How do the Conservatives rate on Energy Policy?

Political campaigns are remarkably like war.  Lots of resources and blitzkrieg attacks disorient the other side.   To re-phrase von Clausewitz – “politics is war by other means”.   And it’s starting to get rough out there.   Political opponents are demonized (scary, not ready to lead, etc. ) so that any tactics are permissible.

But let’s look at energy policies.  What are the leaders of each party thinking about?

Stephen Harper is a master tactician of the political game.  Some say he’s got control issues or perhaps he just uses “enhanced management tools.”  He spots weakness and dive-bombs the opposition with attack ads, campaign or no campaign.  Take no prisoners is a description that comes to mind.  Hey, who knew that Karl Rove lived at 24 Sussex Drive? But you can’t argue with success.  He’s had the opposition on the run for some time.

Energy costs are the sword of Damocles hanging by a horsehair, and will have serious consequences for each of us.  However, this is not apparent when viewing the Conservative website. Of the eight key priorities on the Conservative website, energy doesn’t make the list.

Our PM has been using short-term tactics and guerilla warfare to build support and destroy enemies.  His long-term vision is less clear.  One of his greatest successes has been the fee on gas-guzzlers and the ecoAuto rebate.  The rebate was cancelled after the 2008 model year.  The relatively low program cost of $150 million couldn’t have been the cause of its demise.  Was it GM unfriendly and had to go?  Luckily, he retained the fee on gas-guzzlers.

His need to retain or increase his power will always trump good policy. The diesel tax cut is a good example.  Stephen is an economist and knows that lowering the price of a product encourages the use of it.  Two cents will lower the cost of fuel by 1.5%.  Since fuel is only one third of transportation cost, the actual reduction in product cost will be ½ of 1% if it’s passed on to consumers.  Since most food comes from the US, this only affects transport within Canada.  So, there’s virtually no effect on your head of lettuce from California.

If you own a diesel car, it will save you $24 a year. This policy will cost the treasury $600 million a year, have questionable results, but it will buy votes.

The National Energy Board recognizes that conventional oil is declining in Canada and that imported LNG will have to take the place of domestic natural gas production in coming years.  Export applications do not have to consider whether Canada has adequate natural gas reserves, as was the case before 1985. Only tar sand development, which has a low net energy output, is on the rise.  Should we be proud of the ecological fallout in Alberta?  Will other countries eventually ban the import of these products or penalize us for carbon output?

Does Stephen still believe that Canada is an energy superpower? What was his purpose to promoting this view of Canada’s energy resources?  Should Canada have a national security policy on energy with actual physical reserves?  Should there be an east-west pipeline through Canada?  What about an east west DC electric transmission line?

An important question remains unanswered: How will we heat our homes in the future at reasonable prices? Those with oil heat in the Atlantic Provinces are in for a rude awakening.  Quebec has cheap electricity and Ontario has natural gas, for the moment.  The votes of Atlantic Canada make little impact on the national scene.

Although the price of oil is now lower than its peak in June, it will rise again in the near future as world production starts a decline in roughly 2010.  The investments required to meet the energy challenges of the 21st century will take a significant number of years to achieve.  We should have started decades ago.

How will we get around as fuel becomes very expensive and is rationed?  How will our economy and jobs survive the shock of energy shortages and prices?  How does Stephen feel about conservation of energy?  Ignoring the problem of peak oil doesn’t make it go away.

My rating given to Stephen Harper for a lackluster energy policy – F.    His lack of attention and understanding of important energy issues is counterbalanced by his desire to spend money on boondoggles like patrol vessels for the arctic.  And $490 billion over the next twenty years for the military to participate in overseas adventures with the US.

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/