economics

Oil buck$

Playing around on the internet at lunch today, I came across a couple of interesting databases that confirm, at least visually, that we are a petro-economy. With data on the daily price of West Texas crude from the Federal Reserve Bank of St. Louis (thanks Google!) and daily foreign exchange closing data the following graph shows graphically just how linked the Canadian dollar value is to the price of crude oil. crude_dollar

I haven’t the statistics background to tell you *how* linked they are, but the picture is stark and convincing.

If, and this is a big “if”, the value of our currency is a reflection of the attitudes of investors on the strength of the Canadian economy, what they see in us is pretty apparent. Note that this graph goes back to the start of 1999, the earliest I could find currency data for, and the trend pre-dates the Conservative government, upon whom I blame all things bad. This one has not been helped by them, but it was not caused by them. I fully expect that pushing both of these databases further into the past would reveal a similar pattern for at least a generation or os.

It’s easy to draw up a couple of curves for unrelated things and claim some sort of linkage between them where none exists – follow this link to see some fun ones. I would argue that these curves are in fact related because they are normalized using the US dollar. This is a useful measure, as all formal trading in international oil bourses has used the US dollar as the price by which oil is set since the early seventies.

What does this graph mean?

First, if we really are a petro-economy, we had best keep finding and exporting oil if we want our dollar to be worth anything. Oil and gas are not going to last forever, though, and nor should they. The tar sands represent the last gasp of the Alberta oil industry, and while it could last for many years, it is still finite. East coast gas has proven to be a disappointment, at least while the peasants are still allowed to get their asses up about fracking. (C-51 may well settle that issue by making anyone protesting the destruction of their watertables for short-term profit a ‘terrorist’. We shall wait and see.) Atlantic oil flows from the Grand Banks, and there is every chance of other discoveries up the margin along the Labrador shelf and Baffin Bay, but development in these areas is still in its infancy. And Arctic resources are likely to be harder and therefore more expensive to access, making them less economically advantageous. Hopefully, before they become an issue we will be moving away from oil as our central fuel source.

The recent crash in the Canadian dollar and the simultaneous precipitous drop in the price of oil also has to do with our little normalizing factor up there, the value of the US dollar. The US economy has been booming along the last couple of years as they distance themselves from the depths of the 2008-09 recession. Job growth is up, exports are up, and they have quietly become the world’s largest producer of oil. For now, this spike in production south of the border has not been offset by cutbacks in OPEC production, and the price has been allowed to fall. How long this will go on is anyone’s guess and I’m not going to venture one.

Historically, Canada has been a resource-sector economy – we don’t really make much, instead we produce raw materials that are turned into goods by others, which we then buy from them. There is no shame in that, and the scenario works well provided the supply of raw materials is not exhausted. We are a fishing economy, a lumber economy, a farming economy, an oil economy, and a mining giant. There is no reason to think that these will all disappear after the oil goes. Whatever happens, resource exports will always be important.

However, as this graph and our fluttering economic growth show, when we become too dependent on one thing, we put ourselves at risk. And, this is where I can place some blame on the Conservative government. Instead of trying to promote industrial growth and manufacturing, the government sat on its hands while the high value of the dollar murdered our exporters. If we are to prosper as a nation, we need wise and courageous leadership to help foster blended economic growth. As I’ve said, resources will always be important, but there is no reason we can’t make stuff, too.

Uncategorized

Polievre and the election wrinkle

It’s not exactly news that Stephen Harper and his merry band are willing to cut a few corners when it comes to getting democratically elected. It’s also probably not news that the party that has been found guilty on several occasions of major financial shenanigans when it comes to advertisements and campaigning has also found a way to potentially disenfranchise two voter blocks that are most likely to swing to the NDP or Liberals – natives and the young.

New rules put in place are designed to fix the “problem” of people voting with only a voter card, having been ‘vouched for’ by a neighbour or relative. Starting with the anticipated election this coming fall, all voters will have to provide identification that proves not only the name of the voter, but also their address. In the past, the voter card was considered enough to meet address requirement.

Having been a university student who traveled to another city to attend school, I know that the address requirement can be potentially difficult to prove – picture identification like passports or driver’s licenses are likely to show home addresses, not their current one. New regulations  found here require that all voters provide one piece of photo identification with the current voting address. Lacking that, the voter can opt to provide an  ID with their name and an additional piece of identification with name and address. Included in the list of valid IDs containing the address include utility bills with name and address, personal cheques with address, or income tax assessments.

Please make sure that you can meet these criteria before you head to the polls. I’d bring a few pieces of backup ID just in case something gets rejected for *any* reason.

environment

“If I could increase it, I would”

These are the words  of Tim Brown, CEO of Nestle Waters, responding when asked if Nestle would decrease the extraction of ground water to supply its California bottling operations. He would increase it if he could. He doesn’t see the historic California drought as anything more than an opportunity – all of those who thirst are simply potential customers.

This is what privatization of public resources has resulted in. This is why we have governments. This is why we have governance. This is why the Conservatives are no longer in power in Alberta.

2015 Election

Vote Together

I’m all in favour of voting your conscience. I’m all in favour of voting for the person who best will represent your riding. However, in the screwed up system that we currently have, your ballot gets used to determine both MP and governing party. And, since a party in power will whip the vote to keep its members in line, I would say it’s obvious that the most important thing that your vote does is choose the leadership in Ottawa.

With the Liberals and NDP splitting 60 – 65% of the popular vote, it is obvious that a majority of the Canadian population is fed up with the Conservative government currently in power. Unfortunately, our screwed up first-past-the-post system could still elect a Conservative majority in October with only a few percentage points more than they have right now. We can’t let this happen.

Vote Together promises to keep you abreast of which candidate is most likely to defeat the Conservatives in your riding. Go there now and sign up – let’s organize to use the ridiculous FPtP system to return sanity to the government.

It would be no surprise to readers that I bleed a bit of orange, but if I have to vote Liberal to keep a Conservative out of my riding, I will, dammit. I have in the past and I will again if I must. I’ll plug my nose, make no mistake, but I will do it.

Go sign up at the link and make your vote a true ABC vote this time. They fucking deserve it.

Civil Rights

Omar Khadr Update

The Supremes have just ruled that Omar Khadr should be tried as a juvenile for crimes he may have committed in Afghanistan. This is no surprise as Omar Khadr clearly  was under 18 years of age at the time of his arrest and he conforms with the UN definition of “child soldier”, but the ruling is heartening nonetheless.

environment

A troubling picture

A just-published report  (enhanced pdf) containing new measurements of global sea-level rise has some troubling news – the rate of sea level increase has accelerated over the past twenty years. What I would argue is the most troubling is the increased precision with which these measurements are made owing to new satellite techniques.

It’s like knowing to the millimetre how long the knife at your throat is.

The figure below is figure 2 from the paper and shows the measured change since 1900. Note that these are from a combination of satellite methods and tide gauge measurements. Note also, the decreasing uncertainty.

Let me put a finer point on it. Note the increasing certainty.

2

(h/t iflscience)