Pipeline approval won’t help the Liberals

If the federal Liberals were as popular as the Trans Mountain pipeline, they would win the upcoming election in a landslide.

image: City News, Edmonton

The problem for the Liberals is that the pipeline is most popular where voters are least likely to vote Liberal and least popular where voters traditionally vote Liberal.

According to an Angus Reid poll, the strongest support for the pipeline is in Alberta and Saskatchewan, 85 and 71 percent respectively (ArmchairMayor.ca, June 21, 2019). That’s where Liberal support is weak. Only a total of five seats were won by the Liberals in the combined provinces. Meanwhile in Quebec, 40 percent disapprove. That’s where the Liberals won 40 seats.

While support for the pipeline in B.C. is 54 per cent, that average doesn’t reflect the difference of opinion between the Lower Mainland and the Interior. People in the Interior generally support the pipeline because of jobs and financial incentives offered by Trans Mountain. An informal poll by Kamloops This Week showed 80 per cent approval. The Lower Mainland opposes the pipeline because of potential spills.

Conservatives are placed in the awkward position of approving of the pipeline while disapproving the Liberals. Cathy McLeod, Conservative MP for Kamloops-Thompson-Cariboo, doubted the government’s ability to finish the job:

“I’m not all that optimistic that this government can get it done,” McLeod told Kamloops This Week. Her statement aligns with the Angus Reid poll where 40 percent of respondents didn’t think the pipeline would be built.

Another perceived hurdle is Bill C-69, passed by the Senate last week, which critics say will ensure that the pipeline will never be built.

Bill C-69 imposes more requirements for consulting affected Indigenous communities, widens public participation in the review process and requires climate change to be considered in the building of any development.

The Alberta-based Pembina Institute is cautiously positive of Bill C-69:

“This bill was never about individual projects, but rather a reform of the entire decision-making and assessment process. It is about creating tools and processes to ensure natural resource development decisions, whether about a mine or a dam or a pipeline, are made in a fair way (press release, June 14, 2019) “

If pipelines don’t determine how people vote, what does? Pollster Michael Adams has noticed something new in the way people view immigrants. Twenty years ago, anti-immigrant sentiment was evenly distributed among all three major parties. That’s changed, say Michael Adams, Ron Inglehart, and David Jamison in their article:

“Conservative supporters are more likely to agree with statements strongly hostile to immigration. For example, 50 per cent of Conservatives strongly or somewhat agree that “Overall, there is too much immigration. It threatens the purity of the country.” Fewer than a third of New Democrats (31 per cent) and Liberal supporters (24 per cent) share this belief. This relative concentration of xenophobic sentiment in one party is a new phenomenon in Canada (Globe and Mail, June 14, 2019).”

The researchers are careful to point out that the Conservative Party is not anti-immigrant: they just attract people who are.

Researchers call this the “authoritarian reflex,” a reaction caused by uncertainty and characterized by increased hostility toward “the other,” regardless of whether they are “deviants” in society or foreigners.

The contagion of populism that has been animated by the authoritarian reflex in the U.S. has spilled over into Canada. It will determine the way people vote in way not seen in recent history.

 

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Alberta’s faulty pipeline gambit

The Alberta government says that if only B.C. would allow a second pipeline to be built, our gasoline prices would go down.

If only it were true.

The new pipeline will not supply more gasoline to B.C. and it will not reduce our gasoline prices. The reason is hardly a surprise -the new pipeline will carry crude oil, not gasoline.  A report uncovered by reporter Justine Hunter confirms that.

The report was commissioned by Trans Mountain with the hope that it would demonstrate the need for a new pipeline. To no one’s surprise, that’s what they found.  The consulting firm Muse, Stancil & Co. says:

“The startup of [the Trans Mountain expansion] project will act to increase the price of crude oil at Edmonton because roughly 79,500 [cubic metres a day] of crude oil is diverted from the existing North American markets to Northeast Asia (Globe and Mail, May 6, 2019).”

In other words, what B.C. needs is not what the pipeline will deliver. It will send crude oil to overseas markets. It will not send crude oil to be refined into gasoline in B.C.

Even if the second pipeline delivered crude to be refined into gasoline, that wouldn’t happen because our refineries are running full-tilt. They couldn’t produce any more gas even if they wanted to.

For sure, B.C. would be hurt if Alberta were to cut off the existing pipeline. Alberta supplies 80 percent of fuel burned in B.C.

Dan McTeague, senior petroleum analyst for gasbuddy.com, says the only way gas prices could go down if the existing pipeline carried more fuel:

“The new pipeline would be entirely devoted to heavy oil, but the existing pipeline would be expanded by 50,000 barrels per day.”

More supply would reduce prices in a marketplace that was properly functioning.  However, there is some doubt about the marketplace according to the Canadian Centre for Policy Alternatives. They claim that price-gouging is driving up prices. Their report reveals that of the 55 cent per litre increase since 2016, only 6.3 cents is a result of increased taxes while profit margins have increased by 18 cents.

Another group confirms that finding. Navius Research reports that since 2008, refinery margins in Metro Vancouver increased to 35 per cent while the increase was less than 18 per cent in the rest of the country. They say that margins “have decoupled from supply costs, resulting in prices that cannot be attributed to competitive market forces or scarcity of supply.”

While there is no hard evidence of price-fixing by the four companies that supply the Lower Mainland, Premier Horgan has asked the B.C. Utilities Commission to investigate the record-breaking gas prices. It will be interesting to hear what they find.

The BC Liberals see political hay to be made. They have erected huge billboards with a picture of Premier Horgan and the words, “Blame John Horgan.” BC Liberal leader Wilkinson says that Horgan has failed to cap gas taxes.

I have to smile at Wilkinson’s claim, not just because taxes aren’t the problem but because it was the BC Liberals who introduced the carbon tax in the first place.

 

 

Alberta to overtake BC on carbon reduction

Alberta is about to take the lead in reducing greenhouse gases says the non-partisan group Canada’s Ecofiscal Commission. In a recent report, they compared the four provinces that have a carbon price and concluded that Alberta will have the most stringent policy by 2020.

Canadians support carbon pricing -poll, April, 2016

Canadians support carbon pricing -poll, April, 2016

By stringent, they mean the most effective overall plan in reducing greenhouse gases in which carbon pricing is just one of five methods. Commission chair, Professor Chris Ragan, explains:

“When comparing provincial carbon pricing policies, it is useful to use metrics that take into account the various design details, such as coverage and trade that differ from policy to policy. That way we are comparing policies on a more level playing field.”

Of the five ways, carbon pricing is still the most important. For that reason, Alberta and British Columbia both have more stringent carbon pricing than Ontario and Quebec who use the cap-and-trade approach. Supporters of this approach argue that pricing alone through taxes is a misleading; that cap-and-trade will work.

The advantage of carbon pricing is that it is simple –it’s a direct tax applied at the gas pump. The cap-and-trade system uses market forces to determine the price of carbon by first setting a cap on the amount of carbon that any industry can emit and then allowing industries to buy and sell unused allowances. If one industry gets under the cap, they can sell the remainder to those who go over.

Watch out, you provinces without carbon pricing. The federal government is holding a big stick: if you don’t implement carbon pricing, the feds will. Federal Environment Minister Catherine McKenna said all governments will have to increase the stringency of their climate policies, including carbon pricing, in order for Canada to meet its international commitments.

Provinces aren’t used to federal leadership. In the past, the feds have been notoriously negligent in reducing greenhouse gases. As a result, Canada has become a international slacker in the fight to confront the global threat of climate change. Under the Chrétien Liberals, promises were made but never kept. Under the Harper Conservatives, no promises were made and provinces did as they pleased.

Several premiers have voiced opposition to any federal price on carbon – including Saskatchewan’s Brad Wall, Quebec’s Philippe Couillard and Nova Scotia’s Stephen McNeil.

Meanwhile, the clock is ticking, reports the Globe and Mail (July 27, 2016) and the commission’s report is timely. “Its report informs talks between Ottawa, the provinces and the territories as they attempt to reach a pan-Canadian climate strategy this fall. Officials are working through the summer on a series of policy issues, including efforts to forge a minimum national carbon price.”

While B.C. can take some pride in being the first province to implement carbon pricing, that lead is in jeopardy. With a B.C. election in less than a year, Premier Clark will have to walk the line between satisfying the business community that opposes higher carbon taxes and the progressive community who wants B.C. to keep the lead in the carbon-reduction.

Stop calling royalties a tax

In raising royalties, Rachel Notley’s NDP government is simply returning Alberta to its roots. Former premier Peter Lougheed urged a sensible development of the tar sands and fair royalties. After flying over the tar sands in 2006, he remarked:

Bust

“I was just up there on a trip, just helicoptering around, and it is just a moonscape. It is wrong in my judgment, a major wrong, and I keep trying to see who the beneficiaries are. It is not the people of the province, because they are not getting the royalty return that they should be getting.”

Corporations like to confuse royalties and taxes because they would rather not pay anything to government, regardless of merit or ownership. Royalties are “rents” says Gordon Laxter, economist and founder of the Parkland Institute of the University of Alberta.

“Many think of royalties as taxes. Any government fee must be a tax. Wrong. Private woodlot owners and musicians collect royalties. No one calls them taxes. When governments collect royalties they aren’t taxes either. Royalties are one way to capture economic rents. Leases, ecological charges and corporate taxes are other ways. Government ownership of resource companies is the only way to collect all the rents,” he says in the Monitor magazine.

By rents, Laxter means the profit from a piece of land or real estate. A tax is not that, it’s a levy on income. Royalties are rents, compensation for the use of public land.

When Lougheed flew over the tar sands moonscape, he was being rhetorical when wondering who the beneficiaries were. As former premier, he knew that the beneficiaries were Big Oil and not primarily those who owned the land.

Despite Lougheed’s pleading for Albertan’s to “think like an owner,” successive Alberta governments fell sway to the push from Big Oil who threatened to leave Alberta if royalties were increased. It was an idle threat, of course. Other governments, like Norway’s, impose higher royalties and Big Oil still continues to profit.

Western provinces tend to think small when it comes to their economies.  Like a young adult, no longer a teenager, provinces fail to think in grown-up ways. Western provinces have trouble seeing beyond living their parent’s basement and working at the equivalent of a fast-food restaurant – quick and easy natural resource extraction.

Mel Watkins, one of Canada’s foremost political economists, foresaw adult economies in his 1963 “staple theory of economic growth.” Simply put, his three pronged maturation involved the export of resources only after they had been processed; then on to the production of finished products instead of importing them; and finally, mature economies which become self-supporting and not dependent on resource extraction.

It hasn’t dawned on Western Canadians that we are there, at the third stage. We have cities with populations over a million; we are large enough to be self-supporting. Unfortunately, the quick-and-easy resource extraction mentality is hard to shake. B.C. Premier Clark imagines our future as the exportation of LNG and has lowered rents to please investors.

The reality is that B.C. and Alberta have the population, the talent and ingenuity to complete the last prong of Watkins’ vision. We need to think like grown-ups.

 

Renewable energy welcomes the Alberta NDP

Big Oil might be quivering in their boots at the prospect of having to pay fair royalty rates to the province but the renewable energy sector is looking forward to the NDP in Alberta.

oraange

Fossil fuels have had a grip on the province that stifles energy innovation. Renewal energy companies are feeling more optimistic with the NDP. Despite much talk by the previous government, not much happened.

“For six or seven years, the previous government had white papers and round tables,” said Kent Brown, president of Calgary-based BluEarth Renewables Inc. “We were caught in the uncertainty and lack of decision making. The new government has a great opportunity to make some decisions now.”

One of the things holding back the development of renewable energy has been slavish devotion to the marketplace. Yes, free markets are great at determining the price of shoes but energy is a different matter.

Under Alberta’s deregulated electricity market, utilities have no incentive to develop renewable energy says Jared Donald, president of Conergy in Calgary. In Alberta’s energy market, customers get to choose which electricity utilities they want to buy from. With twice as many marketers as there are utilities, there’s no lack of choice. Albertan’s generally select the cheapest utility.

That’s fine for buying shoes as long as the shoes are not choking the atmosphere and threatening the planet. Fossil fuels are not like other consumer items. Alberta currently uses coal for 43 per cent of its electricity and natural gas for 40 per cent.

Jared Donald told the business section of the Globe and Mail that one crucial change the new government could make would be a shift away from the fully deregulated electricity market. Power producers charge fluctuating prices depending on supply and demand at any particular moment. This leaves utilities stuck on fossil fuels.

Deregulated fossil fuel energy means there is little incentive to build anything but the cheapest source, usually new natural gas-fired power plants. Solar, wind and hydro plants have greater up-front costs, and are thus harder to finance under the current regime, even though they require no fuel once they are complete.

“If you are uncertain about what the energy market is going to be, you don’t spend the big capital dollars up front,” Jared Donald. That provides an “incentive to make short-sighted decisions.” It will take government intervention to change the pricing and financing of electricity generation to encourage renewables, he added.

The wind energy industry, too, is keen on expanding in Alberta, but it also has issues with the market pricing of electricity said Tim Weis from the Edmonton-based Canadian Wind Energy Association.

One solution would be for the province to set a “clean electricity standard,” that would force power retailers to sign contracts with some renewable suppliers.

As the province with the youngest population in Canada, Albertans are ready for innovation. Cogeneration plants now produce 31% of needs. While they still use fossil fuels they also use biomass, such as livestock manure, to simultaneously generate both electricity and steam for industrial process. Cogeneration substantially reduces net greenhouse gas emissions.

NDP’s public insurance corporation is saving the BC Liberals from heat

It’s all because of the NDP.  That we have amongst the lowest automobile insurance rates in Canada, that is.

The B.C. Liberals are quick to blame the former NDP government for all their troubles. But they would never admit that our public insurance corporation, ICBC, is saving them from a lot of political heat.

Premier Campbell will grin and bear the distinction of being the only right-wing government in Canada with socialist auto insurance.  He will even strengthen the public insurer that was incorporated by NDP Premier Barrett in 1973.

While Campbell eagerly dismantles BC Hydro, he dare not touch ICBC.  Not now.  Campbell has learned from political blunders.  No, I don’t mean his impaired driving conviction in Hawaii.  I mean the one in New Brunswick.

The otherwise popular Premier Bernard Lord of New Brunswick and his Conservative government were nearly defeated in the last election over auto insurance.  Voters were mad as hell with the price-gouging of private insurance and they were prepared to toss out the government to show their anger.

And the Campbell can’t even look for comfort in that fortress of free enterprise, Alberta.  Their insurance rates are the highest in Canada.   His friend, Alberta premier Ralph Klein is frantically trying to control the political damage by freezing insurance rates.  Klein shrewdly knows when to control the marketplace.  The competitive free enterprise system is the best way to keeps prices low – – except when it doesn’t.  Jim Rivait, with the Insurance Bureau of Canada, was caught off guard by the freeze. “We certainly don’t like them, it’s interventionist. I think we should just fix the problem.”

Private insurance companies fix the problem by making customers pay for their bad investments.  Ironically, insurance companies don’t make money by selling insurance.  In the last 25 years, 1987 was only year that selling insurance was profitable, according to Paul Bobier in his article for the Canadian Centre for Policy Alternatives (September, 2003).

Private insurers make money by investing your money in the hope that the investment returns will cover the true cost of insurance and provide a profit for shareholders.

Before the collapse of the stock market, insurance companies (and almost any fool) made big returns by investing money in inflated stocks.  After the bubble burst, pickings are much slimmer.  Now drivers are paying for bad investment returns.

To make matters worse court settlements for injuries to people are rising, now exceeding the cost of repairs to vehicles.  The costs for insurance companies are going up and the returns from investments going down.  But those costs have increased for both private and public insurers, so why the difference in what drivers pay?

The difference is that public insurers are in the insurance business, not the investment business.  Public insurers reduce driving risks, reduce accidents, and consequently damage claims.   For example, ICBC identifies dangerous intersections and roads, and works with local governments to make them safer.  They work with police forces to reduce speeding and violations that cause accidents.

The B.C. Liberals have wisely reversed earlier thinking.  They eagerly canceled photo radar because it was unpopular with speeders.  They put police out of a job.  Now the Liberals have ordered an extra 100 cops to patrol highways with more road checks and speed traps.

“ICBC is willing to fund enhanced enforcement, because that’s one of the best ways to make roads safer, to reduce injuries and fatalities, reduce ultimately ICBC’s claim costs,” says spokesperson Doug McClelland.

And who will pay for those extra police?   You and I will through our auto insurance.  ICBC will pay cops to crack down on speeders to prevent us from hurting ourselves, and thus keep insurance rates down.  Not exactly right-wing policy.

The only other provinces with public insurance plans are Saskatchewan and Manitoba, where insurance increased by only 8 per cent.  In all other provinces with private insurance, increases averaged 58 per cent.

When he thinks he can get away with it, Premier Campbell will revert to his old ways and privatize auto insurance.  He will carve up ICBC the way he is slicing up BC Hydro.  We will soon pay the same high electricity rates and the same high auto insurance rates as Alberta.

Too bad that Campbell doesn’t learn from Alberta’s mistakes.  Public corporations are best served whole, not sliced up.