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.

 

 

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Canadians support carbon pricing

Canadians, including business groups, support Trudeau’s proposed carbon-pricing plan announced Tuesday. So why are some politicians opposed? The short answer is politics, although games are being played by both sides.

image: Werner Antweiler

Recent polling from Environics Research shows that nine out of ten Canadians are concerned about climate change. And a majority support carbon pricing except in Alberta and Saskatchewan. Tony Coulson from Environics Research says:

“For many Canadians, it appears their concern about the consequences of climate change is strong enough that they’re willing to bear some cost to help stop it (Globe and Mail October 16, 2108).”

The feds say that they will collect carbon taxes from those provinces that don’t have a carbon-pricing plan and return the money directly to citizens of those provinces. Depending on how little fossils fuels they burn, they could get more back in rebates than they spend on the added carbon tax.

Opposition parties are calling it a vote-buying tactic in time for the next election.

Those opposing carbon pricing include Ontario Premier Ford. During his Alberta visit to bolster Jason Kenney, leader of Alberta’s United Conservative Party, Ford tweeted:

“I am proud to say that Ontario will stand with Albertans who oppose this unfair and burdensome tax on families and businesses.”

The Ontario Premier has allied himself with Saskatchewan Premier Scott Moe in opposing the federal tax plan. Manitoba also recently cancelled its planned carbon tax.

Carbon taxes are directly on the sources of carbon: 70 per cent of them from burning fossil fuels to heat our homes, generate electricity and for transportation.

Ford claims that carbon taxes take money out of the pockets of taxpayers. Not necessarily. A revenue neutral carbon tax such as the one that B.C. has doesn’t. Sure, we pay more for gasoline but receive an equal reduction in taxes elsewhere. As demonstrated in B.C., carbon pricing reduces greenhouse gases and doesn’t harm the economy.

If Ford wanted to take a conservative approach, it would be our carbon tax. A progressive approach would be to take the carbon taxes and directly invest them into sources of renewable energy.

Canadian businesses also support carbon pricing. The business-backed C.D. Howe Institute has recently come out in favour of carbon-pricing. The institute understands both the necessity and practicality of carbon taxes. C.D. Howe policy analyst Tracy Snoddon says:

“The politics of carbon pricing may have changed but the climate change challenge and Canada’s emissions reduction targets under the Paris agreement have not. The economics are also unchanged – carbon pricing continues to be the most cost-effective option for achieving emissions reductions across the country (Globe and Mail October 18, 2108).”

It’s disappointing to see politicians use the future of our planet as a political football.

Canadians want government action. For the first time in polling history, Canadians say that individual action is not working that governments need to step in.  “A slim majority now feels that voluntary action is not enough to address the challenges we face,” says Coulson.

Canadians are waking up to the fact that individual actions, like changing to energy efficient light bulbs, is not working. Only legislated policies will collectively accomplish what we individually wish for.

 

Homoeopathy debate re-ignited

Questions about the practice of homoeopathy have been re-ignited by two recent events. One has to do with a homeopathic rabid-dog-saliva treatment and the other about the retrial of a couple originally found guilty of failing to provide for the necessities of life.

Samuel Hahnemann   image: thefamouspeople.com

 

If you thought that dog spit was an effective treatment because Health Canada approved it, you would be wrong. Health Canada approved rabid dog saliva and 8,500 other homeopathic remedies, not because they are effective but because they have concluded that they are safe. Health Canada doesn’t test these remedies for efficacy.

Other homeopathic treatments are made from cancerous cells, black mould and the smallpox virus; they sound dangerous until you realize just how much they have been diluted.

The founder of homeopathy, Samuel Hahnemann, devised a dilution system that he called “C scale.” Homeopathy claims that the more remedies are diluted, the more effective they are. A 6C dilution will result in the original substance being diluted to one part in a million million. Kamloops’ tap water has a million times more naturally occurring fluorides than such remedies.

No wonder Heath Canada has deemed homeopathic remedies to be safe. They are purer than the water we drink. So, why go to all that trouble to make pure water?  The difference between pure water and homoeopathic pure water, homeopaths claim, is that the later contains a “memory” of the original substance even when it is diluted virtually out of existence.

A Vancouver Island naturopath got into trouble when she provided a remedy containing (or not containing, depending on the dilution) rabid-dog saliva. Anke Zimmermann, gave a child lyssin because he demonstrated behavioural issues after a dog bite. The problem, according to Health Canada, had nothing to do with the fact that it contained rabid-dog saliva: five others had been approved. The problem was this one, lyssin, which is made in Britain and not approved.

People can imagine whatever they want, but if they think they are taking medicines when they are drinking pure water, that’s a worry. B.C.’s Provincial Health Officer, Bonnie Henry, wrote Health Canada expressing her concerns.

“I believe all of these products that are purportedly based on infectious or dangerous material should not be classified as ‘medicines’ and should not be regulated as health products (Globe and Mail, May 13, 2018),” Dr. Henry said in an e-mail.

Professor Bernie Garrett at the University of British Columbia’s nursing school says:

“It’s absurd that these homeopathic remedies should be licensed for use when technically, they’re nothing more than water because of the dilution process. But they still cause harm by delaying access to effective treatment and by causing people to lose money.”

David Stephan and his wife, Collet, were found guilty in 2016 of failing to provide the necessaries of life for 19-month-old Ezekiel. They treated him with garlic, onion and horseradish rather than take him to a doctor. Ezekiel’s body was so stiff from meningitis that he couldn’t sit in his car seat. She took him to naturopathic clinic in Lethbridge on a mattress where she bought an echinacea mixture. Ezekiel died later.

The Supreme Court allowed a new trial based on a technicality. The couple appealed the original decision and lost. But because appeal court’s ruling wasn’t unanimous, the couple had an automatic right to take their case to the Supreme Court.

Michael Kruse, executive director of Bad Science Watch, is blunt in his assessment of homeopathy:

“These self-regulated professions are based on magical thinking, and until provincial governments take responsibility to be the arbiter of what is scientific and what is not, the doors are open for any profession with a training program and standard of practice to make potentially deadly claims.”

 

Good riddance to B.C. LNG

There were lots of things wrong with former Premier Christy Clark’s plan to produce liquefied natural gas but let me start with the good.

image: the Tyee

At least it was a plan that labour and business could agree to. It was a provincial strategy that had workers and industry pulling together in the same direction.

It was an ambitious plan but unrealistic from the start. Markets for were weak and no one wanted to develop the plants. Now one of the last players, Petronas, has pulled the plug.

I can only speculate why they bailed out only one week after the BC Liberals were defeated. Was there some deal with the Clark government to provide concessions such that the LNG plant would be built regardless of whether it was viable? It’s not inconceivable considering how much political capital Clark had invested in the project.

Or was it because of Canada’s so-called anti-business climate, including high taxes, environmental reviews, and Indigenous land claims? Instead of recriminations, let’s celebrate the passage of Petronas says economist Jim Stanford.

Stanford has a unique perspective of LNG projects in B.C. and Australia. He’s a professor at McMaster University in Hamilton, Ontario, and lives in Sydney, Australia.

“In fact,” says Stanford, “far from blaming government red tape for the collapse of this misguided project, we should be collectively grateful. Those rules likely saved us from wasting tens of billions of dollars on the biggest white elephant in Canadian history.”

Stanford’s analysis shoots down an impression I had. I wrote that Australia was a LNG success story and that Australia’s early entry into the market was why B.C.’s plants were doomed. I now realize that Australia’s experience was not as rosy as I thought.

When Asian gas prices started to surge in 2009, Australia decided to chase after those markets. Unlike Canada, Australian developers faced few environmental hurdles and Australia’s Indigenous people had little negotiating power.

What followed was a spectacular construction boom in which $200 billion Australian was spent on LNG plants.

The boom had a dramatic effect on Australia’s economy. Their dollar, now at par with Canada, spiked up to $1.30, resulting in what economists call the “Dutch disease.” When Australia’s currency rose dramatically, the price other countries paid for Australia’s products rose. As well, imports were cheaper. Exports fell, imports rose and Australian factories could no longer compete. Australia became deindustrialized including the shutdown of their auto industry.

With the drop in gas prices, Australia’s LNG online plants are marginal. Boom towns that sprung up during the construction years are becoming ghost towns. Housing prices have collapsed.

Gas plants are selling into markets at discounted prices. Unlike Canada, Australian plants don’t have to supply the country first and so, ironically, there is a shortage of gas in Australia and a glut of gas on world markets. Domestic prices have doubled because of diversion to export markets.

B.C. has no economic strategy. Only one per cent of our GDP comes from mining, oil and gas and most from finance and real estate.

Our new NDP government faces a challenge. In our polarized political climate, unifying strategies are rare. Just ask former Premier Clark.

Electoral reform disappointment #3

I was disappointed but not surprised when Prime Minister Trudeau abandoned his plans for electoral reform. I’ve been let down before.

fairvote.ca

fairvote.ca

The first time was in 2005 when a Citizens’ Assembly was created to study models of reform. After much deliberation, they recommended a made-in-BC type of Single Transferable Vote called BC-STV.

The referendum was coincident with the provincial vote. Only weeks away from the vote, an Angus Reid poll showed that two-thirds of respondents knew “nothing” or “very little” about BC-STV.

Then to everyone’s surprise and my delight, BC-STV almost passed despite the high threshold: 60 per cent of voters had to be in favour as well as 60 per cent of the provincial districts.

The threshold for districts easily passed with 76 of 79 districts in favour. The popular vote came within a hair`s breadth of passing: 57.7 per cent. Support in Kamloops was the lowest in the province at 49 per cent in both districts (Elections B.C.). Bud Smith, the popular Social Credit MLA from 1986 to 1991, led the no vote in Kamloops.

The popularity of BC-STV seemed baffling given the lack of understanding of just what voters were supporting. But not so baffling in light of a recent referenda, such as Brexit. British voters were as much against immigrants as they were for leaving the European Union. Clearly, voters don’t necessarily answer the question on the ballot.

BC-STV was on the ballot but not on voter’s minds; rather, it was dissatisfaction with Gordon Campbell’s BC Liberals. The BC Liberals lost 31 seats, down from their record win of 77 out of 79 in 2001.

My second disappointment was the defeat of the BC-STV referendum again in 2009. With the earlier referendum being so close, I hoped, against discouraging opinion polls, that earlier support was not a fluke. This time, even in Kamloops, electoral reform would prevail. I joined city Councilor Arjun Singh, Gisela Ruckert, and others in Fair Voting BC. In a column for the Kamloops Daily News (May, 2005), I implored:

“This is a limited time offer.  The chance to change our electoral system comes once in a lifetime, . . . Don’t let this chance to make history pass you by.”

It was not to be. A disinterested electorate, 51 per cent of eligible voters, returned the BC Liberals for a third term, defeated BC-STV by 61 per cent and buried electoral reform for decades.

Trudeau raised my hope federally by proposing unilateral legislation. But Canadians want a referendum (73 per cent in an Ipsos poll).

A referendum would doom electoral reform to failure. Voters like the idea of proportional representation but have trouble understanding the voting systems that would accomplish it. The outcomes of referenda in B.C., P.E.I and Ontario made that clear. The same would be true of a federal referendum says pollster Environics. The vote would be split between three alternatives –the current system and two types of proportional representation:

“In a referendum, not one of these three alternatives would achieve majority support — leaving the reform project to die, along with virtually every other proposal ever put to a referendum in this risk-averse country.”

And that assumes they vote on the ballot question.

Why drivers text and drive

Fines in B.C. for driving while using phones will double to $368 on June 1. But will it change phone use? Psychology provides some clues.

shutterstock_116889370

“At any moment in time,” explains psychology Professor Gerald Wilde, “people assess risks and compare them with the amount they are willing to take,” on CBC Radio’s Spark. While risk factors may change, the amount of risk for any individual remains constant. If the perceived risk goes down, for example, people will engage in more risky behaviour to keep their risk level constant. Professor Wilde calls this “risk homeostasis.”

Risk homeostasis is best demonstrated by a famous experiment called the Munich taxi experiment conducted in the 1980s. A taxi company had to reduce their accidents or pay more for insurance.

So they installed anti-lock braking systems on one-half their fleet. To their surprise, the accident rate didn’t drop. In fact, over the three-year period of the experiment accidents actually increased slightly in the cars with ABS brakes.

It seemed like the drivers in safer cars were taking more risks. To find out, they hired expert observers to monitor driver habits such as speed, lane changes and so on. The drivers didn’t know that their passengers were paid observers and the observers didn’t know which cars had ABS – a classic double-blind experiment.

Sure enough, the observers found that taxi drivers increased risky driving behaviour: they maintained a constant risk.

In frustration, the taxi company decided to try a different approach. They told drivers that they would be financially responsible for damaged cars. Then the number of accidents went down.

Risk homeostasis is not a conscious decision but rather an intuitive calculation involving costs and rewards, including the cost of car repairs due to accidents and fines from traffic violations. Think of the calculation this way, says Prof. Wilde: “You set your thermostat such that there is a balance between comfort and cost of energy.”

Based on this psychology, increased driver fines will reduce distracted driving. But since looking away from the road is pretty drastic, there must be something beyond risk homeostasis.

When air bags were introduced into cars, drivers drove faster as explained by risk homeostasis –safer cars, riskier driving. What doesn’t add up is that the death rate to pedestrians and bicyclists went up. Yet, knowing that, drivers didn’t slow down. It seems like the risk to others was not part of the calculation. If it were, drivers would have slowed down.

Drivers who text and drive do so because it doesn’t appreciably increase their risk. Air bags, ABS brakes, seat belts and impact-absorbent car bodies reduce the risk to drivers but not to vulnerable people outside the car.

Add to that sound-proofing, cruise control, comfortable seats, deluxe sound systems, and drivers are easily lulled into a false sense of the degree of attention required while hurtling down the road in a two-tonne iron shell. Driving becomes secondary to fiddling with the radio, texting on their phones, applying makeup or rummaging through the glovebox.

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.