Occupy Moncton takes on the Irving Media

The following article was distributed in the Moncton area as an Occupy Moncton initiative to attack the impediments to democracy in New Brunswick.  The biggest impediment is the Irving Family and their newspapers.

 The Moncton Free Press   est. 2011

“Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”  Margaret Mead

Why we need a Free Press  

Public knowledge is the foundation of democracy.  Is the media in New Brunswick giving us the unbiased information that we require?  J.K. Irving owns virtually all of the English language newspapers in New Brunswick.  On the way to building this monopoly, Ken Langdon, owner of the Carleton Free Press, became the latest victim of the Irving machine.

Acadie Nouvelle, a French language daily is now under siege. The Irving owned L’Etoile is distributed for free to destabilize their finances.  How can an ordinary business compete against free?

Rod Allen’s T&T column of Oct 29 was a recent volley in the fight against L’Acadie Nouvelle.    Both English and French New Brunswickers will be the losers if this monopoly becomes absolute.  Where is the federal competition bureau?

Why does the Irving family want control of the media in New Brunswick?

• To control the message – Irving promotes stories that help Irving businesses.   Do you remember the sale of NB Power and the volume of promotion to try to close that deal?  That sale would have provided ~$60M a year to Irving companies by lowering power rates.  Unpleasant stories about the family avoiding taxes or pollution issues just don’t see the light of day.
• To control the political agenda – better control of politicians means laws can be changed, contracts awarded, or subsidies to the Irving Family remain intact.
• To influence you to accept their behaviour as normal – To promote the fiction that they are good corporate citizens.

What can you do?   Stop supporting Irving businesses.  Complain to advertisers who use the Irving newspapers.    Read more about the issue of media concentration. Let your local politician know that you want change.  http://journals.hil.unb.ca/index.php/JNBS/article/view/18192/19610

http://www.dominionpaper.ca/features/2003/11/10/freedom_of.html

Resources on facebook:  New Brunswick is NOT for sale    Occupy New Brunswick    Protesting the Times & Transcript’s Biased Views                       Occupy Moncton

Moncton High moves to the edge of the world (LOL)

Disclaimer: I have no children that went to Moncton High or will go to that school.  This post is a letter to the editor of the T&T with a few extra comments and images.

It’s not so easy to be green.  A recent article suggesting that a high school replacement at Royal Oaks would be “green” lacks some perspective.  It is over 7 km distant from the existing Moncton High.  It is over 3 km to the nearest residential populations making it necessary to bus virtually all students for the lifetime of the school.  Extra-curricular activities will require that parents pick up their children with a car.  That’s the opposite of eco-friendly.

A recent Canadian military report Army 2040: First Look, suggests that “Global reserves of crude oil could become problematic by 2025.”   Others believe the problem is already here and that all of our major capital decisions, like this, should consider this fact.  In simple language – the world is going to change dramatically and the majority of students will be walking to schools in the future.  The Department of Education should be planning for schools on this basis.

Moncton has been consulting with its residents about the type of city that we want and need in the future.   “Plan Moncton” is the process.  (Sustainability, increased density, better urban transportation)  How will we transfer those ideas into reality if we accept proposals which are formulated primarily to meet the needs of a developer?    Moving the school away from the area that it serves promotes urban sprawl and a vehicle-centered life whose future is ending.

I’ve been told that a new school is considerably cheaper than a renovation project.  If that is a primary motivation, a new school could be built adjacent to the existing school on Church Street as the property is large enough.  A transfer of some architectural elements to the new building would preserve the memories of the past but permit an overall energy footprint that truly is green.

Roy MacMullin

Energy Advocate, Green Party of New Brunswick

English high schools with 2 km walking radius

 

 

New Brunswick’s approach to natural gas is full of cracks

The Green Party has a number of concerns regarding the development of natural gas in New Brunswick.  The Province has no long term energy plan, a poor royalty structure, and citizens have a real lack of confidence in our government to protect their property rights.  As well, there is a poor understanding of the economics of natural gas industry and a lack of respect for the environment.  This report, although brief, may improve the understanding of the issues.

A long term energy policy.

Our NG supply is presently coming from Sable Island.  By roughly 2017, it will be nearing depletion and unable to supply New Brunswick.   Western Canada gas is not connected to Atlantic Canada by pipeline.   One alternative is the use of LNG arriving from countries like Algeria and Qatar, which introduces questions about security of supply and prices in coming decades.  Our world will increasingly be defined by energy shortages, energy nationalism, resource wars, and competition for those dwindling supplies.  It is possible that we might import from the US, itself a large user of natural gas.                                                                                                                                                                                                                                 Note that 3% of Canada’s natural gas production is from Atlantic Canada and only a very small percentage of that is from New Brunswick – Corridor Resources.   As the conventional natural gas supplies in NB and NS play out, the size of unconventional reserves (shale gas) is still unclear.  Recent wells by Apache (a partner of Corridor), who drilled horizontally into the shale level, were unsuccessful.                                                                                                                                                                   The recent provincial Energy commission report suggests expanding the use of natural gas within the province, but makes no mention of restricting usage or export levels of New Brunswick gas to ensure adequate supply for our children and grandchildren.  We have no solid evidence of a viable in-province supply at this time.   There is plenty of hype surrounding the expectations of shale gas resources in North America.

The existing royalty structure

New Brunswick has little rational incentive to exploit its natural gas given the return on energy supplies.   Any businessman would be reluctant to rent a property for 5% of its value, let alone sell off a non-renewable energy resource of strategic value in the future.

Our present royalty is 10% of the wellhead price.  Given the subsequent deduction of costs, we see in 2010, a recovery of 2% of the revenue of the production from Corridor.  The current glut on the Boston market and the structure of the royalty ensure that we receive a minimal return.

Public confidence in the government of New Brunswick.

The extensive development of natural gas proposed requires the consent of the people of New Brunswick.  The experience of about 60 families in the Penobsquis area with water problems and subsidence cracking basements and creating sinkholes in fields has caused a confidence gap between citizens and their government.  Based on government responses to the problems caused by the Potash mine, we can predict that anyone having water quality issues related to hydrofracking will be “on their own” in regards to seeking justice.

The government of New Brunswick has refused to release the data related to subsidence gathered by a consultant required as part of the mining process so that the families can defend their rights before the mining commissioner.   Will the same approach apply to water testing by shale gas companies?  How is it possible that we allow the socialization of the environmental problems of industrial activity to innocent citizens while the Potash Corp made $1.8 billion of profits in 2010?

The economics of natural gas.

Horizontal drilling and fracturing are necessary to get gas out of the shale rock and this costs more than conventional vertical drilling.  A shale gas well’s production will decline at significant rates of 65% per year or more, which means that constant drilling is necessary to maintain production levels.   Although the cost of a well in Arkansas may be as low as $3 Million, the Apache wells in Elgin cost about $12 million each.  The breakeven point for shale gas may vary from $5 to $8 /mmbtu.

The initial rush of drilling in the US has driven market prices for natural gas down to $4 per mmbtu or less.   This is below the cost of production leading to less drilling taking place now.   It is now 20% of US production, which has reduced the export volume and prices of Canadian natural gas sent to US markets.

The Energy Report by Thompson / Volpe suggests that natural gas prices will remain stable in New Brunswick for the next ten years.   This seems unlikely given that availability of gas is dependent on companies actually making a profit.   It is more likely that as depletion takes effect, oil prices rise and natural gas displaces some functions of oil, then NG prices will again rise.

The problem remains that New Brunswick is poorly positioned to compete against shale gas originating in the US.  One can see from the chart of prices, that although volatile, the price has rarely stayed over $8 / mmbtu for significant periods.  The cost of transport to market is about $1.40 per mmbtu or 20% of the market price.   Our prediction – Natural gas will remain a boom and bust industry with hardship for companies drilling in New Brunswick.   We might consider a different economic model for this industry.

The distribution of natural gas -Enbridge

Starting a new distribution network is an expensive business and building a customer base requires time.  Enbridge expected to lose some money in the initial years.  However, the conversion rate of customers has been slower than anticipated.  So far, Enbridge has lost about $170 million which would be paid back once they start to make money.  To attract customers, they have offered between 10 and 20% savings over oil and electric rates.  When oil prices went up, so did the delivery charge and this has caused some concern among the industrial customers, like Flakeboard.  The very large industrials get a bypass license so they get the very best price.  The government is presently renegotiating the terms of the 20 year agreement which ends in 2020.

Fracking, a questionable practice

Fracking is a complex process.  Without fracking, shale will not release natural gas.  To get large volumes of gas, many wells would need to be drilled each year.  How often does fracking result in cross – contamination of the water supply?  We know the answer is not zero.  Is it 1%, or is it 10%.  Is there an acceptable level of failure?  The people who are affected would say no.  They take the risks with no compensation or protection.   We are drilling without acceptable standards, and without adequate inspection.    Will the prior water testing be in the public domain?

Conclusions:

Our present approach to natural gas fails on many levels.  One senses the desire to export at any cost and with limited economic return.  We are at the end of the fossil fuel era, clearly evident by the costly development of a low quality resource – shale gas.    We are left with many questions and decisions to be made.  We need a moratorium on drilling to have time to answer many of these questions.

• What is the level of industrialization of the province that we are prepared to accept?
• How can we protect those citizens affected (Penobsquis) and rebuild the confidence of the people?
• Can we improve the royalty structure or should we have a totally different model.
• Should we use natural gas to produce electricity given its lower efficiency rating? Should we consider gas New Brunswick’s ‘transition’ fuel easing the difficult switch to renewable energy sources?
• Should we export the resource, or use it in-province over a century? Do we want the responsibility for US energy supplies as fossil fuel cost skyrocket?
• What are the standards, the inspections, the water quality testing and the insurance that provides the best protection possible?
• Might leaving shale gas underground be the best gift we could leave for our grandchildren?

I know the term “Banana Republic” is overused, but….

Giving it all away

True or False?   Our common heritage, the natural resources of the province, is being managed in a competent manner by the government.   Recently, I looked at the money being received by the province from natural gas production. Here are the results of my investigation.

A royalty is a payment to the owner of an asset for its use.  For example, if you pay rent of $900 per month on an apartment that is worth $80,000 per unit, that’s effectively a royalty of 13.5% per year that you pay for the use of that asset.

To develop a natural resource, governments often assign a block of land based on a bidding process, prospective sites are drilled by a company, connected to a pipeline and the gas produced is sold until the wells are empty.

So the valid questions seem to be – First, are we getting a fair price for our non renewable gas resource? Secondly, how fast is the resource being depleted and will there be any left for our children and grandchildren?  In other words, are we using the resource in the best possible manner?

In the years from 2003 to 2010, the major producer of natural gas in New Brunswick, Corridor Resources paid royalties of between .5% and 8.2% when expressed as a percentage of natural gas revenue.  The average over the period has been 5.3%.    Typically, one would compare royalty regimes with other jurisdictions as a basic sanity check.

For example, Alberta collected $5.8 billion in natural gas royalties in 2009 – that’s 17% on sales of $34 billion, with a sliding royalty scale of 5 to 36% depending on various factors.  Nova Scotia’s on-shore royalty is similar to New Brunswick.  Generally speaking, if you collect higher royalties, you are better off.

The New Brunswick regulation reads, “The royalty on natural gas shall be ten per cent of the actual selling price or fair market value at the time and place of production, whichever is the greater, free and clear of any deductions”

The key phase being “place of production” (being the wellhead), is interpreted to mean the company can deduct many things (amortization of processing equipment and connection pipeline, and transportation tariffs to Boston), prior to its 10% calculation.  10% of a reduced figure can be quite small.

Worse, the North American price is exceptionally low this year and will be into the future, due to a North American glut of gas caused by increased production by horizontal fracking of shale gas in many areas.  In 2010, the company expects to pay New Brunswick less than 2% of the value of sales as a royalty. (Roughly $500,000 on $26M).   In fact, the amount due to the province will be less than stock based compensation given to executives of the company.

Corridor certainly isn’t complaining about its royalty conditions.  A report entitled “Global Petroleum Survey 2010” by the business-friendly Fraser Institute surveyed the differing investment climates based on corporate responses to royalties and other factors.   New Brunswick isn’t even mentioned, unlike NS, NFLD, Que, Man, Sask, AB, BC and the rest of the world.

The nature of the natural gas exploration business means that once you have committed many millions of dollars to drilling, you almost have to sell no matter what the price.  Selling at a loss at least gives some cash to hold on for better times.

The 3^rd quarter results of Corridor Resources shows each unit of gas (1 million Btu’s) sent through a pipeline all the way to Boston for a $1.46 tariff, the gas sold for $3.50 per unit.  The company lost $2.17  on each unit of energy delivered, and New Brunswick received a 3 cent royalty.   Put another way, the typical home uses 100 million Btu’s to heat it, so Corridor is selling the energy wholesale for $350 per home in Boston and losing $217. The New Brunswick government received the princely sum of $3 per home as a royalty.   Can it get any worse for the government or Corridor?

New Brunswick has the downside of extremely low royalties when the market price is low or production is low, and just plain low royalties when prices are high.

When a tenant can’t pay the rent, he gets thrown out.  Here in New Brunswick, we’ve designed the royalty of natural gas to go so low that nobody gets evicted.   We seem to be happy to give the resource away, just to have a few truckers hauling fill for roads or water for fracking the well.

We don’t seem to realize that we can have both – a decent royalty and jobs.  Horizontal drilling of shale gas is the last hurrah before the end of natural gas.  We can set the terms and companies will eventually come to a viable resource. But it will take creative thinking to devise a win/win situation.

The story of natural gas continues in the next installment of this series.

Roy MacMullin is the energy critic for the Green Party of New Brunswick and a writer on energy topics.

The sale of power assets and The anatomy of a debt

Just when I think I’ve heard it all. It’s hard to imagine a stranger scenario than the present storyline. NB Power was originally being sold to pay down its $4.75 billion debt, but now the sale will be for $3.2 billion. At the same time, Premier Shawn Graham has been running provincial budget deficits consistently and intends to do so until 2014 for a grand total of $3.8 billion. These figures can be found in the public accounts 2009 and the budget speech 2010 on the government’s website.

So, it’s pay down debt and then incur larger debt? What doesn’t make sense here? What most people may not understand is that replacing a funded debt with an unfunded debt is a small distinction that will cost them dearly.

Higher debt means higher taxes at some point. Paying for the new $3.8 billion debt will take about $300 million in additional revenue or service cuts by 2014. That could mean a tax increase of $400 for every resident of New Brunswick or, for a family of 2.2 persons, $880 per year.

Now, are the savings from foregone power rate increases significant enough to counteract the new provincial debt being incurred? Well, the full debt arranged by Premier Graham and the full savings implied by the sale won’t be in place until 2014, so let’s examine at that date. Energy savings for the typical household are 15.92 per cent in year five, or $473, but the additional tax burden for the average family of 2.2 people is $880. So, the net effect of government policy will be an increased tax burden of approximately $407 a year. Not so good an idea. The effect on apartment dwellers is worse, as their energy savings are minimal.

Perhaps you think that large industry, the big winner in the 2010 rate sweepstakes, might contribute towards these taxes. Based on historical precedents, we probably won’t see them at the front of the line to pay any portion.

A previous column mentioned another inconvenient fact – lost revenue streams that could reach as high as $200 million dollars per year would erase the value of this deal, such as NB Power’s “in lieu of taxes” disappearing, reduced jobs at NB Power and related tax revenue. Expressed as dollars per year, that’s another $266 per person ($585 per family).

Politics is the fine art of kicking a problem down the road to the next guy. It is also the art of misdirecting the audience. Lower energy rates here, and nobody notices the higher taxes there.

We have a bad habit of giving a leader two terms. The present occupant plans to get finances under control by 2014, when his second four-year term ends. Any new premier will inherit a fiscal mess to deal with either in 2010 or 2014.

A recent Telegraph-Journal commentary by Toby Couture made an important distinction between energy politics and the larger framework of energy policy. Lacking a rational energy policy, we might be tempted to embrace this deal, and there are indeed attractive elements. However, the numbers don’t support the framing of this deal as a “money saving” experience for residential and commercial customers.

What will likely happen is that the loss of revenue streams will negate the benefits, at least for residential customers. And quite co-incidentally, the premier’s lack of fiscal control will increase net costs to New Brunswickers for taxes and electric energy.

The idea of lowering the cost of energy is fundamentally flawed. Conservation and innovation happens with higher energy prices, and waste occurs with low prices. By choosing this approach, we ignore reducing energy usage for homes, make renewable energy policy next to impossible, and we risk losing control of our energy costs in the long term.

There’s a real alternative out there, and perhaps we can save the best aspect of Shawn’s initiative. More to come..

Develop an energy strategy that serves New Brunswick

Building a new oil refinery with a price tag of $8 billion was never going to be an easy task, but saying goodbye to a project where millions have been already spent must be quite difficult.  Collateral damage may include employees losing work and the investments made by individuals in the community expecting a boom.

There is always a risk of becoming emotionally invested in a concept, whether it’s private or public sector managers.

According to news reports, Irving Oil now sees declining customer demand for gasoline “from 2015 out for the next 25 years.” They didn’t divulge the reason for the decline, despite an expanding U.S. population. One likely cause is the reinvigorated corporate average fuel economy standards (CAFE) in the U.S. gas market and hence in Canada. The new refinery would have added capacity into a declining market.

But looking beneath the surface, rising oil prices in 2007 and 2008 made it clear that we are reaching a tipping point in world oil supply. About 40 of the world’s 54 oil producing countries have passed peak production and are declining. Reduced supply means fewer refineries, as I noted in a previous column from 2007.

Has the present government become so emotionally attached to its self-sufficiency agenda and “energy hub” job strategy that they reject the reality of an oil production decline in coming years with its consequential economic chaos? Or is it just saving face until the next election?

Self-sufficiency, as proposed by Shawn Graham, was fatally flawed from the beginning.

It was based on growing a larger population, a strong industrial economy and sufficient cheap energy, all of which are unlikely in the next decade.

With the passing of the refinery project, the “energy hub” seems an empty shell.

There is talk of an Irving wind power export project, which is like assembling Lego blocks made elsewhere – few construction jobs, and few or no permanent jobs. A related concern: do we want to use the best wind sites for export power rather than local use? A proposed natural gas plant is comparable, giving some short-term construction work but few permanent jobs.

The fallout from the refinery decision means expected tax revenue will not materialize.

Based on reduced revenue expectations, one would hope that the expenditures of government (both capital and ordinary) would be reviewed. As an example, New Brunswick’s latest budget proposes spending $160 million on new technical schools and programs, which were partially intended for training of refinery construction trades.

Demographic forecasts of a 20-per-cent reduction in student population in coming years and with more distance education, would see significant spare capacity in existing“bricks and mortar”institutions.

Does this expenditure still make sense? Perhaps lowering tuition would keep the institutions filled in coming years.

Having misunderstood the threat of an impending energy crisis, it’s time for Premier Graham to return to the basics of government.“Government intelligence” could produce an energy policy that meets our needs.

Should new homes have to meet an energy code? Is Efficiency NB making a serious impact on heating costs for existing homeowners? I recently talked to a hard-working woman in the process of being cut off from electricity. Due to misfortune and remarkably high bills, she couldn’t catch up from the high winter costs. This is real life for the less fortunate among us.

What is the role of wood in New Brunswick for heating homes? Why can’t NB Power reduce its winter peak? Should NB Power be consolidated and work on improving operational efficiency and reducing costs? Should new appliances sold have to meet energy efficiency standards? Since we are facing an impending crisis of very high gasoline prices and energy shortages in the near future, should we be setting a floor price for gas to encourage the purchase of high-efficiency vehicles? Would incentives help us? What about mandatory standards for vehicle mileage or speed limits?

These are but a few of the questions that I would ask the premier. Will he change course? What will be his legacy? His three years of power have shown little progress in setting a new course on energy. Considerable time was occupied in the energy department marketing the “energy hub” idea.  Being a strategy for job generation, it should have been handled by Business New Brunswick.

Who are the losers with three years of an energy policy abyss? The people of New Brunswick, who won’t be prepared for hard times.

But it could be worse, I suppose. Mexico is again facing large decreases in government revenue, as their oil exports declined 14 per cent during the first half of 2009. That decrease of 200,000 barrels a day amounts to $4 billion less revenue for Pemex, the state oil company.

Canada needs lower interest rates

If you look around you can always find someone worse off, and by comparison, you’ll feel better about your own situation. The New York Times recently borrowed $250 million dollars from the Mexican billionaire Carlos Slim. The interest rate: a whopping 14 per cent. Times are tough for the newspaper business, with ad revenue down considerably in the recession and challenges from the Internet. Carlos Slim is betting that the better brands will survive.

Fortunately, the average cost of borrowing for the province of New Brunswick is lower than that, presently 8.3 per cent, down about half a per cent from several years ago, due to the trend of lower interest rates and the rise of the Canadian dollar. Former Premier Bernard Lord isn’t happy with the rising provincial debt strategy taken by Premier Shawn Graham’s government, according to a recent news report. A combination of higher capital spending and lower personal taxes will be financed by debt. The auditor-general indicated in March that the province’s debt could surpass $10 billion by the end of 2013. That’s approximately 52 per cent higher than the legacy of the previous administration.

If the interest rate on the provincial debt remains the same, the annual payment for that $10 billion debt could be $830 million annually, or $253 million more than 2008. To be fair, a higher debt is not necessarily a bad thing, if the money borrowed results in future increased revenue to pay the higher debt interest. For example, if the spending increased economic prosperity, or if our population would increase to provide higher tax revenues – not likely based on our recent history.

There is an historical precedent for this strategy that comes to mind. What country consistently deficit-financed budgets, lowered taxes over the past 30 years and now finds itself in a financial minefield? While Zimbabwe may have a terrible debt to GDP ratio at 240 per cent, the country I was talking about is the United States. It’s at 85 per cent and will hit 97 per cent in 2010.

Canada’s ratio is slightly less than 30 per cent but will rise in the next few years as we follow the Keynesian expenditure bandwagon suggested by the Obama administration.

So where is these story going? Well, the U.S. makes a link between oil prices and the economy. “Another spike in oil would have consequences in terms of world recovery…” explained Steven Chu, the U.S. energy secretary in Rome at a meeting of energy ministers.

Italian Economic Development Minister Claudio Scajola called for an alliance between the private sector and governments to spur investment. “When the crisis is over, the risk of insufficient energy supply exists, and as a result high and unstable prices.”

From these statements, it appears that some governments finally recognize a precarious situation in oil pricing and supply when they see one. There’s a book that just went on my must read list, “Why your world is about to become a lot smaller – Oil and the end of globalization.” Jeff Rubin, formerly CIBC’s chief economist, foresees future recessions caused by oil price spikes in triple digits.

We’ve seen that recessions lead to reduced government revenues. A logical thought progression would suggest that provincial governments could benefit from lower borrowing rates to help adjust to difficult times in coming years. How could this be done?

The mandate of the Bank of Canada could be enlarged to include purchase of provincial bonds as deemed advisable. Perhaps these funds could encourage an off-oil agenda by conservation and green power construction. At the moment our central bank provides assistance to chartered banks and administers national monetary policy. The short term funding to chartered banks can be as low as the bank rate, presently .25 per cent.

One intent of monetary policy is to limit inflation to around 2 per cent and definitely avoid deflation. Over the past few years, the growth in the money supply has varied between 7 per cent and 12 per cent and depending on which money supply indicator you use, it increases by a double digit and sometimes triple digit billions each year. A portion of this money could be used. The key question is, how the chartered banks would view this type of change?

Simply reflecting on a statement from Senator Dick Durbin of Illinois brings doubt: “we’re facing a banking crisis that many of the banks created..  are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

In Canada, Finance Minister Jim Flaherty’s proposed revision of credit card law doesn’t lay a glove on the chartered banks. There’s no cap on maximum interest rates.

Let’s see if I’ve got this right. The banks have access to billions of government capital at .25 per cent, your deposits for virtually nothing, and they loan it out to us at 19 per cent interest? That’s quite a spread to work with, Jim.

The banks may not own Jim Flaherty or Stephen Harper, but they certainly have a good hammerlock going and didn’t someone just cry uncle.

We all have Alzheimer’s when it comes to health care

Each time I go to a medical clinic, it’s like they don’t recognize me and have never seen me before.  And the hilarious part is I don’t know them either.   This is not a huge problem as I’m an extravert and make friends easily.  However, I really do feel strange asking someone I don’t know to give me a prostate exam but that’s your life when you don’t have a family doctor.

Today, I can’t say the health system is working for me.

The documentary by Michael Moore entitled “Sicko” compares the health systems of the US, Canada, the UK, Cuba and France.   Moore’s analysis makes for good entertainment and perhaps opens the eyes of a few American viewers on the deficiencies of their health system.  His portrayal of the Canadian system is generally on the mark although there are inaccuracies with emergency room wait times and access to primary care.

Statscan figures show that 8.2% or 61,500 New Brunswickers don’t have a family doctor.  We presently have 700 family doctors or 1 for every 983 people.

The Minister of Health Mike Murphy plans to hire another 15 doctors, which would be 1 doctor for each 4100 of the 61,500 citizens presently without medical representation.  Hey, what’s wrong with the math here?  Are we hiring enough to solve the shortage or just enough to lower the political heat?

The annual health budget for New Brunswick is $2,933 per person or $2.2 billion.  As a country, we spend about 9.8% of the Gross Domestic Product (GDP) on health care (NB is 8.8%).  We’re in the middle of the pack when looking at what some countries spend; Ireland –7.2%, France – 11.1%, Germany – 10.7%, with the US being considerably higher at 15.3%.

What has concerned all national governments over the years has been the continual increase in the cost of health care above the rate of inflation.  In other words, the health budget chews up more of the government revenue leaving less for other departments.  The US system is trending towards 20% in coming years and I don’t think that country or New Brunswick can or will accept costs of that magnitude.

The increase in costs comes from more high technology (MRI’s, etc) and what is often called “mission creep.”  That’s a change in our expectations of what the system can provide.  Only a number of years ago, open-heart surgery or hip replacement wasn’t that common.   Longevity of people is on the rise and a significant portion of the budget is spent on people who will live less than a year.

Even though the Canadian system has a lower cost due to reduced administration, it is encouraging to see the Health Departments 2008 – 2012 plan.  It’s a road map for providing better health care with less cost.  A notable initiative is the use of computer technology to manage patient care (one patient, one electronic record).
Consolidation of regions and non-clinical services should provide less back office cost and focus money back on patient care.  This saving is approximately 1% of the total health budget or $20 million per year.

It appears that efficiencies can give us some respite in increasing costs, but it will not be enough.  Are we prepared to set an upper limit on our health costs to perhaps 11% of GDP?  That would be another $550 million per year in New Brunswick.  It might eliminate wait times for surgery, provide more MRI’s and the like, but what else in the overall provincial budget would we cut?  Or would we be prepared to raise taxes to live longer, healthier lives?

But perhaps our future won’t be increasing budgets for health care but cutting them.  The fragility of our financial system to something as ridiculous as sub-prime mortgages shows that the economist’s assumptions of perpetual growth is not entirely certain.  The decline of the world’s commodities like oil production in the near future will have a profound effect on GDP.  It will shrink the tax base that supports the health care system we so cherish.

Should we be planning for a future that is less rosy than the optimists of this world predict?   As an aside, there are 45 million Americans who could be looking for a family doctor in Obama’s insured world.  Maybe I’ll get a doctor before they come looking for 45,000 doctors north of the border.  I doubt they’ll be talking to Raoul Castro about Cuba’s surplus medical talent.

What will you burn this winter?

How are you going to heat your home this winter? If you’re heating your house with oil and about 25% of New Brunswickers do, you may have noticed that the regulated price of fuel oil is up to a maximum of $1.43 per liter. That’s quite a change from June 2007 when it was 57% lower (91 cents per liter).

What would be a good forecast (guess) for next year’s price? At this moment the world supply doesn’t quite meet demand so the price is trending upwards. It may reach as high as $1.80 per liter and perhaps as low as $1.20 if we get very lucky.

First of all, the recent announcement by the Saudis that they would open the tap by 500,000 barrels a day didn’t drop the price. The increase is only ½ of one percent of the daily supply, it may be heavy crude that not all refiners want, they probably can’t turn the tap any further and certainly no one else can. It may be time to review your options.

Could your house be more efficient and use less energy? Perhaps an energy audit by Efficiency NB is in order. If you could save 25% on your costs, it would stabilize your bill for a short time. They’re waiting for your call and want to help you.

I like to use examples and real numbers to illustrate costs. Let’s assume a home that takes 80 million BTU’s annually to heat. Your house may use more or less fuel depending on size, insulation level and other factors. The costs of different methods are:

Oil – With an 85% efficient furnace, 94 million BTU’s are required, which is 2580 liters. The cost last year (at $.91) would have been $2,347, at $1.43 it would be $3,689 and next year it could be $4,644 or more. Some people lock in their oil rates and this can be helpful when rates are rising. Adding up your liters from the fuel company bill can let you know how your house compares. In the next five years, the cost of fuel oil will increase greatly and make it too expensive to use to heat your home. The only question is how quickly does that happen and what can you do?

Electric –80 million BTU’s divided by 3413 is 23,439 kWh’s, which at the second block rate of $.0861 would cost $2018 per year. The rate structure is changing soon and the second block will be same or higher than the first block. As well, NB Power burns a lot of heavy oil, natural gas and coal, which are all rising in price. When the retrofit of Lepreau is finished in 2010, the $1.4 billion cost will be part of the annual debt repayment and cost roughly $140 million per year. That’s a 14% rate increase.

But using oil, natural gas and coal to create electricity to space heat is not as efficient as burning at the source and should be discouraged, perhaps by installing a carbon tax on the fuels of NB Power that create CO2. Electric heat also causes a peaking problem, which cause additional power plants sooner than if other heating options for residences were used. It’s an unfortunate fact that low electric rates attract heating customers and fear of public revolt prevents rate increases to properly price electricity for conservation, environment and future energy shortages.

Natural Gas – The gas distribution network is new and not yet everywhere in New Brunswick. In fact, will it go beyond the major centers in the golden triangle? Given an 85% efficiency furnace, we would require 94 million BTU’s or 99 GJ. For those converting from electric to gas, the cost of the Enbridge SGSRE rate would be $1872 per year ($1401 for the gas, $279 for delivery and $192 service charge). For those converting from oil, the SGSRO rate applies and you would pay $2557 ($1401 for the gas, 965 for the delivery, and 192 service charge). Enbridge prices their delivery charge based on the competition and loses money on electric heat customer conversions to build a customer base. Because natural gas prices track oil to some degree, we can expect the gas price to climb rapidly so that it will be higher than electric at some point. Gas supply is declining in North America so LNG from offshore countries will be essential as a supply source. How secure and price stable are those countries?

Wood heat – The old standard for many people is wood heat. In this case, with a 70% efficient stove, we would need 114 million BTU’s. A cord of hardwood would provide at least 20 million BTU’s to be conservative, so we should buy 6 cords. If it costs you $200 per cord, then that is $1,200 each year. There is a considerable investment in time and energy involved with wood – stacking, moving it to the stove and tending the fire so it’s not for everyone. The use of an EPA rated stove is recommended for round wood as it reduces the smoke to 10% (2 – 5 grams / hr) of previous stoves.

Some prefer the convenience of wood pellet stoves, which have automatic feed mechanisms. They could be delivered by truck and blown into a container in the home as it is done in Europe. Briquettes are another option providing consistently dry wood that burns with little pollution, no insects and is a stackable product. Manufactured items like pellets or briquettes are more expensive than split round wood.

I’ve considered heat pumps to be in the electric category as they are essentially electric in the coldest weather. Geothermal systems provide low annual costs, but are very expensive in the front-end installation resulting in fewer users. Solar collector heating as well hasn’t yet developed a prime time audience.

Is there a constructive role for government in assuring warm homes in this province? Nobody wants to see people freeze in the dark.