WHY CANADIAN ECONOMY IS IN DANGER OF SLOWLY SLIDING IN TO A SECOND WORLD ECONOMY

Statistics Canada’s figures released on 30 May indicated that Canada’s economic growth slowed to an annual pace of 1.2 per cent in the first three months of 2014. It was the weakest growth since the fourth quarter of 2012. As per Statistics Canada, the gross domestic product of Canada in the first quarter of 2014 marked a deceleration from the 2.7 per cent of the final three months of 2013.

Much of the above is being attributed to severe winter which apparently impacted the overall domestic demand, or spending by consumers, government and business. Harsh winter conditions in US are also being cited as one of the contributing factors apart from drop in housing construction.

            

The weaker first quarter, however, hasn’t changed the 2014 outlook for some observers. A lot of hope is being pinned on US economy to bounce back and businesses in Canada loosening their purse strings to invest. However, some analysts fear that domestic demand are likely to remain under pressure as debt-laden households constrain growth in consumption, housing constructions slows, and government spending remains capped by tight fiscal policy.

But the abovementioned fear does not recognize the elephant in the room – the tardy pace of the exports and the ominous circumstances threatening to crush the expansion potential of major components of Canada’s export resource, i.e., oil sands (and yet to be tapped gas for export as LNG).

People who are familiar with the basics of Canada’s GDP know the significant contribution oil makes to Canadian GDP and the huge service sector it supports (remember, service sector is one of the two main components of Canada’s GDP). The Canadian Association of Petroleum Producer’s 2013 Crude Oil Forecast, Markets and Transportation report forecasts Canadian crude oil production will more than double to 6.7 million barrels per day by 2030 from 3.2 million barrels per day in 2012. This includes oil sands production of 5.2 million barrels per day by 2030, up from 1.8 million barrels per day in 2012.

But the situations that are surrounding oil sands today seem almost poised to strangulate the lofty expansion plans set forth by the industry. One of the main stifling reasons being lack of infrastructure to export the bitumen out of Alberta – the various proposed pipeline projects meant to solve this situation are getting increasingly bogged down in litigations, controversy and delays. One of the casualties of this disheartening situation was Total’s Joslyn North project which was recently put on hold for an indefinite period.

Over on the LNG export side of things too, the portents don’t inspire optimism: the tax regime of the Province (BC) is yet to be finalized, LNG supply economics is getting squeezed due to the recent gas supply deal between Russia and China and the issues with First Nations not settled yet.

The horrifying scenario of oil sands industry getting stifled and LNG projects not getting off the grounds (or just one or two LNG projects getting set up at best) is that Canada’s revenues will get severely impacted in which situation hundreds of thousands of jobs will not get created which will in turn mean opportunity lost in the boost the service sector would have got.

As more people get jobs and earn more, they spend more and, as this work force grows, they need more of everything - from Tim Hortons to pickup trucks. This leads to more jobs and higher wages in other sectors and other regions of the economy, so everyone benefits.

The knock-on effect of stifling of the oil sands (and the proposed LNG industry) will be so severe on the overall Canadian economy that many features of the first world economy that Canada is would get severely disrupted: health care, education, infrastructure, seniors’ care, all these sectors would be badly affected. What would that mean? It would mean Canada would slide from being a first world country to second world nation for all intents and purposes. Is this what Canadians would like for their children’s future?

Can something be done about it? Yes, sure but Canada does not have the luxury of time. The Canadian Federal and the Provincial governments would have to resolve the issues that have the potential of strangulating the oil sands and the LNG industry. The governments need to deal with the First Nations (FN) on top priority basis. The FNs are economically better off than before and smarter too – they now know better how to leverage off their so-called treaties with the Crown and wangle bigger slices of the pie.

The FNs are getting publicity savvy too – the latest example being to get Desmond Tutu to lecture Canada on climate change. What should be raising the alarm bells for the Federal and Provincial governments is that people like Tutu are not lecturing the other heavy oil producing countries nor even lecturing his own country (South Africa) on coal based power plants but comes almost half way around the world to lecture Canada.

This means that there is probably a sinister move to throttle Canada’s oil industry (which for all practical purposes is predicated on oil sands) and thereby deal a crippling blow to Canada’s economy and its economic clout. This is indeed cause for worry and the Canadian government with all the resources at its disposal, namely, CSIS and CSEC, should investigate and take necessary protective measures.

The global economic situation stands at a very critical juncture where economic outlook is still very uncertain and recovery mechanisms highly fragile. At such a juncture, Canadian economy is also walking a tight rope. A slight push or shove can potentially send Canadian economy on downward slippery slope, some forces seem to be wanting to do that. It is up to Canada (its government and the peoples) how it handles this and succeeds in continuing to be a vibrant first world nation. Canada would need all the speed, alacrity, nimble-footedness, resilience, determination and innovativeness to come out on top. 

CANADIAN ECONOMY’s RESTORATION: TIME RUNNING OUT, CANADA NEEDS TO ACT FAST

There were some important nuggets to be picked up from Bank of Canada Governor’s address to the Saskatchewan Trade and Export Partnership in the last week of April:

·       One of the most important forces powering Canada’s economy currently is the long-term strength in global prices for resources; and, for Canada, oil stands out. 

·       As people earn more, they spend more and, as this work force grows, they need more of everything - from Tim Hortons to pickup trucks. This leads to more jobs and higher wages in other sectors and other regions of the economy, so everyone benefits.

·       Diversifying Canada’s export markets is important to future growth and resilience.

·       Canada’s is an export-driven economy. Canadian economy needs to shift gears and for exports to lead again.

A new report from the Conference Board around middle of May put Canada's three oil rich provinces on top of the world in terms of economic performance. The report places Alberta, Saskatchewan and Newfoundland -- the three oil producing provinces -- in that order as the top performers with A-plus scores across indicators such as per capita income, economic growth, unemployment and productivity. They are the only jurisdictions rated to have A-plus economies. Alberta is "class leader," says the report with 2013 per capita income that was $10,000 higher than Norway, the top-ranked country in that indicator. For the rest of the country the news was not so stellar.

What the above narrative clearly suggests is that while the 31 subsectors (of Bank of Canada) of the non-energy export sector need to be promoted with suitable strategies, the increase in production and export of the energy resources, i.e., oil and gas is vital from the point of view of Canadian economy’s restoration to good health in near term and sustaining it in the long term.

However, the growth of the aforementioned two energy resources appears to be getting bogged down in an endless loop of consultation, opposition and procrastination. As Leo De Bever, chief executive of Alberta Investment Management Corp., the largest wealth fund in the country with assets under management of $63-billion, says, “We find it easier to pay somebody not to build something rather than actually build it. There has been a shortage of resolve to build projects.”

De Bever was alluding to opposition to various pipeline projects and oil sands projects. To compound issues there is tardiness is formulating policies that the investors need to know urgently to firm up their investment decisions. For example, investors (Petronas, Shell, Chevron et al) are eagerly waiting on British Columbia’s final decision on the tax regime. As well, the investors are concerned about wage inflation, the tax environment and about Canada’s ability to actually deliver in a timely fashion on environmental assessments.

Besides cost-competitiveness of doing business in Canada (e.g. British Columbia) being crucial, time is of the essence as investor companies are mulling similar projects in Australia, East Africa and the United States. Petronas led consortium is hoping to set sail its first shipment of LNG by 2019 before a number of Australia’s brownfield projects start ramping up. Analysts say that some South Korean investors are already gravitating towards U.S. projects.

Then there is the proposed long term multi-billion dollar oil and gas agreement between Russia and China which Russia’s president Putin is going to pursue aggressively. If this agreement gets concluded, it would mean China’s financial capacity and need to import these resources from other countries like Canada would get that much reduced. Which would in turn mean the companies intending to invest in Canada may like to change their minds.

On the flip side, the Ukraine crisis has got the Europeans to clearly articulate their desire to source their long term energy needs from Canada (and US). This is a godsend opportunity for Canada to latch on to and expedite the necessary approvals process associated with oil and gas and pipeline projects.

Just to give an idea on negative impact of ‘endless cycle of consultations’, as oil sands projects stall and crawl, Canadian producers have lost as much as $30-billion annually due to discounts on their blend of crude in the past few years. While spreads have narrowed over the past 12 months there is much more at stake. According to energy consultancy IHS CERA if oil sands production reaches 3.8 million barrels per day in 2025, the bitumen’s contribution to Canadian GDP could nearly double, and a third more jobs could be expected.

“Between 2012 and 2025, oil sands’ contribution to Canadian GDP could grow from $91-billion to $171-billion,” the IHS estimated in a report published this year. “This would be like adding an economy the size of Saskatchewan today to Canada by 2025. Oil sands could also add over one-quarter of a million more jobs, contributing to 753,000 jobs in Canada in 2025.”

To address the concerns around environmental impacts of oil sands development, Alberta already has in place stringent measures and more are expected. This should blunt criticisms brought forth by the environment-activists. As regards carbon emission issue, an independent group of scientists/experts are challenging the White House National Climate Assessment (NCA) issued in early May. In their view, the foundation of the NCA is a "masterpiece of marketing" that crumbles like a "house of cards" under the weight of real-world evidence.

And, in regard to the issue of opposition by the aboriginals to the various oil and gas and pipeline projects, the legal experts say that as for aboriginal communities, they need to recognize that their right to be consulted doesn’t negate the government’s power to make decisions.

Summary: Energy (oil and gas) is a vital component in the context of restoration and sustainability of Canada’s economy and standards of living associated with this first world country. The companies in Canada, who wish to implement the various oil and gas and pipeline projects, and the Federal and the Provincial governments must expedite the approvals’ process. The window of opportunity for Canada is NOT going to be there for ever, therefore, it would be a criminal folly if they fail to capitalize on the opportunities presented to Canada by the global situations.

JIMMY CARTER, DESMOND TUTU ET AL OPPOSE KEYSTONE XL PROJECT – IS IT CASE OF SENILITY OR EFFECT OF SOME KIND OF CRAVING AND/OR MAMMON?

The Keystone XL pipeline project approval circus is getting more farcical with former US president Jimmy Carter weighing on this project. Carter joined some Nobel Laureates– Archbishop Desmond Tutu is one of them – in issuing an open letter to US President and Secretary of State seeking rejection of the pipeline.

Carter and the other writers have expressed their opposition in quite vehement terms; among other things saying that “Keystone XL project is the linchpin for tar sands expansion and the increased pollution that will follow, triggering more climate upheaval with impacts felt around the world.”

Let’s try to understand what these folks are trying to say. So, they are saying that this one pipeline – Keystone XL – which is supposed to transport 830,000 barrels of bitumen per day, will cause so much pollution that it will trigger climate upheaval with impact felt around the world?!!! Really?!!! Can anyone in right frame of mind make such a ludicrous, nonsensical, irrational statement?

Then why did Carter and others allowed their names to be used for such a ludicrous, nonsensical, irrational assertion? Seriously, why?

Is it senility or something else that has afflicted them? After all, one assumes that Carter et al should have this much of commonsense to realize that just one pipeline carrying less than a million barrels of crude per day which is just about one percent of current crude oil production worldwide cannot by any stretch of rational sense ‘trigger climate upheaval’. It is flat out nonsense. Yet, these so-called intellectuals have affixed their name to such gargantuan irrational, foolish statement.

Of all the persons whose names are listed in the open letter, Carter should know best the enormous advantage US stands to gain through STRATEGIC partnership with Canada of which Keystone is a major component. Advantage of being energy giants! Imagine the scenario wherein US and Canada can stand together as stable, dependable energy superpowers with massive amount of oil and gas at their disposal for export to the world in today’s global uncertainty – uncertainty in gas and oil supply from regions in Europe, Middle East, Africa. But Carter overlooks all this! Why?

Do the people who have written this letter really believe that by killing one pipeline they will make any meaningful impact in regard to the so-called pollution problem? If they do, they are dumb-asses. If these people had raised their voice against global use of fossil fuel that would have still made some sense at least. It is a different discussion though the theory propounded by some scientists, that the so-called CO₂ generated from combustion of crude oil is responsible for ‘climate change’, is total balderdash and piffle.

In the letter there is another assertion that is completely dubious. This is regarding the so-called impacts on First Nations of Northern Alberta – apparently their water, air, land and human rights are being ‘devastated’ by growth of oil sands. It appears that this kind of statement is drafted by someone who has no clue of the reality prevailing in Northern Alberta. Nothing but some sensational stuff meant to stir emotions of those unfamiliar with the ground realities!!

So, coming back to the question: what made these people to jump on this Keystone XL bandwagon? Do they also want to be included in the post-scripts of climate change ‘crusade’? Or, maybe they want to have their names included in the list of knights in shining armor who saved the world from some ‘climate change apocalypse’? On this point of climate change it must be mentioned that unfortunately the world is currently in the grip of a massive hoax predicated on climate change – a hoax similar to what history saw in Galileo’s time when people thought sun goes around earth.

So, if it’s true that the above cited letter writers are unable to control their inner cravings to have their names included in a so-called climate change crusade, well, then that can be said to be stemming from senility (or some psychological disorder) in some way or the other.  It is sad that these people failed to realize that campaigning against just one pipeline is totally meaningless – killing one pipeline will not make any dent whatsoever. If they had to really achieve anything substantive, they could have raised their voice against something on global scale, say, against all heavy oil – be it from Saudi Arabia or Venezuela or US or China, not just against Canadian heavy oil.

So, now the pressure is on President Obama. On one hand former president Clinton, Warren Buffet et al have reportedly supported Keystone XL pipeline apart from host of current Democrat Senators. As well, a former National Security Advisor of US testified before Senate recently that Keystone is INDEED in the national interests of US, rejection of Keystone would be playing in the hands of Putin.

People may be reminded that, unfortunately, Obama was ‘framed’ by the shrewd Europeans in his early days of presidency by very cleverly putting the albatross of Nobel Peace Prize around his neck. And, now Obama is continually getting crushed under its weight in the context of leaving behind a legacy.

Will Obama buckle down under the weight of misplaced phantom notion of legacy and reject the pipeline or think of larger long term interests of United States and approve the project? Perhaps Obama would care to remember that one of the signs of a person’s greatness and statesmanship is to subordinate one’s own hankering after greatness to the greater good of the people and the world. What greatness material is Obama made of?

LATEST CLIMATE CHANGE HOOPLA – CASE OF SOME VISUALLY CHALLENGED FOLKS UNSUCCESSFULLY TRYING TO FIGURE OUT AN ELEPHANT

Ever since the latest report of IPCC has been presented some people, including the UN and IMF, have started jumping up and down in some kind of inexplicable frenzy. There are talks of gloom and doom – as if the world will come to an end within few decades if something drastic is not done soon. However, if one keeps aside one’s emotion (i.e. irrational state of mind) and rationally analyzes the information, people are basing on for their doomsday scenarios and other information germane to so-called climate change topic, one would be taken back.

A question that will come up will be: Have the scientists been able to figure out totally as to why the phenomena known as La Nina and El Nino behave the way they behave? The honest answer is that scientists still DO NOT fully understand these phenomena – the various parameters that affect them, the interactivity of the parameters, the why’s and wherefore’s of the parameters’ influences and so on.  Just so people know, La Nina and El Nino profoundly affect weather patterns for a given year.

From the above question, the next question will arise: If the scientists have not been able to fully fathom the aforementioned two very important natural phenomena, how on earth can they claim that they have figured out climate change phenomenon in totality? Very commonsensical question indeed! It brings to mind the story in which some visually challenged people who were trying to figure out an elephant made very inaccurate assessments because they were visually impaired – one person who touch the leg called it a pillar, one who touched the trunk called it a thick rope, and so on they went.

Exactly in similar manner some so-called scientists are making some very apocalyptic assessments in regard to planet earth’s future vis-à-vis climate change without having understood the REAL causes behind climate’s behavior. Based on the analogy of visually challenged men unsuccessfully trying to figure out an elephant, the idea that climate change poses an existential threat to humankind can be classified as preposterous and scare-mongering.

The current climate change doom-n-gloom monkey dance is very much akin to a misinformed notion that used to prevail in Galileo’s time when a sizable community of so-called scientists (perhaps almost all) used to think that that the sun goes around the earth. In fact, it was a heresy to say anything to the contrary, and Galileo was persecuted when he challenged the prevailing view.

At the current time if anybody challenges the climate change postulates, its apocalyptic prognostications, that person is ridiculed. This is very reminiscent of Galileo’s time. The hoax perpetrated during Galileo was sun revolves around earth; the current climate related hoax being bandied about relates to an ‘alarming’ change taking place in climate and it is all due to the villain called carbon-di-oxide (CO₂).

The climate change doom-n-gloom proponents ascribe all the apocalyptic scenarios to CO₂’s level in the atmosphere. It will take many pages to go in to the analysis of the parameters used by doom-n-gloom scientists (and its inadequacies), suffice it to say that putting all the blame on CO₂ is laughable because the theory of ‘man-made climate change’ is an unsubstantiated hypothesis – water is a much more powerful greenhouse gas and there is 20 time more of it in our atmosphere (around one per cent of the atmosphere) whereas CO₂ is only 0.04%.

The climate change doom-n-gloom scientists cite the freakish weather incidents to bolster their case. In this context one noted scientist said “The temperature of the earth has been going up and down for millions of years, if there are extremes, it’s nothing to do with carbon dioxide in the atmosphere, it’s not permanent and it’s not caused by us……. “The reason records seem to be being frequently broken is simply because we only started keeping them about 100 years ago. There will always be some record broken somewhere when we have another natural fluctuation in weather.” “It’s absolutely stupid to blame floods on climate change.”

The fact of the matter is that there is an agenda behind this climate change hoopla. Again, to quote the above scientist “If you talk to real scientists who have no political interest, they will tell you there is nothing in global warming. It’s an industry which creates vast amounts of money for some people.” So, there you go!

It has become almost a fashion for world leaders to parrot the climate change topic and pontificate without comprehending the subject in its totality. May be it provides an easy diversionary angle to their spiels. But they need to be enlightened and told not to repeat the lie and hoax situation of Galileo’s time. 

At any rate, it’s time that people who understand the game behind the nefarious, agenda driven hoax of ‘climate change’ circus should unite and lay out for the general public the truth behind climate change in easy to understand lingo.  It will not be easy to stand up to the ‘organized mob’ of climate change doom-n-gloom proponents but then Galileo stood against the ‘organized mob’ of his time and proved them wrong. The Galileos of the present time would have to rally together and bring out convincing material to prove the 21^st century hoax perpetrators on climate change wrong. It would be a hard, long road that would require perseverance. But truth shall prevail ultimately!

HOPE OIL SANDS DEVELOPMENT WILL NOT BE SACRIFICED AT THE ALTAR OF CLIMATE CHANGE BLATHER

The buzz word ‘climate change’ was used by President Obama in his joint press conference with Canada PM Stephen Harper during the recent Three Amigos meeting in Toluca, Mexico. Obama was responding to question on Keystone XL pipeline.

In the Liberal Party of Canada convention held in Montreal in the last week of February, the Liberal leader Justin Trudeau also used this buzz word in the context of development of Canada’s natural resources (clearly the allusion was toward oil sands development).

While Obama habitually talks about climate change in the context of Keystone XL pipeline project as if climate change is on the line due to this project – this of course is a preposterous correlation, self-intuitive to someone who is endowed with reasonable amount of intellectual faculties – it is not clear where Trudeau stands on the above correlation. But Liberals also have a habit of mentioning ‘environment’ and ‘climate change’ in a parrot-like manner in their speeches.

Now, let’s see whether the phrase ‘climate change’ is appropriate to use in the context of some different weather conditions seen in some parts of the world, for instance, polar vortex which brought quite cold temperatures in parts of US not experienced in many years. So, if a certain winter becomes relatively colder or a summer is relatively hotter than usual, does it provide sound basis to trumpet the phrase ‘climate change’?

It is well know that the meteorological conditions, including temperature, precipitation, and wind, that characteristically prevail in a particular region, i.e., climate, are known to be have been different (more severe/less severe) during certain year or years if one looks at hundreds of years data for a given region. So, the point is that: differences in meteorological conditions in a certain winter or summer should not be confused as climate change, rather the more appropriate phase would be ‘climate aberration’.

In 2014, winter has been relatively colder in certain parts of the world, due to the wider impact of polar vortex, all this should be viewed/studied as climate aberration instead of jumping up and down like a clown parroting the phrase climate change. If the temperature, precipitation data of a certain area shows a longer trend of change, then the new set of data could possibly qualify as a basis to characterize a change as climate change.

The next question to ask in the context of so-called climate change, which should actually be referred to as climate aberration, should be: Do the so-called environment scientists really know what is causing the climate aberration(s) of recent years? Why this question is important to ask because the so-called environment scientists have been ascribing the climate aberrations to GHG – first they coined the phrase ‘global warming’, but when winters started to get colder they switched on to this phrase ‘climate change’.

It is well known that factors most responsible for earth’s temperature are water vapour, methane, solar activity, earth’s magnetic effect, Gulf Stream among many other factors, including CO_2, about which the scientists are still not fully knowledgeable about. However, CO₂ is certainly not the main culprit – by no stretch of rational imagination.

So, if CO₂ is not the main culprit for climate aberrations and since emission of this gas is associated with oil sands for levelling all sorts of (irrational) criticism against oil sands’ development, it is clear that Canada’s this very vital resource (namely, oil sands) is not the critical factor for the climate aberrations one is witnessing in recent past, no way!

Hopefully, the Liberals would remember this when they deal with the subject of oil sands development whether as part of any government or any debate within and/or outside Canada. Hopefully, they would also remember the huge contribution oil sands has made to Canada – this fact has been clearly brought out by a recent study by IHS CERA called ‘Oil Sands Economic Benefits: Today and in the future, January 2014’.

And, by the way, if, for argument sake, CO₂ happened to be the main culprit (which it is NOT!), is any one on this planet in a position to shut down ALL CO₂ emitting operations all over the world with a snap of a finger? Of course, not! Can fossil fuel consumption be brought down to zero in next 5 or 10 or 15 years? Of course, not! Not even in next 50 years!

But what CAN be done is to develop resources like oil sands in a responsible manner, meaning, using processes which emit lesser GHG and causes minimal impact on environment. Hopefully, the Liberals would understand and remember this, Trudeau seemed to be okay with ‘responsible development of natural resources’ as he put it in his address to delegates on 22 February 2014.

Obama may not want to see things in scientifically rational manner for his own reasons/agenda, but the Canadian political parties of different stripes need to see and deal with the subject of oil sands development in rational manner and not kill it or stifle it out of some foolish political jingoism. The parties would do well to remember an old English saying that cutting one’s nose to spite one’s face does not help anyone! Certainly not Canada!