A Tale of Two Economies...

[radon]

Re: California invades Alberta?

I thought only the US had this problem. But can a democracy ever avoid it? Can you be elected on a platform of discipline and restraint?

This is an inevitable outcome of universal suffrage. Voters will naturally vote for the candidate who promises to deliver the largest bribe. It is especially easy to ignore the cost of services when you have no skin in the game. This isn't necessarily a criticism of individuals acting in their own self interest, only that this outcome is expected because of the nature of the system.

[Thailandnotes]

Re: California invades Alberta?

http://www.washingtonpost.com/opinio...2e2_print.html

smoke and mirrors?

A second act for Jerry Brown — and California
By Harold Meyerson, Published: February 6

SACRAMENTO

The walking, talking, governing refutation of the notion that there are no second acts in American lives is on a roll in California. “I’ve never been more excited,” Gov. Jerry Brown says, “and this is my 11th year on the job.”

Brown, 74, has ample reason for excitement. After a calamitous recession (inland California was the epicenter of the subprime quake) and nearly a decade of record deficits and legislative gridlock, Brown has come up with a budget that will put the Golden State into surplus territory without requiring further cuts. In November, voters approved Brown’s ballot measure, Proposition 30, which raised taxes on the wealthy and stabilized state finances to the point that Standard & Poor’s upgraded California’s credit rating last week. The new revenue has gone chiefly to schools and universities, though Brown wants to change K-12 funding so that money flows disproportionately to those districts with more impoverished and Spanish-speaking children.

Brown’s second stint as governor (a post he also held between 1975 and 1983) is proceeding more successfully than his first. His standing in the polls has never been higher, the Public Policy Institute of California has found. He gets universally high marks from liberals and centrists for his conception and promotion of Proposition 30, while business and conservatives look to him to rein in the more-progressive instincts of the legislature. What liberals would like is for Brown to consider still more tax increases — say, the imposition of an oil severance tax, which California alone among oil-producing states does not have — to restore state services to pre-2008 levels. State spending is still 18 percent less than it was in 2006, and California has 11 percent fewer teachers than it had then.

But Brown will have none of this. “The answer is no on taxes,” he told me in a recent interview. The annual “state spending on schools [and universities] will go from $47 billion to $63 billion in the next five years” with the funds from Proposition 30. “I think we should digest this great leap forward before we contemplate anything further.”

The governor is committed, though, to certain big-ticket green-infrastructure projects — in particular, a water project for the Central Valley and a high-speed rail line from Los Angeles to the Bay Area. In this, he is following in the footsteps of the state’s master builder, his father, Edmund “Pat” Brown, who as governor raised taxes that he used to turn the state into America’s postwar industrial Eden, expanding the University of California system and building freeways and aqueducts.

The son took pains during his first go-round as governor to differentiate his politics from his father’s. Brown was at the forefront of the first generation of post-New Deal neoliberals — a cohort that included Gary Hart and Paul Tsongas — who promoted environmentalism over growth and cultural liberalism over economic populism. With Brown, the tension between the two strands of liberalism at times seemed painfully Oedipal: As his father had embraced all rituals of the political life, so Brown took pleasure in shunning them.

Brown is the last of the 1970s neos still governing, and while he has adopted his father’s mantle of master builder — albeit for greener purposes — his resistance to convention, so apparent in his first tenure as governor, has expanded to include a resistance to novelty as well. Where he finds genuine technological breakthroughs, he wants to proceed “at mach speed”: He is pushing the University of California to offer more classes online, partly as a way to hold down spiraling costs to students.

As head of the university system’s regents, though, Brown casts a cold eye on much of what passes for academic work. “Research is important, but the faculty’s primary role is teaching. It’s not the students’ job to subsidize research,” he told me. “Some of the talk of producing new knowledge — it’s like GM producing new tailfins rather than a new kind of engine. Research into reality is good; academic novelty isn’t so much of an imperative.”

If Brown’s excitement has never been higher, it’s partly because he has settled into the dual role of builder and naysayer — a perfect resolution of both neoliberal and Oedipal tensions. Whether he has struck the perfect balance for the state is open to question: California’s middle class has never recovered from the evisceration of the aerospace industry at the end of the Cold War, while the number of its working poor has exploded. Brown has achieved his equipoise. His state still needs more help.

[radon]

Re: California invades Alberta?

As head of the university system’s regents, though, Brown casts a cold eye on much of what passes for academic work. “Research is important, but the faculty’s primary role is teaching. It’s not the students’ job to subsidize research,” he told me. “Some of the talk of producing new knowledge — it’s like GM producing new tailfins rather than a new kind of engine. Research into reality is good; academic novelty isn’t so much of an imperative.”

He is counting chickens before they hatch. Assuming all this money comes in he still sounds like a pompous ass who likes to throw money at education but is oblivious to its purpose.

[Polish_Silver]

Re: California invades Alberta?

Not a chance. You have to get elected on a platform of providing more goodies. Then, on Day One in office you announce that after looking over the books it has become obvious that the previous government, which the voters wisely tossed out, were a bunch of no-good, unaccountable, corrupt and lazy spendthrifts that left the cupboard completely bare...and therefore Austerity must be imposed for the greater good of the City/State/Province/Nation/whatever...

That's not so bad. As long as you can impose a policy which is sustainable in the long run, I don't mind a few "white lies" to get there. I just want to see how California/Illinois handles this. It has been suggested that when California goes begging to Washington DC for real, that will be the end of this financial world.

[GRG55]

Re: Tax Me - I'm Canadian

A rejection of Keystone may not be all that bad for Canada. It might force some sanity to return to the idiocy going on in the oil sands sector that the industry and the Alberta government have jointly allowed to prevail for far too many years.

Who knows...they might just price themselves out of the market at the rate they are going. Imperial Oil is a Canadian subsidiary of Exxon.

The figures in the last line below work out to $90,500 per flowing barrel. If they hit their targets for costs and production. Right now there's better reward/risk buying production than to develop projects like this. For example, the current market cap of Suncor Energy is about $53 Billion. Using the mid-point of Suncor's 2013 production forecast range means the entire company is valued at $88,000 per flowing barrel.

Imperial bumps up cost of Kearl oil sands project

...

Two different views of the same situation [everybody is talking their own book]:

Do more refining in Alberta to fix 'bitumen bubble,' conference told

North West Upgrading executive says Alberta’s balance is wrong

February 6, 2013

CALGARY — Worried about high differentials for heavy oil?

The solution is simple: Don’t sell heavy oil, says Ian MacGregor, chairman of North West Upgrading Inc.

“With all the transportation and market constraints that we see, it’s hard to see this situation reversing itself,” he said at a conference in Calgary on Tuesday...

...The refinery MacGregor’s company is building northeast of Edmonton will take raw bitumen under a 30-year deal from the Alberta government’s bitumen-royalty-in-kind program and producer Canadian Natural Resources Ltd. and turn it into diesel fuel...

...The difference between Western Canada Select, a blend of heavy oil, bitumen, synthetic crude and diluent, and New York-traded West Texas Intermediate settled at $29.10 US per barrel on Tuesday. Its five-year average is $16.65.

It spiked at $42.50 in December and $41.50 in January...

...John Zahary, president and chief executive of Sunshine Oilsands Ltd., said he supports more domestic upgrading but his company is too busy raising capital for its thermal bitumen projects to consider building its own upgraders.

Publicly traded Sunshine, which is 30 per cent owned by four Chinese state-owned corporations, is building its first 10,000-bpd in situ project near Fort McMurray and hopes to get to 300,000 bpd by 2025 — by 2020 if it succeeds in attracting joint venture partners...




Voyageur upgrader economics worsen: Suncor

Margins for synthetic crude likely to tighten due to competition

February 6, 2013

CALGARY — The gusher of light oil flowing from tight formations in North America has further eroded the economic argument for building the Voyageur upgrader, Suncor Energy Inc.’s president and chief executive said Wednesday.

In spite of that — and despite taking a $1.5-billion writedown on the project that handed the company a net fourth-quarter loss — Steve Williams said a final decision on the delayed multibillion-dollar project it shares with French giant Total S.A. won’t be made until the end of March.

“If you go out in the five-year-and-beyond time frame, clearly ... we have a mix challenge on the continent,” he said on a conference call.

“We have too much light, effectively, sweet crude, which is what upgraded synthetic crude, effectively, is, and if anything we have too little heavy crude. That’s quite a change. ... Our view is that will cause on a squeeze on upgrading margins.”

Suncor stock fell more than $2 or six per cent in Toronto before closing at $32.53, off five per cent, after it reported operating earnings of $1 billion but a net loss of $562 million for the last three months of 2012 thanks to the after-tax impairment charge on the partly built Voyageur upgrader...

...Suncor announced it would make a sanctioning decision on the Fort Hills mining project it also shares with Total in the second half, with Williams narrowing the timeline to the end of the third quarter or start of the fourth.

Suncor owns 40.8 per cent of Fort Hills and is the operator. Total holds a 39.2 per cent stake and Vancouver-based Teck Resources Ltd. owns the remaining 20 per cent...

[GRG55]

Re: A Tale of Two Economies...

Inflation? Nah, there's no inflation...

[dlaw52]

Re: A Tale of Two Economies...

Plus if you drop one of the new polymer notes they fly like little mini hang gliders. I wonder who came up with the idea for these plastic notes. They are a pain!!!

[GRG55]

Re: A Tale of Two Economies...

Plus if you drop one of the new polymer notes they fly like little mini hang gliders. I wonder who came up with the idea for these plastic notes. They are a pain!!!

I have come across them elsewhere in my travels. Another one of Her Majesty's colonies, Australia, has had them for a few years...and it's a lot hotter and stickier down there than most of Canada.

[dlaw52]

Re: A Tale of Two Economies...

You are correct. I was in Oz in 2000 and they had plastic bills then but I do not recall the bills sticking together there the way the Canuck ones are. I was at the bank last week making a withdrawl and the teller counted them then put the bills through a machine to verify and even she had slipped an extra one into the pile. (That's, of course, why they put them through the machine). I do not have any Australian bills handy but I wonder if they could make them easier to handle if they put a raised face on them or made them thicker.

[touchring]

Re: Tax Me - I'm Canadian

A rejection of Keystone may not be all that bad for Canada. It might force some sanity to return to the idiocy going on in the oil sands sector that the industry and the Alberta government have jointly allowed to prevail for far too many years.

Who knows...they might just price themselves out of the market at the rate they are going. Imperial Oil is a Canadian subsidiary of Exxon.

The figures in the last line below work out to $90,500 per flowing barrel. If they hit their targets for costs and production. Right now there's better reward/risk buying production than to develop projects like this. For example, the current market cap of Suncor Energy is about $53 Billion. Using the mid-point of Suncor's 2013 production forecast range means the entire company is valued at $88,000 per flowing barrel.

Imperial bumps up cost of Kearl oil sands project

CALGARY — The Globe and Mail

Published Friday, Feb. 01 2013, 9:00 AM EST
Last updated Friday, Feb. 01 2013, 7:37 PM EST

Imperial Oil Ltd. boosted the price tag of its Kearl oil sands mine by $2-billion, the second major increase for the project and the latest cost increase to hit Alberta’s energy industry.

Imperial said Kearl’s first development phase will cost $12.9-billion, up from $10.9-billion estimated previously. And the latest estimate is 61-per-cent higher than the original calculation of $8-billion...

...Kearl’s escalating budget is another indication of the difficulties facing the oil sands sector, which is grappling with higher costs for materials and labour, as well as discounted prices for heavy crude due to an oversupply caused by transportation bottlenecks – mainly pipelines – for exported oil.

Companies are reconsidering planned projects, as the industry re-calibrates spending to boost results that have often failed to impress investors. Suncor Energy Inc., for example, is weighing how and when to proceed with three undeveloped projects. It also withdrew its goal of hitting production of 1 million barrels of oil per day by 2020...

...Imperial on Friday said it will now cost $6.80 per barrel to develop the first and second phase of the project. That is a 10-per-cent increase from its last estimate of $6.20 per barrel. The company originally predicted it would cost $5 per barrel.

Imperial still expects a second phase of Kearl to ring in at $8.9-billion, despite revisions to the first phase of the project. It has not released a cost estimate for the final phase of the project, known as “de-bottlenecking,” but it expects the development costs per barrel to be the same as the during first two phases.

This means the cost of the entire project will reach about $31.2-billion, the company confirmed. The Kearl mine is expected to produce 345,000 barrels of bitumen per day by 2020, when it is running at full speed...

I've been monitoring Canadian oil companies. I can't understand the bullishness over Suncor when the Western Canadian Select has plunged to record lows vs international oil price.

Some sort of bubble that is detached from fundamentals?

[Polish_Silver]

Brown then and now

Brown junior was a very frugal during his first term. The opposite of his father, as the article says. I think people wanted that this time around too.

Whether they got it or not I'm not sure.

[GRG55]

Re: Tax Me - I'm Canadian

I've been monitoring Canadian oil companies. I can't understand the bullishness over Suncor when the Western Canadian Select has plunged to record lows vs international oil price.

Some sort of bubble that is detached from fundamentals?

I don't understand what "bullishness" you are referring to. The stock is trading about 25% below the price of two years ago. It just reported some seriously poor financials, and some output declines. However, if the stock trades below $28 it might be an interesting play given its huge reserves in the ground in a reasonably secure political jurisdiction...

[GRG55]

Re: A Tale of Two Economies...

Canada jobs plunge: What the economists say

Reuters | Feb 8, 2013 9:09 AM ET | Last Updated: Feb 8, 2013 9:41 AM ET

After two months of hefty gains Canada’s economy unexpectedly shed 21,900 jobs in January, almost entirely in full-time work, according to Statistics Canada data released on Friday...

...Douglas Porter, chief economist with BMO Capital Markets, said...“Combined with the steep drop in housing starts as well as the still-wide trade deficit, the jobs report rounds out a day of infamy for Canadian economic stats,” said Porter. “To some extent, the drop in jobs appears to be a payback for the surprising strength in the second half of last year, and would normally be little cause for concern. However, with housing softening notably, and consumers and governments not in much mood, or ability, to spend, the economy will need a major helping hand from a stronger U.S. performance in the year ahead to help generate renewed job gains.”...

[GRG55]

Re: Tax Me - I'm Canadian

This one fits your thread title perfectly ...

U.S. / Canada car markets head in opposite direction

Vehicle sales roared ahead in the U.S. market in January, but went into reverse in Canada...

http://www.theglobeandmail.com/globe...rticle8104877/

Looks like something similar is happening in new home construction - going in opposite directions:

Canada’s homebuilders scale back

The Globe and Mail

Published Friday, Feb. 08 2013, 8:51 AM EST

Last updated Friday, Feb. 08 2013, 9:59 AM EST

Canadian housing starts dropped sharply in January, coming in far below expectations, as homebuilders scale back, notably in Toronto’s condo market.

The number of starts sunk to 160,577 units during the month, down from 197,118 in December, Canada Mortgage and Housing Corp. said Friday.

In Toronto the figure came in at 16,800 units for January, compared to 49,800 in December...

...“Starts were down sharply in Ontario (44 per cent), Quebec (30 per cent), and the Prairies (6 per cent), more than offsetting gains in B.C. and the Atlantic regions,” Mr. Rangasamy wrote in a research note. “With this fifth consecutive drop, starts are at their lowest since the 2009 recession.”...

From the US Census Bureau:

Housing Starts:

Privately-owned housing starts in December were at a seasonally adjusted annual rate of 954,000. This is 12.1 percent above the revised November estimate of 851,000 and is 36.9 percent above the December 2011 rate of 697,000.

Single-family housing starts in December were at a rate of 616,000; this is 8.1 percent above the revised November figure of 570,000. The December rate for units in buildings with five units or more was 330,000.

An estimated 780,000 housing units were started in 2012. This is 28.1 percent above the 2011 figure of 608,800.

Building Permits:

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 903,000. This is 0.3 percent above the revised November rate of 900,000 and is 28.8 percent above the December 2011 estimate of 701,000...

[Fiat Currency]

Re: A Tale of Two Economies...

Canada jobs plunge: What the economists say

Reuters | Feb 8, 2013 9:09 AM ET | Last Updated: Feb 8, 2013 9:41 AM ET

After two months of hefty gains Canada’s economy unexpectedly shed 21,900 jobs in January, almost entirely in full-time work, according to Statistics Canada data released on Friday...

The jobs data is what it is. However, almost 300K jobs created in the last 12 months overall.

January at BigCos is always "firing" month, as it's basically self-funding over the year. I guess I'd wait for 3-4 months of data before determining if it's a trend or not. However, with jobs & housing starts down, and the trade deficit widening it's not a great start to the year. Carney certainly knew when to get out and Flaherty will most likely be next.