Uncategorized

Diversions, deflections and misdirections

While business advocacy groups such as the Canadian Taxpayers Federation and pablum peddlers like Corus Radio’s Bill Good criticize TransLink, these small distractions enable wealthy participants in the economy to divert real money from all of us, rich and poor.

British Columbia’s energy policies provide the best illustration.

The following information rich item was offered as a comment here on Screw the needy, our money goes elsewhere and I repeat it in a featured place. I also encourage readers to add the commenter @trivcap to Twitter subscriptions. BTW, I’ve not paid direct attention to Robyn Allan’s work but I respect the admirable work she is doing. I wish more independent professionals had the courage to speak out in similar fashion.

“Probably the most significant impact of both Enbridge exporting tar sands oil and BC LNG exports is that these exports to Asia are going to also increase oil and natural gas prices paid by Canadian and BC consumers. These extra costs to Cdn/BC consumers are not factored into the studies submitted by the project sponsors.

Robyn Allan, the former president of ICBC, retired, and also an economist, has done great work picking apart the Enbridge studies, the LNG studies, etc. You may not be surprised to know that, for eg, in the case of the 5 studies done on Enbridge, most rely on the same flawed statis input/output econometric models (so different authors, same info/conclusion, according to Allan; the quality of work seems about equivalent to the frauds we used to seek out to short in my old job). You can find her work at http://www.robynallan.com. She also gave a great video presentation that is online somewhere…I cant find it right now. She’s worth talking to if you havent already.

“After I saw Allan’s work I got in touch with my Lib MLA to ask whether the government had done any studies to determine whether BC natural gas prices would increase as a result of the LNG exports. It took more than a week, but the office emailed me back and say that their studies show BC natgas prices could increase 11%. I was surprised they admitted even that.

“I think it’s a gross understatement of the potential price increase: the 3 export licenses are for 3 bcf/day, which is three times BC’s current daily consumption (our natgas market is continental, but there are regional contraints that make it so that natgas is not as fungible as gasoline; ie these exports will affect BC most directly), so we’re talking enormous – 3x domestic consumption – export quantities.

“Second, I believe there’s a fairly good chance that the shale gas boom is a bit of a ponzi scheme -it will flame out, or will not achieve the kinds of production forecast by the producers (see for eg Chesapeake Energy and its recent problems – Rolling Stone has done great work in the company -…it’s a bit of a Canary in a coal mine as the largest lease holder of shale properties).

“Third, Asian prices are approx 3x-5x higher than BC/North America natgas prices; arbitrage will create tremendous upward pressure on domestic prices in BC; fourth…given the enormous planned increases in oil sands production, which is to a large degree reliant on natgas as feeder fuel, there’s a huge built in domestic increase in natgas demand; finally, conventional natgas production has peaked in both the US and Canada (years ago)….the only reason we’re going after the shale is that’s what’s remaining….so our shale gas production has to grow not just to supply export markets but also to replace 5%-10% steady declines in our conventional natural gas production – it’s a touch challenge, and one we’re unlikely to meet. It’s all a recipe for unimaginable disaster – underused export infrastructure, higher prices for natgas across BC and higher oil prices across Canada.

“@trivcap on twitter

“ps: i’m sorry if you’re already well acquainted with Robyn Allan. I cant remember where i got connected to her work…I apologize if it was here but a quick search didnt show a reference to her. Also apologize for the run on writing…it’s late and Im tired. Cheers. Great work!”

Categories: Uncategorized

2 replies »

  1. Norman…I found the video presentations Robyn Allan, former ICBC president and retired economist, gave on Northern Gateway:

    http://j.mp/L6dYe7 at SFU

    http://j.mp/KHjsdP at on of MP Joyce Murray's “Breakfast Connections” meeting

    fyi: Allan engaged herself in this work, as she says, not because she has any direct interest in it or was paid,….she and her husband are comfortably retired in Whistler; her son was visiting her last fall and she noticed he was pre-occupied; they got into a discussion of Northern Gateway; she had of course been aware of the project but as to the economic case she told her son she'd have to get back to him. This is her getting back to him.

    cheers

    @trivcap

    Like

  2. This is not new. The province demands SkyTrain or light-metro because of the billions of dollars involved, that is, the billions of taxpayer's dollars they can divert to their political friends legally.

    SkyTrain can cost over 10 times more to build than light rail, depending on the amount of engineering needed.

    With SkyTrain, the cement companies have an orgasm at the money spent on concrete. Architectural, Engineering, and Legal firms rub their hands with glee, when a new SkyTrain line is built. Unions smile at all the new union employees are hired to build the SkyTrain viaduct and tunnels.

    Building SkyTrain means a taxpayer's supplied bonanza for all sorts of friends of the government, both the Liberals and the NDP.

    The LRT is more efficient to operate and has proven to attract more new customers than SkyTrain is quietly forgotten with the mass of hype and hoopla spewed from the main stream media.

    So, when someone glad hands the Canada Line (which isn't a SkyTrain at all and can't operate on the SkyTrain Lines), about three quarters of the cost, went to friends of the government for building a grossly over-engineered rapid transit project.

    The real cost of the Canada Line is about $2.5 billion ($4.5 billion including debt servicing over 30 years), thus about $1.875 billion more than what should have been paid, was paid out to companies, mostly friends of the government on a grossly over-engineered transit project.

    Gateway is more of the same, only on a massive scale!

    Like

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