N.B. is still hooked on building highways

Frank McKenna began the trend of large capital expenditures with the Trans Canada Highway. He took us into the four-lane world, just like the big provinces and states. And it seemed like a good idea at the time. There were a number of deaths caused by collisions, and didn’t we deserve highways as good as Quebec and Ontario?

That’s what politics is all about – finding a leverage point with the masses and using it to lengthen your run in power. The projects were extremely expensive and one section was contracted to the private sector, with tolling as part of the annual payment. In 2000, Bernard Lord removed the tolls and arranged compensation for the road contractor. He continued down the path of road construction.

Our present premier, Shawn Graham, has proposed spending $1 billion to bring route 11 between Shediac and Miramichi to four lanes as well. But before betting the farm on highway construction, perhaps we should examine the implications of this adventure. The existing book value of our highways is now $4.2 billion and requires an annual interest payment of $394 million. The gas tax provides $199 million and motor vehicle registrations bring in approximately $100 million of annual revenue. That means that we are short of revenue to pay for highways by $95 million, if highway users are to pay for roads. As we use 1.5 billion litres of gas and diesel each year, the gas tax should be 6.3 cents a litre higher. It’s a strange twist of fate that Premier Graham removed 3.8 cents of gas tax after he was elected and now we are short of revenue.

Now supposing that the premier succeeds in persuading the feds to cost-share his billion-dollar baby of four lanes between Shediac and Miramichi, then the province will go into debt only $500 million more. That means $47 million extra in interest, which should translate to 3 cents more gas tax. So, it looks like we can expect a total of 9.3 cents per litre increase in gas tax – or perhaps we can just layoff 1,800 teachers and nurses, or increase the HST.

No matter how you slice it or dice it, there is no free ride.  Federal cost-sharing programs are always popular with politicians. The funding is mostly allotted among provinces on a per capita basis. There’s an economic term “opportunity cost” meaning that choosing one alternative negates another choices. If we use the $500 million federal dollars and $500 million of our own money for an expense like highways, then we get a short-term high with employment building the road in exchange for many years of interest to be paid. Cost – $47 million every year.

A simple alternative would be using the money to pay down debt. Benefit – $47 million reduction in government’s interest expense every year. Another distinct opportunity would be investing the money in energy efficiency in homes, or perhaps installing wind turbines to get us off oil. For example, a 1 MW turbine costs roughly $2 million dollars and produces roughly 2,200,000 kWh per year. At 8 cents / kWh, that’s $175,000 per year per turbine, or $87 million per year gross revenue. Benefit – with maintenance and interest costs subtracted, it’s a $35 million return every year, and increasing as power rates rise.

The worst is yet to come as world oil production peaks in the next few years, increasing fuel costs and hence lowering gas tax revenues here in New Brunswick. If we have $4.7 billion in highway debt, we will have a gigantic problem. The economist James Hamilton suggests that oil prices are to blame for the current recession: “The evidence to me is persuasive that, had there been no oil shock, we would have described the U.S. economy in fourth-quarter 2007 to third-quarter 2008 as growing slowly, but not in a recession.” If this is true, then peak oil will cause further recessions in the near future. Without significant restructuring of the province’s finances, we risk slipping into a deficit-financing spiral. How do we cut the health and education budgets?

Unfortunately for the residents of New Brunswick, Shawn Graham has become a weapon of mass financial destruction, busily building roads to lead us into poverty. If you’ve ever been to Cuba, you may have noticed the empty roads with few private cars. There’s little chance of an accident when you pass a horse driven carriage or bicycles ambling along major highways. A similar fate awaits us when peak oil affects the world’s economies, except we’ll have four lanes.

In fact, if Premier Graham were serious about self-sufficiency, we would spend the very least possible on roads and the most we could on getting off oil and improving energy efficiency.

Is the road upgrade plan another hint from Francis McGuire for Miramichi residents to commute to Moncton jobs?   Wow, that’s real energy efficiency.

Avoiding “The Long Emergency” in Food Supply

The Mayas of Mexico and Central America created amazing temples, pyramids and palaces, all constructed by hand.  We don’t know precisely why, but the Mayan civilization suffered a serious blow in the 8th and 9th centuries when drought, disease or overpopulation caused the abandonment of the lowland cities.  The Spanish invasion later finished off the remainder of the Mayan civilization.

They used several calendars but the Mesoamerican 5000-year long count calendar generates some controversy today.  A number of new age mystics have come to the belief that the world ends in 2012 since that calendar also ends.  Mayan scholars, of course, insist that the ancient Mayans meant nothing of the sort.

We can easily dismiss the idea of the world ending, but we might examine why Mayan society ran into trouble, or why the Roman Empire collapsed if we want to understand the serious threats to our present day society.  Reasons suggested for the downfall of Rome vary from overtaxation of agriculture to support a massive military necessary to retain the outer limits of empire, foreign invasions and political instability, a dissolute economy incapable of production, and many more.

Some of those conditions, such as a feeble Canadian agriculture sector, American overexpenditure on military to maintain the empire, exist today in our society.  I might add that we have an unprecedented energy decline coming very shortly on the horizon.

The “banksters” of Wall Street have really sabotaged the world’s financial system, not from intention, but from structural greed.  Who dislikes a bonus?  Previous to the credit crisis we had a diversion of corn supply to ethanol and rise of food prices to the world.  Products like rice also rose in price and countries hoarded supplies.  Now, we have the tightening of trade of agricultural goods between countries, although temporary.  Will the tightening of credit apply to world farmers and affect our available food in 2009?

Security of supply is a matter of extreme concern.  The food supply chain is dependent on cheap and available fuel, and there is probably only three days food in the local supermarkets.  Food travels thousands of kilometers across the world – melons from Mexico, bananas from Ecuador, lettuce from California, oranges from Florida, water from Italy or Fiji and on it goes.

The World Trade Organization (WTO) sees the narrow viewpoint of industrial agriculture, ignoring security of supply or the plight of the small farmer around the world.   Food is not a discretionary product like a video game but we treat our farmers as unimportant elements in an ordinary production process.  It is an article of faith that we will always be able to ship food around the world by air or truck.  Unfortunately, that is not going to be the case in a few years as fuel supplies trend down.

The higher price of food today has many in the Maritimes thinking of growing a garden in their yard.  As well, there are citizens across North America pushing for the right to have some farm animals in their urban garden.  This “chicken in the city” movement is gaining converts.  Locations such as Victoria BC, Los Angeles, Atlanta, Baltimore, New York City and many other locations permit chickens.

The rules typically permit 3 or 4 hens, but no roosters and may specify other conditions such as size of coop or distance from residences.  Here in the Maritimes, the city of Moncton bylaws allows rodents, rabbits, Vietnamese potbelly pigs, but only if they are pets.  Unfortunately, no chickens are welcome.

Recently, I had the pleasure to meet a young couple who would like to add chickens to their backyard urban farm.  They look for the eggs that chickens would provide, as they are vegetarians but not vegans.  Being very aware of their ecological footprint, they give me some hope that we can turn around our society.

Writer James Howard Kunstler gave a talk at Mount Allison University this week.  The author of “The Long Emergency” has a vision of our future that is bleak, but entirely possible.  He considers that energy independence and being car-dependent are mutually exclusive.

According to Mr Kunstler “We have to get off of petro-agriculture and grow our food locally, at a smaller scale, with more people working on it and fewer machines. This is an enormous project, which implies change in everything from property allocation to farming methods to new social relations. But if we don’t focus on it right away, a lot of people will end up starving, and rather soon.”

James suggests that we will know if the world wants to survive when it starts to rebuild the train system for freight and passengers.

On the other hand, Shawn Graham is suggesting hundreds of millions of dollars on four lane highways such as route 1.  You might think about the Atlantic Gateway as a boondoggle, socializing the costs to you and privatizing the profits to someone else.

There should be a law to stop the wasting of our money in such a cavalier manner.  Oh wait, there is one! – The voting act.

Why the Green Party is out-greening the NDP

I didn’t know jack about Jack Layton and that’s not right.  A citizen should make an informed decision on who’s right for them.  At least that’s the theory.  But I float over the surface of life because there is so much information to absorb.  Jack, I did like your “new kind of strong” advertisements.  It brought me back down to earth and I’m listening.

The 2008 NDP platform proposes the development of high-speed train links in the populated corridors like Quebec to Windsor and Edmonton-Calgary.  Wonderful!   He also supports better public transport through a 1-cent gas tax.  Sounds like a carbon tax to me.  Not that there’s anything wrong with that.

Jack suggests that a Canadian Renewable Energy Agency would promote 35% renewable energy by 2020.  This includes “new financial incentives for clean power, including from solar, wind, water, biomass and other renewable sources for electricity production and from industrial co-generation and small-scale, sustainable community facilities.”  Also, the NDP suggests promoting the zero emission and high efficiency cars by working with manufacturers.

Another interest of the NDP is energy security and environmental considerations being number one priorities in any new trade negotiations.  They also want to slow down development of new tar sand projects until the environmental problems and CO2 considerations are dealt with.  The New Democrats would promote the processing, refining and petrochemical development of oil in Canada for job development.

From their platform comes a remarkable statement. “We must plan now for a future where our energy consumption is drastically reduced and where all our energy comes from renewable sources.”  This is a politician telling you the truth about your energy future – oil will decline and we need to adapt.

Of course, it makes perfect sense that non-renewable sources will eventually decline.  But few politicians want to be the bearer of bad news or to utter that incendiary four-letter word “peak” when describing oil.  Jack Layton gets a “B+” rating for his energy platform that confronts directly the challenges we will see in coming years.  Jack said no to a carbon tax in favour of a cap and trade system.  Some call it an opportunistic approach to vote getting.

Can you identify what party makes this statement?  “We acknowledge that human society depends on the ecological resources of the planet, and must ensure the integrity of ecosystems and preserve biodiversity and the resilience of life supporting systems.”  If you thought Green Party, you would be right.

The Green party, in 70 countries around the world, has some similarities with the NDP but the Greens go back to the basics of life and develop policy through a number of basic principles (Social justice, ecological wisdom, non-violence, participatory democracy, sustainability, and respect for diversity).

The leader since 2006 is Elizabeth May, a longtime environmentalist, writer and lawyer. On energy, the Greens favour a carbon tax like the Liberal plan. The green vision includes cuts in income, payroll taxes and provides rebates to make the tax shift fair to various sectors.  Corporate tax is reduced when companies reduce carbon emissions, which provides them a double benefit. A cap and trade system is implemented for large emitters.

She supports increased rail and green urban transport, promotes local agriculture and the 200-kilometer diet as well as community gardens.  Her party would “launch a plan for Canada’s Green Century, with a commitment to make Canada one of the most energy-efficient, sustainably powered nations in the world.”

All buildings in Canada would have an energy retrofit by 2025 and new buildings would net zero energy construction after that date.

The Green party positions itself as being fiscally conservative with a goal to eliminate the national debt.  According to May, it is the only party that “grasps the future… at the end of the Fossil Fuel Era, we are emerging to a new reality….that the greatest threat to our security does not come from foreign terror cells and criminal elements, serious as they may be, but from our addiction to fossil fuels and the clear and present danger presented by the climate crisis.”

Elizabeth May’s straight honest approach attracts me.  I would give her an “A” rating for the very detailed Green energy platform.  Although I may not agree with every item they propose, the website makes fascinating reading.  Her rise to prominence has been due to her performance in the debates and is an indicator of dissatisfaction with the present government.

Polls show only a little better than a third of Canadians want Stephen Harper, which means a clear majority of Canadians do not want Stephen Harper.  Together the Greens and the NDP have almost a third of the voters.  Our electoral system ensures that the split among the opposition is of advantage to the Conservatives in the same way that the PC’s and Alliance split the right wing vote in years prior to the 2003 merger.

As difficult as it may be to contemplate, there are some ridings (closely contested in 2006) where voters, who want a better energy policy than the Conservatives offer, may vote strategically.  This include Tobique-Mactaquac, Fredericton, Madawaska-Restigouche, and Miramichi.

The people of Canada have several credible choices this year with respect to solving our energy problems.  Recent events in the financial world indicate how fragile our global economy is.  It’s evident that different policies are required to make our system more resilient and stable.  Review the platforms.  Your vote on October 14 is important to your future.  Can you afford to miss it?

Maybe Canada should opt for Free Trade in Cars

Are Canadians paying too much for their cars?

Last year the US dollar lost considerable value in relationship to the world’s currencies.  When the Canadian dollar hit parity and indeed rose above the US dollar, it became strikingly apparent that cars were still considerably cheaper south of the border.  It became an embarrassment for the car manufacturers and some announced reduced “Canadian” pricing.  Like the innocent soul that I am, I went back to sleep assuming that the problem was solved.

Wrong!  A little research on the websites of various automakers shows a different story.

Honda sells vehicles that range from 7% to 48% more expensive in Canada.  Lower end cars show less difference.  For example, the Fit is close, coming in at 7% higher in Canada.  The Civic hybrid is 17% higher ($22,600 vs. $26,350).   The S2000 sportscar is 48% higher, about $16,000 more expensive here. The Toyota Prius is 24% cheaper in the US ($22,220 vs. $27,600). And I could go on and on but you see the tendency.

GM and Ford seem to have closed the price differential by marking down the differences with discounts.  GM has a “pricing allowance” of $16,000 on the Cadillac Escalade.  Ford uses the terms – “family pricing and delivery allowance”.  It looks like they don’t actually want to lower the higher price on a permanent basis.

What I find incredible is that cars can be sold cheaper in Alaska than in New Brunswick.  The Mazda 6 sport sedan is 25% ($5,400) more expensive in Canada. In fact the destination charge is only $700 versus over $1200 for Canadian locations.  Are we overcharged by auto manufacturers?

Some of the reasons tossed around for the difference are a bit strange.  Are Canadian interest rates really lower?  Do we get more incentive deals than the US?  Could we really negotiate a better deal because there is more profit than south of the border? Do cars sold in Canada have different warranty coverage and different features? One thing is certainly true. Exchange rates vary from week to week.

We spend roughly $53 billion on new vehicles each year and if we’re paying roughly 15% too much, it’s costing us $8 billion extra each year.  Wouldn’t this be a fair job for the federal government to investigate and act? Obviously, we have to consider the exchange rate and other valid costs that could be proven by the manufacturers.

What has been Ottawa’s response so far? Mr Flaherty suggests that we shop around.  Well it’s presently quite difficult to import a car from the US, thanks to our government bureaucracy.   Real “free trade” in cars would allow Canadians to buy a car in the US and bring it into Canada paying only the sales tax.  Anything more is a trade barrier that ensures higher prices in Canada.  When enough cars come across the border, the prices at Canadian dealers will migrate towards the same level as in the US.

During research, I came across a recent article in MACLEANS magazine by Colin Campbell that indicated the same tendency is showing up in all consumer goods, not just cars.   A couple of interesting quotes  “The reality is that what you can buy in the States for a dollar costs $1.35 up here. That’s the reality they should be facing, not this other smoke and mirrors.”
From Professor Avi Goldfarb quoted in the article “It’s not so much that the Canadian consumer is willing to pay higher prices. It’s much more that the Canadian consumer doesn’t have a choice,” he says.

Canadians don’t make higher salaries than in the US yet we pay more for everything we buy.  The answers being given to us are inadequate and unacceptable.   We are paying probably hundreds of billions of dollars in excess of fair prices.

It’s time we ask Stephen Harper what he plans to do about this gouging machine supported by his government.  And the next time you go to Chapters to buy a book, bring along some American money.  If there is a US price listed, you might get a bargain.

here’s a website I ran across after writing this article.  it’s great for those who want to take real action and save money by importing a car from the US.    http://www.carswithoutborders.com/

Where is New Brunswick’s Green Vehicle Policy?

These are interesting times.  A remarkable historical event is unfolding before us at breakneck speed – the beginning of the end of the oil era and the gasoline car.  On a superficial level we get emotionally involved with our cars and it’s such a pain.  Either there’s a repair bill, or higher operating expense these days with gas going through the roof.  It makes you want to reach out and sign on the dotted line for a new shiny reliable model.  But wait a minute.. Let’s think about this a little deeper.

My car just cost me $73 to fill up and it isn’t a large tank.  My sister’s van with a 90-liter tank costs $125 to fill each time.  She recently bought a small car.  The saving in gas bills makes their payment.  The older van sits in her driveway and is used sparingly.  Such is the discipline of higher prices.

The Federal government introduced the ecoAUTO Rebate program for two years.  Penalties are being levied on big gas-guzzlers and bonuses given for vehicles that sip fuel.  Looking closely, it seems to have been the proverbial horse designed by a committee (ends up as a camel).  It has selections that are totally illogical unless one realizes that the domestic auto industry has a powerful lobby.

Take the example of the Honda Fit, 6.6 L/100 km, not being included in the 2007 Federal government ecoRebate program by .1 liters / 100 km.  Honda was not impressed as it’s competitor, Toyota’s sales took off and their figures dropped.  As a result of quick re-engineering by Honda, it now qualifies for 2008.

Under the flex fuel category, the Chevrolet Impala at 12.3L/100 km, and the Chrysler Sebring, at 13L/100 km, is eligible for a $1000 rebate.  The Sebring uses double the fuel of the Honda Fit.  Impala is made in Oshawa, Sebring from Illinois, and the Fit is from Japan.

The federal program ends in December as Transport Minister Lawrence Cannon indicates that “it has served its purpose in raising consumer awareness of fuel-efficient models”.  Can you follow that reasoning?  A recent CBC story says higher than expected buyer interest will result in overspending of the program budget.

There are five provinces that offer a sales tax rebate for hybrids – BC ($1,000) PEI ($3,000), Quebec ($2,000 for vehicles under 6L/100 km), Ontario ($2,000), Manitoba ($2,000).  A number of these programs will be phased out in coming years, presumably as the technology evolves and price differentials decline.  If you buy a hybrid in Ontario, the combined rebates are $4000.

The rationale for these programs had been primarily reduction of greenhouse gas, and not peak oil.   In the last year, the peak oil theory has made the jump from blogosphere to some main stream media.

As gas price rises, all of the usual suspects (declining US dollar, speculation, and instability in oil producing countries) have been rounded up but will be eventually released.  The idea that we are at the peak of oil production will eventually gain credence in the general population.

The International Energy Agency (IEA) recently indicated that world oil prices were “justified by fundamentals…  Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions.”   It’s very startling to hear such clarity from that organization.

In a column last October, I indicated that when gas rose to about $1.60 a liter, replacing a gas guzzler vehicle with an efficient model would pay for itself from reduced gas bills.  Well, we are almost there!  If the tendency continues we could be there within several months.

If you have to buy a new car in the near future, you might consider the future cost of fuel.  It could be at $3 a liter in the next several years or even higher.   We just don’t know.   Consider the case of a full size vehicle like the Dodge Avenger, or the Chevy Impala.  At roughly 12 L / 100 km, that’s 2400 liters for the average driver (20,000 km).  Annual fuel cost of $7200 a year ($600 per month) is higher than your car payment.

The alternative would be something like the Toyota Prius or Honda Civic hybrid at roughly 4.5 L / 100 km. Only 900 liters are used annually, which translates into $2700 ($225 / month).

The former CIA chief James Woolsey drives a hybrid and compares the local gas station cash register to a collection box for al-Qaeda.  Whether a link as direct as that can be drawn is difficult for me to say.  However, the best way to moderate prices for gas will be for all people to use less.

Do we have a plan in New Brunswick to ensure that most vehicles sold have excellent fuel economy? The life of vehicles is typically 12 years.  Are we planning for a transportation alternative after the personal car era is finished?

We’re about two years into the mandate of Shawn Graham’s government but I haven’t seen an energy policy and little transparency.   We do hear the phrase “Energy Hub” quite often, describing private sector energy investments for export.  At what point will “peak oil”, a once in the lifetime of this planet event, sink into the consciousness of this government?

“Big Three” look at big losses

“It was the best of times, it was the worst of times” to use the words of Charles Dickens to describe the world today.  Perhaps these words are equally true at any time, but they seem appropriate enough today.

In the best of times category, we are seeing the long overdue death of the Hummer and the dying gasp of the SUV, those ultimate symbols of consumerism, disrespect for the environment and the resources of the earth.

The individuals who bought those gas-guzzlers have been pawns in a big marketing game.  GM, Ford and Chrysler knew a good thing by positioning the large vehicles as status symbols with big price tags and profits over $10,000 per unit.  They co-opted the American and Canadian government CAFE standards to allow large vehicles and SUV’s a pass on fuel economy.  The big three automakers are now fighting a wintertime retreat from Moscow.  They are getting massacred by Honda and Toyota among others, who have had a better strategic vision over the years.

GM’s results over the years have varied from a high of $10 Billion in 1984 to a loss of $38 billion in 2007.  In the last ten years, they’ve lost money overall.  Let’s be generous and assume an average $2 billion annual profit over the last 30 years.  That’s not a great return on sales of $200 billion. Recently, GM’s VP Bob Lutz indicated that it would cost an average of $6,000 more per vehicle to meet the new CAFE standards.  If that is the case, GM has a problem as consumers will have less disposable income for cars in the future.  Toyota indicates that it will meet the 35-mpg standards well before the required date of 2020.

The CAFE standards will soon be the least of the American automakers problems.  Higher gas prices will make the standard irrelevant, with consumers demanding vehicles giving 50 to 100 mpg, no matter what kind of silly marketing schemes Detroit comes up with.

What has been the “butterfly effect” of GM on the US and world economy? Obviously, GM is no butterfly but a recent film by the same name or the 1947 film “It’s a wonderful life” with James Stewart illustrates the concept that a relatively small action can have a great effect in the future.

One can only wonder what would be the alternate future if GM had embraced fuel efficiency for both small and large vehicles (SUV’s).  Supposing that the world gas usage (including US) was 2 million or 5 million barrels a day less than it is today.  This would have been a real possibility.  Supply would be greater than demand and the price would still be at $55 per barrel or less.  The world’s oil bill would be $2,300 billion less in 2008 (86 MBarrels *365 day* $75/b difference).  These are large sums by anyone’s standards as the Canadian federal budget is $550 billion per year.  This is equivalent to the entire cost of the Iraq war until 2017.  GM, in turn, would be profitable today.

I see the big three automakers headed towards bankruptcy in the next few years.  GM is burning through cash at a rate that precludes significant changes to their products and cost structures that would be required. Are GM and the others too important to be allowed to fail?  Will the public be interested in a bailout of this size?

Rick Wagoner, CEO of GM, seems to understand that the oil prices are not coming down but does he really understand the implications of peak oil in his bones?  Can someone who earns $15 million a year not fully understand the fuel supply that his products run on?

GM has some new products in development, one being the Volt, an electric car.  The car will cost $40,000 and run 40 km before the backup engine kicks in.  At that price, it is not initially intended as a high volume contender.

This column has mentioned the lack of consumer choice in vehicles that have good mileage ratings and that are available elsewhere.   A car dealer would say that they don’t meet the North American standards, but that sounds like thinly veiled labour protectionism as the climate / emission / safety standards in Europe should be capable of harmonization to North America.  The cars work perfectly well in Europe.

“There are 113 off-shore models (mostly Europe) that get over 48 miles per imperial gallon in a combined rating,” according to an article by MSNBC earlier this year.  The fact that very few are available here is an admission of failure by our government to foresee and manage the liquid fuel crisis.

The big three automakers and labour unions are managing government policy and Canadians are now paying a significant premium for that dubious privilege.  Where are all of the free market pundits when you need one?

I haven’t heard them saying that a little more competition would shape up GM and the others?  Isn’t that their mantra?

On Big Issues, Graham’s Government has earned a ‘D’

Does it bother you trying to compare the real price of an airline ticket or vacation? Taxes or fees can more than double the first price you see.

One of the best I’ve seen recently was a car dealer who sent a card to my residence and thousands of others. It appeared that I had won $1000. I turfed the card as being a gimmick, but a friend took the bait and his “win” was a fishing rod which, bought in bulk from China, probably cost $5. The fine print showed 56,000 fishing rods and one $1000 prize. It seemed to be working for them based on the volume of people at the dealership. You can’t sell to a customer until they show interest or step through the door.

Governments do marketing (sometimes called spin) over a long period, which culminates on Election Day. They’re selling a brand, a dream for a better tomorrow because there is little they can do to change today. They have to convince you that they care for you, that they are good stewards of your money and that you are better off if you vote for them again.

Given the short memory of most people, politicians only give you a break in the last 12-18 months before an election. In the first two or three years of a mandate, you often get to feel the cattle prod. Usually, there is a time lag between a change in policy and when the public perceives an actual change. Has there been too much haste to achieve concrete results before the next campaign starts, probably in 2009. Has the thought process on policy been overlooked?

If Shawn and the Grahamites were a band trying to make a name for themselves, some of their tunes would be the “self-sufficiency reel”, the “UNBSJ breakdown” or a recent cut called “French Immersion –the late waltz”. Is this the best that we can get?

Changes to public policy should start from a clearly defined problem and evaluate a series of solutions, which are weighed from many different angles – in other words, a serious business case. What was the clearly defined problem that required the removal of UNBSJ and the solution of a polytechnic?

What is the definition of self-sufficiency for tomorrow’s world of global warming and energy scarcity? What are the concrete steps that will start the process and how will it work. We were invited to participate in a dream of self-sufficiency that we might all have contributed to and believed in. But it collapsed due to a lack of intellectual clarity at the start and poor execution.

The Early French Immersion review identified a real problem but picked an inferior solution. Was there no time for negotiation and finding a middle ground? To achieve a September 2008 implementation takes time to organize apparently.

There are some bright spots. The government has accelerated the creation of wind power facilities and this should reduce our dependence on oil fired generation to some degree. They are investigating a second Lepreau, which has some positives and of course negative aspects.

As much as I disagree on some of the approaches of this administration, what this government seems to lack is the ability to listen and it is failing to act on the incredible danger to us all from peak oil. Listening to Jack Keir recently, he appears to understand some of the dimensions of the problem. He has unfortunately failed to produce an energy policy and specific approaches that could ease our way into the post-carbon era.

The era of continual growth fuelled by oil is coming to an end. Should Shawn Graham be asking Stephen Harper for $137 million to twin 55 km of Route 1? Let’s evaluate two different ways this money could be invested.

1) Spend on twinning Route 1 – No additional revenue is evident once the road is built but some additional maintenance costs are required for snowplowing and expensive repaving at 10-15 year intervals. No payback from this project. In fact, it is a drain on resources.

2) Provide a $2,500 subsidy for any New Brunswicker’s who upgrades to a fuel-efficient car – Let’s say over 40 mile per gallon. The $137 million would fund 55,000 cars spread over a number of years. Each vehicle would burn 1300 liters less fuel a year than the previously owned gas-guzzler. At $1.50 a liter, which it may be quite soon, it would save $1,950 per car per year. At its maximum impact, the money back into the pockets of our citizens would be $107 million per year. This money is no longer going offshore to Saudi Arabia but staying in our pockets to spend locally. The payback could be as little as 1.5 years.

I won’t go into program details because there are many ways that this program could be designed. Is 40 miles per gallon an aggressive enough target? Would Buzz Hargrove of the Canadian AutoWorkers approve of this idea? Of course not. GM mostly sells gas guzzlers. What the example shows is there are ways to slow down the effect of high oil prices and produce less CO2.

The Liberal government has shown some courage in addressing certain issues and for that reason, I would give them a D on overall performance instead of an F.

Could the government be more creative and effective? Yes, very easily.

Let’s start building more sustainable cities

Stephen Colbert did his civic duty when he declared his candidature for the US Presidency.  His tongue-in-cheek foray into politics was not taken too seriously given his comedic nature.   Apparently the polling numbers were quite high, which can be explained by the attraction of celebrity and his “truthiness”.  Other examples have been Ronald Reagan, Arnold Schwarzenegger as governor and even Clint Eastwood who became mayor of Carmel, California for a time.

In the municipal elections taking place on May 12, 2008 in New Brunswick, you don’t have to be a superstar to take part.  But being a candidate is a tough act.  Those running have a belief that they possess a unique quality that is required by their fellow citizens – some might call this a really big ego.  Many good candidates will be publicly dumped on Election Day, humiliated for having lost in a popularity contest, the equivalent of not being picked for a team at school.

Yet we continue to have candidates, so the rewards must be of considerable significance to subject themselves to this process.  It can’t be money, as the salary of a councillor is fairly modest.  The real reward is contributing, and being a part of shaping public policy for the betterment of other citizens.

For many years, I’ve avoided the temptation to put my name in the ring for city council.  First, I’m not sure my ego is big enough, although being elected might augment its size.   It’s true that my average sized brain slipped past its peak effectiveness ten years ago.   Writing this column on energy and politics might be seen by the public as part of the necessary qualifications.

Many of you perceive that the world, as we have known it, is changing and not necessarily for the better.  The price of commodities such as oil, uranium, wheat, corn among others are rising rapidly, salaries are not keeping pace and we suspect that the economic system is a “ponzi” or pyramid scheme that requires constant growth.  Given a world with limited resources and 6.6 billion people means that a considerable adjustment will eventually happen.  The question is when and that time is not of our choosing.

The different levels of government each have a responsibility area.  The municipality is the closest to the average citizen and can play an important role in building a sustainable society.   Consider the city of Freiburg, Germany where cycling is part of the culture, where subdivisions are being designed on a sustainable basis, where building codes mandate a low level of energy use in the design stage.  Active and passive solar is part of the heating systems.

Here in Canada, some thought is being given to the eco-footprint of our cities and our personal lifestyles.  Firstly, if we’re using too many units of energy per person or per square kilometer, then we can work on bringing structural changes or efficiencies into play.  For example, some communities are encouraging people to forgo ownership of a car by better public transport and the use of car-shares, where groups “borrow” a car when they require one. Example – Zipcar operates in many US cities with 2500 cars, 90,000 registered drivers with one vehicle replacing 15 privately owned vehicles.  Other examples are Cooperative Carsharing of Edmonton, Autoshare of Toronto, CommunAuto of Montreal, among others.

Secondly, we have to look at the quality of energy that we are using.  For example, when cities mandate that electric power used within their boundaries is generated by sustainable means, a clear message is sent to other levels of government that action is required.  Too often, municipalities do not take a leadership role and assume that appropriate decisions will be made on their behalf.

There are two basic ways to proceed with saving energy, our planet and our own lives.  One is to let the individual make all the choices to conserve.  Human nature tends to let the decision go until it is too late.  General Motors will continue to market the Tahoe hybrid as the green car of the year.  Corporations just love to divide and conquer the consumer.

A different approach is to build a structure of society that permits and encourages good energy choices.  The use of building codes and zoning to encourage high density and low energy consumption, the design of a society around people’s needs and not the needs of cars would reduce consumption without difficulty by citizens.

We have tried the competitive society and it has led us to near disaster environmentally and in the use of resources to their depletion.  Should we wait until gas is $2, $3 or $4 a litre before we try a co-operative planned approach to city design.

There, I’ve convinced myself to run for councillor.  Now, I have until April 11 to find 10 people who won’t fall down laughing when I tell them what I’m doing.   Do I care whether I win or lose?  Yes, I want to win, but the possibility of losing won’t stop me from trying.

Can we transform our cities? Yes we can!  If you are reading this column, you may have the vision to lead your community or support someone who will.  Think about it.  Act. Let’s build a tidal wave of change that is an inspiration for other provinces.   Time is running out.

Jevons Paradox and the value of conservation

William Stanley Jevons made an observation about the usage of coal in England in 1865, when the increased efficiency of the Watts steam engine actually caused the use of coal to increase rather than decrease, as he would have expected.  The use of the improved steam engine in a wide spectrum of industries increased coal usage as a direct result of the cost-effectiveness of coal.

Today, a number of people use the paradox to argue that increases of energy efficiency only leads to more use of energy and that attempts at conservation are doomed to fail. For example, “if cars double their gas mileage, then people will drive more.”  They’re mainly wrong for the following reasons.  First, when fuel costs are rising rapidly, such as hitting a resource production ceiling in the past several years, any increase in the efficiency of passenger cars and trucks will reduce the litres burnt, not the actual cost of a tank of fuel.  Airline fares have been increasing even though the efficiency of jet engines increase with newer technology.   Reason: fuel prices are rising faster than airlines can upgrade their fleets.  Westjet is an example of a company that invested heavily in newer efficient planes and it shows in their profits.

On the home front, adding extra insulation will reduce the amount of oil, natural gas, wood, or electricity used to heat your house.  You are unlikely to change the setting on your thermostat far from its normal level.  In a rapidly rising cost of energy environment, all categories of conservation will produce good results.

Secondly, some categories of usage, like transportation of goods are relatively fixed.  For example, the amount of produce transported from California to Canada each week is unlikely to change greatly based on a decrease in the cost of transportation.  We can only eat so much lettuce.

In the infinitely slow path to energy efficiency, our friends south of the border recently passed an energy bill mandating an increase from 25 to 35 mpg, a 40% increase in vehicle fuel standards by 2020.  The increases start in 2011, but there are a number of loopholes related to alternative fuel, trucks and swapping of credits.  The entire bill is 1055 pages and deals with a huge variety of topics from incandescent lamps to biofuel.   Was the legislation partially a pre-emptive strike to ward off more severe legislation on car mileage from California and 12 other states who wanted SUV’s and light trucks treated the same as cars and higher mileage implemented sooner than later?

Around the world, there are countries with higher standards than North America. China has already a 35-mpg standard in place.  Europe and Japan standards are over 40 mpg.
Here in Canada, our energy policies are guided by American legislation. The automotive companies are integrated across North America and have driven the agenda.  Perhaps Stephen Harper will now feel comfortable raising our mileage standards to meet those of his friend George.  Don’t expect to see anything different or better.  The auto industry will have to invest billions of dollars in retooling factories to meet the requirements of lighter, more aerodynamic vehicles.  The aluminum and carbon fibre industries are big winners and steel, being heavy, will be replaced where possible.

Canada’s “new” government has been interested in clean emission technology.  This follows the American lead on misdirecting the public.  Common sense alone makes it clear that burning less fuel reduces emissions of all types, whether CO2 or other varieties, less expensively than technology alone.    The auto industry has wanted to keep its high profit margin SUV and trucks at all costs, even at the risk of its long-term demise.

It is unfortunate that politics is an averaging process where you give a little bit in each direction and end up often in the same location with the same problem.  The American legislation is too little, too late and we will soon see the California’s of this world forcing deeper changes.

What most people don’t realise is that we are starting on the second half of our oil reserves.  This is the tough expensive oil to recover, and the worst part of it will be the gradual decline of world production.   $100 oil will seem cheap in the near future and the resulting economic catastrophe will be unprecedented.

Jevons was concerned that the supply of coal would run out in his time.  He couldn’t foresee that coal use would be partially displaced by the rise of oil for 150 years and that other reserves would be found.  Likewise today, we are concerned that oil is starting a decline very soon.  There is a small chance that we will find technological solutions to our energy needs in time.  There is also a small chance that we will find additional reserves of significant size.

However, there is a much larger chance that we will not solve the problem and we will suffer greatly.  In 1865, there were 1.2 billion people on this planet in a mostly agricultural lifestyle using little energy.  Today, we are 6.6 billion people who use a great deal of energy.

What should be our resolutions for 2008?  Certainly, we should plan for higher efficiency in all of the products that we purchase.

Resolve to live differently

A New Year naturally brings New Year’s resolutions. It’s a subtle admission that all wasn’t perfect in our lives in 2007 and we could benefit from setting a new course based on lessons learned. Yes, I gained a few pounds and I don’t exercise enough. That’s going to be on my list. I wonder if the testimony of Brian Mulroney and KarlHeinz Schreiber before the Commons committee will generate any resolutions on their part.

Now, Brian Mulroney has many likeable qualities as a person. His testimony does raise some questions though. What I didn’t understand is the shrinkage factor than affects money placed in safety deposit boxes. Karlheinz says he gave $300,000 to Brian who only found $225,000 by the time he reported the amount to the Canada Revenue Agency five years later. Perhaps Mila did some shopping and accidentally took the money out of the wrong envelope in the safe. But that wouldn’t explain how Karl also gave $30,000 to Jean Charest’s brother as a campaign contribution but Premier Charest only found $10,000. Obviously, somebody just can’t count and who would that be?

We shouldn’t be surprised that money is paid to influence politicians. Politicians spend large sums of our money and if a contract happens to be directed in a contributor’s direction, who would ever know? In fact, it is amazing when an incident is actually made public.

Another lesson I’ve learned from the former PM’s testimony that it is possible to call income in cash a retainer or an expense account and not report it for tax purposes. The letters I’ve gotten from the Canada Revenue Agency are borderline nasty at times. Maybe I’m just too sensitive and they really won’t waterboard me if I’m slow in paying. Canada’s tax regime may be a kinder and gentler place than I imagined.

It appears that the PC party was giving Mr. Mulroney a $4,000 a month salary in addition to his other government income and expenses. Many other premiers and prime ministers have taken this route. The problem with receiving money from sources other than your job is that loyalties may conflict.
Wouldn’t it be better to double or triple our leader’s salaries and prohibit all payments from other sources? Would you prefer to pay our political leaders very well and punish ethics non-compliance with severe penalties or continue on the present course of government by corporate agenda?

This brings us to the old pork barrel politics here at home. The latest New Brunswick capital budget is the largest ever according to spin. Should we believe this is a good thing? Given the approaching decline of our oil-based economy, one would think that our policy makers would be making investments in items that have a payback, reduce costs of operation or promote sustainability. New highways are just corporate welfare for road builders. Once route 1 is twinned to Saint Stephen at a cost of $80 million, the focus will likely turn to twinning route 7 to Fredericton. Will we get to our driving destination any sooner? Not appreciably. The minister indicates that this is a real requirement of our self-sufficiency agenda. Any return on investment here? Not really.

So the capital budget is mostly road expenditures (67%) and buildings (22%). Any transformational change here? Not really, it just the same old path.

They’ve brought back the public-private partnerships of McKenna. We’re now into renting rather than owning courthouses and psychiatric facilities. With the new courthouses, are we going to put more bad guys in jail? Not likely.

If the capital budget is any indication, it looks like the self-sufficiency agenda is definitely postponed a year.

Shawn Graham has set a major goal of reducing dependence on the federal government, yet will direct major capital spending into the same poor investments such as highways. Naturally, he wants the federal government to give him extra money to become self-sufficient. Should Stephen Harper contribute to the plan before Shawn applies his own provincial money in a creative way? Transformational change begins with transformational thinking.

There isn’t anything wrong with renewing facilities that are antiquated or grossly inadequate, but if we are truly embarking on a transformational change exercise, then we should ask ourselves the following questions: The amount of world oil production in 2026 is likely to be 50% of today’s levels. Are you going to be able to live with 25% of your present fuel because essential services will have 100%? How are the public investments, particularly on highways, going to improve the likelihood of a sustainable society when the private car may be no more? And more importantly, why do we continue to invest huge amounts of money in highways?

What has the government learned in 2007? Shall we make a New Year resolution to ask our representatives about their plan for 2008?