick’s ombudsman.

Payback really is, well, a bummer.

According to Telegraph-Journal legislative reporter Chris Morris, in a piece this week, “Charles Murray states in the report of his investigation into a complaint filed last year by the Nashwaak Watershed Association that the existing regulation governing waterway classifications ‘is in some respects worse than having no regulation at all.’”

He continued: “Over 12 years have passed, and the Clean Water Act has been amended, yet (the water classification) regulation exists primarily as a mirage, misleading observers to their detriment. The history of this file leads us to conclude that the Legislative Assembly must take a more direct interest if it wishes the province of New Brunswick to have an effective Water Classification Program rather than an illusory one. . .(This is) like a smoke detector without batteries. It provides no protection.”

In its absurdly lame defence, the T-J reports, the provincial Department of the Environment (which is, by every observable standard, merely a bedroom community of the Department of Natural Resources), stipulates that it has “initiated a process to develop a provincial water strategy. This will include a public engagement component, and will include discussion concerning the existing Water Classification Regulation, and whether it is the right tool to achieve our water management objectives.”

It must be joking. What water management objectives? For more than a decade, we now know, the Province has had a law on the books that its various governments – both Tory and Grit – have repeatedly refused to parse, let alone enforce.

And not just any law. It deals with water, people. . .water! Ninety-per-cent of the stuff comprises our human body weight. If we stop drinking good, old H20, we die within seven days. No other consideration in economic development – especially of natural resources – occupies a position of primacy more than does this.

Indeed, it’s bewildering – in fact, it boggles the mind – that this government expects to create a shale-gas industry, expand mining and forestry operations across the province, track in a pipeline from the west whilst winning the hearts and minds of New Brunswickers for its intentions without a sound, responsible water protection regime.

Perhaps this government is weary of public office.

Perhaps it does, in fact, prefer to commit suicide by droning and then, finally, by drowning.

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Jul 30 2014
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Business, Economy, Energy, Government

Ducking the dreaded ‘B-word’ in New Brunswick

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Those who maintain that in the absence of a global depression governments and the jurisdictions they administer do not go bankrupt – not, at least, in the barrel-wearing, down-and- out sort of way – do not remember Argentina.

In a 2008 edition of Der Spiegel, the magazine reported, “The signs of looming national bankruptcy are plentiful, and bankers in the Uruguayan capital of Montevideo know them well. In late 2001, they were the first to see the coming crash in Argentina. Men traveled across the Rio de la Plata, from Buenos Aires to Montevideo, carrying suitcases filled with US dollars. They stood in long lines at the city’s banks, depositing the contents of their suitcases into accounts and safe deposit boxes there. Uruguay is South America’s Switzerland, a safe haven for money in times of crisis. No one asks about where the millions come from.”

The article continued: “Once the Argentine businessmen had transferred their dollars abroad, the second phase of the collapse began. The Argentine government froze all bank accounts, capping the maximum amount an accountholder could withdraw at only $250 (€198) a week. Small investors, those who had left their money in the banks, were the hardest hit. Tens of thousands of desperate citizens stormed the banks, and many spent nights sleeping in front of the automated teller machines.”

Finally came the denouement of that country’s humiliation: “The last phase of the downturn began in the Buenos Aires suburbs. After consumption had dropped by 60 per cent, young men began looting supermarkets. In December 2001, 40,000 people gathered on Plaza de Mayo in front of the Casa Rosada, the presidential palace. There, they banged pots and pans together day and night, until an unnerved President Fernando de la Rúa fled by helicopter.”

Reach back even farther into history, if closer to home (at least culturally), and we may recall the economic wreckage of post-World War II Britain, which had to borrow the equivalent in today’s dollars of $150 billion from the United States just to keep the lights on, cops on the payroll and hospitals open. The Brits have only just paid back the Yanks the final installment of the loan.

In fact, national bankruptcies are a far more common occurrence in the modern world than many suspect – made all the more chilling by the thorough devastation they wreak on the afflicted economies.

Money’s not worth a plug nickel for anyone (except, perhaps, for those who had the foresight to move their cash to offshore, safe havens before the collapse). Schools and emergency rooms shut down with alarming speed. As for public pensions, you can forget about them altogether.

And because societies are vastly more complex and intra-dependent than are individuals, a jurisdiction can take years, even decades, to crawl back to some semblance of solvency.

Anyone who has endured a personal bankruptcy knows what it’s like to have a trustee like Price Waterhouse tethered to his ankle. But these guys are guardian angels compared to the dark minions who ply their trade at the International Monetary Fund.

It’s lamentable (though not surprising) that, in this run-up to the September 22 New Brunswick election, almost no one has uttered the ‘B-word’ in relation to the province’s dreadful fiscal shape.

It appears we live in a perpetual state of denial, expecting to make no hard choices, to undertake no risky business (can you spell s-h-a-l-e gas?) that might replenish our collective coffers, and yet always expecting fine, fat, grass-fed chickens in our pots at the end of the day.

The New Brunswick Business Council – a collection of demonstrably successful heavy-hitters, whose membership roster includes names like Oland, McCain and Ganong – made headlines this week by challenging the province’s political parties to drop their usual talking points and talk plainly to citizens. What, it demanded, are these political hopefuls going to do to clean up the mess that is New Brunswick’s financial condition?

The Council suggests a temporary hike in the HST and radical surgery on the spending side of the ledger. To be sure, the measures it prescribes aren’t nice, comfortable or easy. But the alternative is obviously far worse.

At least these folks remember Argentina.

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Jun 20 2014
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Energy, Oil and Gas

Taking stock of our car-loving culture

 

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The horses stand sullenly in the barn where they have dwelt, uninterrupted, for two years. Has it really been that long since my wife and I hopped into their saddles and sped away down the street and around the lake, the soft summer wind peeling the frowns from our faces?

The “horses” – that’s what we call our twin, hybrid two-wheelers with the fancy side bags for boxed lunches and bottles of wine. We bought them from a local outfit six years ago when we became convinced that global warming would doom the infernal combustion engine to a proper extinction. Humanity, we thought, would finally see the error of its fossil-fuel ways. Everyone would soon be riding bikes. We were just ahead of the curve in southeastern New Brunswick. 

Ah yes, how young we were.

Today, the oil and gas industry is pumping away harder than ever. Production in the tar sands of Alberta, where bitumen is king, has never been higher. Now, the only fear policy makers and politicians nurse is whether they can get the stuff to market before competition drives the price down to commercially unsustainable levels. 

That’s certainly what Canada’s finance minister, Joe Oliver, fears. 

Speaking in Ottawa recently, he said weaning the nation from its dependence on American buyers of its black gold is, “an obvious strategic imperative.” Moreover, he added, “the Canadian economy has been bolstered by resource revenue and it’s important that we continue to see that revenue sustained and grow. . .(It’s an) asset that Canadians consider absolutely fundamental to their identity.”

I’m a Canadian, but I’m not sure I will ever perceive non-renewable reserves of oil and gas as innate to my sense of self. Aren’t they more or less necessary evils, the consumption of which we would all do well to curtail? 

Yves Bourgeois of the Urban and Community Studies Institute at the University of New Brunswick might agree. “A lot of people are interested in public or shared transportation because for low-income people it’s often the only means of transportation, he told the Saint John Telegraph-Journal recently. “Decision-makers in municipal or provincial governments are often told they need to fund public transportation because it helps low-income people. . .in New Brunswick, there’s actually a compelling economic argument to fund more shared transportation.”

Still, we remain a defiantly car-loving culture. 

According to the Institute, this province boasts (if that is the word) the third-highest rate of automobile ownership in the country – 1.55 cars per home. The national average is 1.47. Reports the T-J: “They also put five per cent more kilometres on their private vehicles than the Canadian average.”

Is there a causal relationship between this and another disturbing trend in New Brunswick?

“A report released by the Canadian Public Health Association says that 30 per cent of the adult population is obese in Atlantic Canada,” the CBC reported in March. “In New Brunswick, the highest rates of obesity are in the northwest, where 27.4 per cent of adults are obese and in the Acadian Peninsula, where 28.8 per cent are obese.”

Said Stephane Robichaud of the New Brunswick Health Council: “We see that we have a higher rate than the rest of the country of people dying before the age of 75 for treatable or preventable causes.”

In fact, my decision to park the car and zip around on bikes was inspired, in part, by the fact that I was turning 50, that dreaded threshold one crosses when one can no longer kid oneself about maintaining youthful vitality without expending an ounce of effort. 

Still, as the first, fresh days of summer arrive, it’s not too late to take stock of our present lot. My wife and I are planning new excursions, new adventures in cycling thanks to our sturdy horses. For now, as the weather begins to cooperate, the Nissan will stay in the driveway, and once again, we will be in the wind

 

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Jun 12 2014
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Climate, Economy, Energy

Climate change is real. But do the feds care?

 

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Senior federal Tories no longer deny, as more than a few once did, encroaching climate change. Their thinking on the issue has evolved. Now, they accept it, almost willingly, as a cost of doing business in the 21st Century.

With all the bellicosity that this proposition implies, Prime Minister Stephen Harper thumbed his nose at U.S. President Barack Obama this week, suggesting that the latter’s effort to enforce new emission standards for power plants was disingenuous.

“No matter what they say, no country is going to take actions that are going to deliberately destroy jobs and growth in their country,” he said during a joint press conference with Australian Prime Minister Tony Abbott in Ottawa. “We are just a little more frank about that.”

Moreover, he added, “the measures outlined by President Obama, as important as they are, do not go nearly as far in the electricity sector as the actions Canada has already taken ahead of the United States in that particular sector.”

Finally, he said, “It’s not that we don’t seek to deal with climate change, but we seek to deal with it in a way that will protect and enhance our ability to create jobs and growth. . .Frankly, every single country in the world (feels the same way).”

Now, who’s being disingenuous?

Canada’s official government position on climate change is virtually non-existent. The feds do not maintain, let alone enforce, regulations governing greenhouse gas emissions from the oil and gas industry for a very good reason: They are terrified of angering their pals in Big Petrol. 

According to a report in the Globe and Mail last year, the World Resources Institute stated that in 2010 this country’s carbon footprint was the tenth-largest in the world. “On a per-capita basis, Canada is 17th; among the G20, Canada trails only Australia and the United States,” the item noted.

As for Canada’s putative lead over the United States in regulating the electricity sector, Simon Dyer of the Pembina Institute, an environmental think tank based in British Columbia, begs to differ. In a blog post on June 4, he wrote:

“While Canada did introduce federal coal regulations in 2012, the regulations have a long phase-in period that allows some of Canada’s coal plants to operate clear through the middle of the century, without any greenhouse gas controls whatsoever.”

Mr. Dyer observes that this “timid response” guarantees that meaningful drops in greenhouse gas emissions won’t appear until 2030. In this context, he writes, “The U.S. proposal is far more effective at reducing greenhouse gases from electricity generation in the short term, compared to business as usual. Analysis suggests the EPA rules would reduce power sector emissions by an estimated 23 per cent below business as usual by 2025, compared to five per cent from Canada’s federal regulations (according to Environment Canada’s own numbers).”

Apart from this, Pembina estimates that, between 2005 and 2020, tar sands expansion will have rendered preposterous Canada’s faint-hearted promise to the international community to cut its greenhouse gas production by 17 per cent.

“Environment Canada estimates that Canada will only be ‘halfway’ to meeting its 2020 target in 2020 – meaning that we’re on track to miss the 2020 target by 113 million tonnes, or double the current emissions of British Columbia,” wrote Clare Demerse, Pembina’s former director of federal policy, on the Institute’s website last year. “To date, the federal government has not published any plan or proposal to close that gap.”

Under the circumstances, how can any political leader in Ottawa claim with a straight face that the government has a plan for mitigating the effects of the nation’s increasingly rapacious fossil fuel industry?

Energy Minister Joe Oliver is practically apoplectic over the possibility that Alberta oil will forever languish where it does no one any good. In a recent speech, he described the black gold as “landlocked”, costing the national economy billions of dollars a year in lost revenue.

Meanwhile, Environment Minister Leona Aglukkaq is ritually fond of stating that the federal government’s emissions policy demonstrates how she and her Conservative confederates are “standing up for Canadian jobs,” as if no clean, sustainable alternative is even worth considering.

Fair enough. But if certain federal Tories no longer deny the existence of climate change, neither should they deny the other truth: They couldn’t care less.

 

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