Amen, brother

A quick lesson in constitutional principles and the danger of glib punditry.

Liberals - A way out of the woods

In the last few weeks since the provincial election, more than a few local pundits of the print and video variety, have offered advice for the Liberal Party for the long march back to power.

Now let me offer my own. . .

To start, let me puncture the notion that the Libs are down and gone forever - that's just self-serving nonsense from government partisans who prefer the "responsible" (read "tame") opposition style of the NDP. This reached a low point under the leadership of Jack Harris who interpreted the concept of "principled opposition" as license to nestle in the warmth of the government's back pocket. I'm glad to see that this has changed somewhat under the leadership of Lorraine Michael.

The NDP, God bless their righteous hearts, are never going to be in the position of government-in-waiting because that's a position they have chosen to pass on. To be a real alternative, they would have to start by severing their relationship with Big Labour in a similar way that Tony Blair did with the Labour Party in Great Britain. And since they are not ready to do that, they forfeit any right to be the government-in-waiting. You can't have a government-in-waiting in Reg Anstey's pocket anymore than you can be a government-in-waiting in the pocket of the Board of Trade.

The day the NDP really shake up their organization is the day they become a force to reckon with - not before.

Until that day comes, our political system is predicated on one party being the passer of political power while the other party acts as the receiver. And unless we all wish to formalize the one-party state then we have to accept the inevitable process: after the political tide comes in, the political tide inevitable goes out. So the the next time that happens, it will be the Liberals receiving power from the PCs.

The Liberal Party, like the PCs and unlike the NDP, are big tent parties where hard ideological positions are eschewed in favour of pragmatics. That means that the parties can shrink and expand to cover the necessity of the times they live in. This is not to say that the PCs and Liberal are interchangeable. They are not. They have very different histories, political cultures, and socio and geodemographics.

And even under the official party banners, there are many shades of red just as there are many shades of blue. Many of the shades of blue currently holding the levers of power are dismissed by some of the other shades of blue. Similarly, some of the shades of red which cheered on the Liberal campaign strategy in the last election felt an enthusiasm unshared by other Liberals of a different shade of red.

There are Liberals who love Danny and PCs who hate him. There are schools of Federalist thought which crosses party barriers just as there are schools of nationalist thought with roots in both the Libs and the PCs.

Research shows that the province is not dominated by Liberals or PCs or the NDP. Maybe 25-30% of the voting population consider themselves Liberal with a roughly same number considering themselves PCs. Less than 1/2 those numbers consider themselves NDP. So in any given election, the Libs can count on about 25% of the vote, the PCs the same and the NDP about 10%.

Most people, about 40%, are undecided/independents who think little of politics, change their vote from election to election and don't consider themselves adherents to any of the parties. They swing around from party to party depending on the issues of the day and the qualities of the leaders and parties they are faced with.

This is only a rough approximate model of the provincial electorate. There are many more complexities than that but this will suffice for the moment.

I'll continue this in a day or two.

Another new blog

Blogs come and blogs go; here's a new one that I hope stays around for a while.

By the infamous local journalist Craig Wescott, the editor of The Business Post, The Public Ledger bears the earmarks of his trademarked pithy acerbic clear-eyed observational style.

Good on you.

Stacking the talk radio lines

Bond Papers noted this Star article which talked about partisans receiving advice on stacking talk radio from the national Conservatives.

Then Meeker on Media carried the ball further down the field to talk about what happens locally.

Now here is the link to the Conservatives that sparked all this off; it's pretty slick.

Tuna and others are on the way out

This BBC story on the commercial extinction of bluefin tuna tells us that:

It is difficult from the outside to comprehend the mentality that would exploit a fishery to collapse in the face of warning after warning. Even from a commercial point of view, it appears to make no sense.

Iccat (International Commission for the Conservation of Atlantic Tuna) scientists believe that if catches were halved now, the stock would rebound, allowing fleets to catch almost as much as they have ever done, and do so sustainably, ensuring an income for the foreseeable future.

According to Sebastian Losada, oceans campaigner at Greenpeace in Madrid, there is a simple problem; the industry needs profits today, not tomorrow.

"The root of the problem is that we have too much capacity in the region," he says.

It sounds all to familiar: an international fishery organization working hand-in-hand with governments and companies who just don't know when to say when.

Further down in the story is this nugget:

Total extinction for a fish species is relatively uncommon, given their mobility. But once numbers have fallen, ecological factors can take over that mean the stock is highly unlikely ever to rebuild.

It appears to have happened on the Grand Banks near Newfoundland, where cod fishing was banned in 1992.

There are still cod there; but their numbers do not appear to be increasing. Boris Worm from Dalhousie University in nearby Nova Scotia believes the ecosystem has moved into a new, probably stable, state.

And before we leave the topic, it's worthwhile checking out this story on a major scientific study which says there will be virtually nothing left to fish from the seas by the middle of the century if current trends continue.

As painful as it might be, I think it's time to start looking at the post-fish future of province.

A new blog - The Stride Protocol

There's a new entry in the political/economic category of local blogs: the Stride Protocol.

I'm not familiar with the gentleman but he seems to have an interesting background with much to offer. He says it's a weekly blog about everyday observations.

His observation this week is called Oil Royalties 101. Oddly, the post actually has very little to do with royalties but no matter; there's a few bits of additional information I think would place his post in better relief.

First, Stride is dedicated to Hubbert's peak oil theory and the associated imminent $100 an oil barrel due to a sharp decline in global oil production. Only problem is, Hubbert's peak oil theory assumed a static oil discovery and development environment and that's not the case. As old sources are depleted, economics kicks in with cost-effective feasible technologies to find, extract and/or manufacture more oil.

Keep in mind that Hubbert was a geologist, not an economist. As The Economist notes:

... the oil production peak is unlikely “for decades to come”. Governments may decide to shift away from petroleum because of its nasty geopolitics or its contribution to global warming. But it is wrong to imagine the world's addiction to oil will end soon, as a result of genuine scarcity. As Western oil companies seek to cope with being locked out of the Middle East, the new era of manufactured fuel will further delay the onset of peak production. The irony would be if manufactured fuel also did something far more dramatic—if it served as a bridge to whatever comes beyond the nexus of petrol and the internal combustion engine that for a century has held the world in its grip.

Second, Stride says definitively that "We own the resource" and that there are tremendous implications to developing an ownership mentality over a regulatory one (and then goes on to parrot the Premier's "no more giveaway's" rhetoric - too bad).

In fact we do not own the offshore oil resource; we have never owned the resource; we will never in the future own the resource. Ownership of the offshore oil resource was definitively resolved in favor of the Government of Canada by the Supreme Court of Canada (and the NL Court of Appeal) in every case brought before it since 1969, the last one in a 6-0 decsion on MArch 9, 1984..

Our relationship to the resources is a regulatory one as opposed to an ownership one through the mechanism of the CNLOPB and the original Atlantic Accord enabling legislation which established it. In the end, NL can tax and control development of offshore oil and gas as if it were on land.

Third, Stride holds up Norway is the golden child of the resource royalty world. Rarely is mentioned, and he does not mention, that Norway is the only OECD country to still be in the business of state owned and directed oil projects. Even more rarely mentioned is that they are working to get out of the ownership game and are steadily decreasing their ownership stake and would be moving far faster if it were not for domestic political impediments.

All in all I'm looking forward to more posts on the Stride Protocol.

Political gossip vs public policy information

Just coming out of a campaign as a candidate, I saw first-hand and was amazed to the extent that gossip can hijack messages even among people who should know better.

Political dynamics is not usually phrased that way using the term "gossip" but that's really the only word for it. Just ask Denise Pike about the effects of political gossip on her campaign.

But by gossip, in this context, I mean more than just personal information about a campaign or candidate. By gossip I mean any kind of untrue information that is passed around and believed even in the face of verifiable alternate facts or plain common sense.

For example, what rational voter would accept the idea that the leader of a major provincial political party would seriously consider driving the province into bankruptcy? I mean advocate literally driving up out debt to levels so high as to be unsustainable given our revenues and so forcing default or bailout or both?

The fact that a politician can use that "fact" as a weapon to discredit an opponent in the face of recordings which clearly show that the original remark had nothing like that intent shows that something peculiar is at play.

You might dismiss this as foolishness and inconsequential but this line of thought was triggered by this article in the New York Times outlining the results of a paper on gossip published by a group of evolutionary biologists in Germany and Austria.

The article noted that the study found that gossip, whether positive or negative, had a big influence on the decisions and outlook of the subjects, and it didn’t even matter if the source of the gossip had a good reputation himself.

You might think the gossip mattered just in borderline cases but that's not the case at all. Using a series of games, they found that even when a player saw that his partner had a record of consistent meanness, he could be swayed by positive gossip to reward the partner anyway.

Or withhold help from a perfectly nice partner just on the basis of malicious buzz.

In other words, what people were told about other people often trumped their direct experience of that person.

Imagine the implications for political campaigns.

F***ing great article

A side road to an interesting issue, this article called Why we curse: What the F***? from The New Republic online points out that:

When it comes to political speech, we are living in a free-speech utopia. Late-night comedians can say rude things about their nation's leaders that, in previous centuries, would have led to their tongues being cut out or worse. Yet, when it comes to certain words for copulation and excretion, we still allow the might of the government to bear down on what people can say in public. Swearing raises many other puzzles--linguistic, neurobiological, literary, political.

The pendulum swings

Check Web Talk for another patented "Before we had Joey. Now we have Danny. Look how for we've come" posts. It presumes that we were once naive federalists and then we have gradually awoken as a nation under the wise and revelatory leadership of Danny Williams to take our place in the country and the world.

*Yawn* to an unnuanced and simplistic point of view which ignores the last 60 years of provincial history.

The post conveniently forgets that Smallwood went through strong federalists phases and strong provincialist phases as it suited him. Just ask Diefenbaker how well the two levels of government got along through the 60s after the extended federal-provincial honeymoon of the 50s.

Then the post rushes to skip entirely over the administration of the great NL nationalist, A. Brian Peckford and his revival of provincialist pride in the 80s. Oddly, this new generation of of provincialist pride advocates prefer to ignore our first Brian entirely. I guess the construction of faux history precludes the existence of rivals to the current favourite.

Then came the swing which lead to the unassailiablilty of the federalist Clyde Kirby Wells in the 1990s.

Only then do we come to the latest pretender of the provincialist crown, Premier Danny Williams, in the 2000s.

Who knows who will lead the swing back in the 2010s?

The lesson of history is that this province has cyclically lurched from a federalist to a provincial point of view under a variety of political strongmen depending on agenda and circumstances.

The lesson for the day is that if one is going to make an historical argument, some knowledge and inclusion of history would be helpful.

Alberta faces royalty choice II

Here's another very good piece on the choices confronting Alberta and Stelmach in modifying Alberta's petroleum royalties. This one is from The Star. The decisions to be made include. . .

"The first and most obvious, expected within days, is whether to hike royalty rates on oil and gas producers by 20 per cent, as recommended by a controversial report Stelmach himself commissioned.

But that's not Stelmach's biggest challenge. While no expert panel is urging him to do so, Stelmach must decide whether to revive Alberta's pitifully small Heritage Fund so that it can one day serve Albertans as a rainy day fund in a way that similar "sovereignty funds" in Norway and Alaska are set to do.

Third, there is the man-made ecological disaster that has become the Athabasca oil sands, prominently featured in An Inconvenient Truth, Al Gore's Oscar-winning documentary about the global warming crisis. With an estimated additional $100 billion (all figures U.S.) in oil-sands projects on the drawing board, the already damaged ecosystem of northeast Alberta will be in still greater peril without political action."

Enjoy.

Alberta faces royalty choice

An impressive article from the Globe and mail this weekend outlines the debate in Alberta on oil and gas royalties and the choices facing Stelmach as he stares into an election. For the sake of posterity, I will reproduce it below. It's worth reading and so are the article's associated comments.

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A deep well of discontent

DAVID EBNER,
From Saturday's Globe and Mail
October 12, 2007 at 11:57 PM EDT

CALGARY — When Ed Stelmach unexpectedly became Premier of Alberta last December, following the long reign of Ralph Klein, a quiet but important shift occurred: Power moved from Mr. Klein's home base in the energy capital of Calgary to Mr. Stelmach's traditional territory, rural Alberta.

Mr. Stelmach has hardscrabble roots on a farm near Edmonton that his grandfather settled in 1898 and in his early 20s he returned to work the homestead instead of heading to law school after an older brother died unexpectedly. That turn back to the farm led him away from corporate power, and even though Mr. Stelmach put grander ambitions on hold, he slowly and surely still managed to rise to the province's highest office, arriving there without years of hanging out at Calgary's Petroleum Club, unlike Mr. Klein and other predecessors.

Today, Mr. Stelmach is poised to make the most important economic decision in the country this year – promising a decision by month's end on what's fair for energy royalties. He is not an eloquent man but is known as a careful leader, a listener – precisely the opposite of Mr. Klein, a shoot-first-ask-questions-later man whom oil executives considered a trustworthy buddy.

Now, the blunt question is whether Mr. Stelmach has the acumen to make the right decision on royalties, and business fears what it calls a potential catastrophe if he makes the wrong move and sinks the country's most robust economy. Billions of dollars, at the very least, are on the line, along with thousands of jobs – in Alberta and across Canada. Mr. Stelmach's government is not particularly popular and there is a strong temptation to play the populist card given the polling numbers that show some support for a landmark report that calls for significantly higher royalties to be implemented in full.

No wonder: The price of oil yesterday rose past $84 (U.S.) a barrel, a record.

Sensing an opportunity for electoral success – the last vote was in November, 2004 – Mr. Stelmach is pondering a snap election this fall if his decision on royalties goes over well. The pressure, with energy companies threatening to pull at least $3-billion (Canadian) out of the province next year, is immense. Where Mr. Stelmach stands is unclear: The farmer has been criticized this month for being too close to industry and possibly cracking under pressure from it.

A spokesman for Mr. Stelmach said yesterday no decisions have been made – the situation is “fluid” – but added: “The status quo is not an option.”

“I think Stelmach's going to make the right decision,” said George Gosbee, chairman of Tristone Capital Inc., a Calgary investment bank that has worked to broker a balance between higher royalties and keeping the province's economic engine running. “It's going to be a big win, for all Albertans.”

The debate shines a light on a maturing Alberta that this year has blossomed beyond the energy monolith many Canadians take it for. Politically, even though the Conservatives have ruled for almost four decades, the public discourse is suddenly far more lively and diverse. Dissent is no longer a synonym for treason.

It is a marked turn away from the era of Ralph Klein's reverence for big business and a re-emergence of the more collective spirit of the 1970s, when then-premier Peter Lougheed launched the Conservative dynasty with a political style that was far more centrist than right wing. The royalty report itself – which was written by a panel that included three economists, a retired forestry executive, a retired oil executive and a technology entrepreneur – was not a staid government tome. It was written for a wide audience and had an almost activist tone, starting with its title: “Our Fair Share.”

“[The royalty report] has tapped into a pocket of malcontent that nobody knew existed,” said David Yager, chief executive officer of HSE Integrated Ltd., a small energy services company, and a columnist for Oilweek magazine. “But when you're premier, you can't take advantage of the province's most important industry for short-term political gain. There are opportunities to take a little more but what I found discouraging was the tone of the report.”

Much of the debate has been vitriolic, with panel members facing accusations of being “uneducated” in the practical business of oil and gas and having “grossly underestimated” key data regarding industry costs. Mr. Yager said “rage” was the predominant emotion, following the initial “shock.” Foreign investors made specious declarations comparing Alberta with Venezuela, with Deutsche Bank Securities Ltd. suggesting there was some sort of socialist revolution under way as it entitled a note to investors: “The Bolivarian Republic of Alberta.” The respected market analyst Don Coxe yesterday referred to it as a “Putinesque abrogation” of the tradition of royalties.

But lost in the shrill and deeply emotional debate are the numerous nuances of a quickly changing business in the province. When the public review began in April to determine whether Alberta was getting a fair share of energy money, all eyes were on the oil sands, where all facts pointed to the obvious conclusion of higher royalties.

In the northern hinterlands of the province lies a huge expanse of boreal forest and the oil sands, billed as the second-biggest reserve of oil on the planet. For decades, the very low-grade resource was considered barely useful until high oil prices, technology and a generous royalty regime ignited a fever, bringing tens of billions of dollars in capital flowing through Calgary and Edmonton to Fort McMurray in a mad building boom.

A decade from now, conventional oil and gas production — and royalties from those sources — will no longer form the foundation of Alberta's treasury, and the province is depending on oil sands to make up the difference, as production in the region is projected to roughly triple over the next decade. Without this, Alberta could actually slowly skid towards the have-not provincial status it held before the discovery of a giant field of conventional oil near Edmonton in 1947.

When the six-member review panel came out with its report on Sept. 18, the surprise was not that it called for higher rates in the oil sands but that the main target for immediate increases was aimed squarely at the struggling natural gas business.

The critical and most controversial issue – natural gas – has underpinned Alberta's economic success and its overflowing treasury. The so-called Calgary oil patch is in fact a gas capital, with a shift only now beginning to swing to the oil sands. Canadian Natural Resources Ltd.(TSX:CNQ), the country's second-largest producer, is the embodiment of this evolution, beginning life in the deep recession of the late 1980s as a scrappy gas producer and growing into a giant gas producer – and now making a big, long-term bet on the oil sands.

But the oil sands remains a tomorrow story, a key source of the province's long-term revenues.

Today, Canadian Natural – and the province – depends on natural gas. There are more than 100,000 producing wells in Alberta, but it's only a very small number that really count, those that dot the rugged Foothills of the Rocky Mountains. Mr. Stelmach's decision this month is absolutely crucial for corporate decisions on winter drilling in those Foothills – the short window lasting a couple of months, when the ground is frozen, to move rigs in and out to hunt for the few remaining big gas targets buried thousands of metres below the surface.

According to Tristone, which has worked closely with Alberta civil servants in Edmonton to produce new work it will present on Monday, these are the 5 per cent of Alberta's gas wells that generate 50 per cent of the province's gas production and provide 63 per cent of gas royalties – which in turn accounts for roughly 40 per cent of all royalties currently collected by the province.

The royalty review panel felt the province wasn't getting its fair share from these big wells, which spit out piles of cash at high prices but also cost millions of dollars to drill (and successful drilling is far from assured). The panel said its recommendations would in fact see royalties on about 80 per cent of gas wells reduced at recent gas prices, aiming to encourage continued production of modest wells – but, stepping back, those tiny wells are a secondary concern in the bigger picture.

Under the recommendations, the prolific gas wells in the Foothills – those that uncover major reserves to heat homes across the country – would see their value slashed to 59 cents per million cubic feet from 98 cents, according to Tristone, as government takes much more money up front.

Pedro van Meurs, a respected international consultant on royalties upon whom the panel relied heavily, indicated in a July report that Alberta had “considerable competitive scope” to get more when gas (or oil) prices are high. But he added that deep wells in the Foothills generally require high initial output to justify drilling them, suggesting that taking more up front “may not deal effectively with deep gas wells” and recommended further investigation of incentive programs to encourage such drilling.

One panel member, speaking off the record yesterday, said if there is good evidence, the government should consider the balance between gas royalties on such wells and economic development. “That's their job,” the person said. “There could be room to move there.”

At current natural gas prices, with the panel recommendations, drilling in the Foothills makes no economic sense, according to Canadian Natural and all other leading explorers in the region. It is why Canadian Natural said it would slash spending by $800-million next year if the recommendations are fully adopted; it's why EnCana Corp. (TSX:ECA) announced its intention to take $1-billion off the table; it's why Talisman Energy Inc. (TSX:TML) is mulling a $500-million cut and ConocoPhillips Co. (TSX:COP) plans to withdraw another $500-million.

The royalty panel envisioned its recommendations quickly adding $2-billion to the provincial treasury, with half of that coming in more money from gas; the potential cuts announced to date already exceed the projected gain.

And if all these wells don't get drilled this winter – beyond the job losses in the field, from the rigs to all the small towns like Edson that support the business – the province's natural gas production will go into freefall. This is already partly in motion, as the National Energy Board this week predicted in a report that showed a possible a decline of 15 per cent in Canadian gas supplies by 2009 because of relatively low prices.

With gas output sliding, the government's royalty take is headed down, not up.

Still, don't cry for the poor natural gas explorer: They are playing a game of big risk and big reward – and the rewards can be fantastic. Natural gas fuelled EnCana's $6.4-billion profit last year, the biggest in Canadian history, not to mention Talisman's $2-billion take, its best ever, and Canadian Natural's $2.5-billion, also the most the company has ever made.

Because Ralph Klein capped gas royalties in the early 1990s at very low levels, wells in the Foothills can produce excellent rates of return of more than 15 per cent at higher prices, such as $9 per thousand cubic feet. The panel's recommendation would cut that to 6.5 per cent, Tristone calculates.

In between is the balance Mr. Stelmach must strike – and executives are ready to deal.

“There's room at higher prices. It's just at what prices that kicks in,” Steve Laut, Canadian Natural president, said in an interview. “By increasing the take, the [review] panel changed how it's collected. The take has shifted to the front end. The government gets their share sooner and that, obviously as a company investing the capital, means we get our returns later. As economics work, it drives the returns down dramatically. And by doing that, they've effectively made large portions of the Alberta basin uneconomic.”

Canadian Natural this week issued the most detailed assessment of what the royalty proposals mean to its business, warning of job losses for 4,000 contractors as it slashes the number of gas wells it might drill in 2008 to just 88 from 253 this year.

“The people that will take the brunt of this royalty proposal will be the people in the field. The guys on the rigs, the pipefitters and welders in the [fabrication] shops in Edmonton, the guys driving the truck, the pipeline crews, the small business person that just bought two new trucks to haul equipment. They will take the brunt.”

Just yesterday, Mullen Group Income Fund (TSX:MTL.UN), a small energy services firm, said it is handing temporary layoff notices to as many as 100 people because of low gas prices and royalties uncertainty.

For Mr. Stelmach, whose core support is in rural Alberta, this is an important part of his balancing act. A poll this month found that almost nine out of 10 Albertans agreed the province isn't getting its “fair share” from oil and gas and two-thirds wanted to see the royalty recommendations adopted in full rather than in part.

“The royalty report has raised the expectations of Albertans tremendously,” said Geoffrey Hale, a political scientist at the University of Lethbridge.

Beyond the headlines were nuanced revelations. About 55 per cent of Albertans want to see higher royalties in the oil sands but roughly the same number believe royalties charged on conventional oil and natural gas wells should stay the same or be cut, which was precisely the sentiment in the air when the public royalty review quietly began in April in an almost empty hotel conference room in Grande Prairie, the hub of 50,000 residents in northwestern Alberta that depends on gas drilling.

Going beyond natural gas – where the price of the commodity is down roughly 20 per cent from a year ago – is the world of oil, where the spotlight shines far brighter and many more people know that riches are being made, given that the price of crude sits at more than $80 (U.S.) a barrel. The panel also called for higher royalties on conventional oil production, which had been capped at about $40 a barrel – leading to an unfair amount of profit going to corporations rather than citizens, who are the owners of the resource, while firms lease the rights to explore and produce.

While corporate Calgary has angrily reacted to the royalty review recommendations, more nuances are revealed in who is standing up and what they are saying – and companies that are quietly not speaking out at all.

Suncor Energy Inc. (TSX:SU), the oldest and second-largest oil sands miner, has not made any public declarations and its stock remains near an all-time high of about $100 (Canadian) a share, just a bit below where it was before the royalty report.

Marcel Coutu, chief executive officer of Canadian Oil Sands Trust (TSX:COS.UN), which holds the biggest stake in the biggest oil sands miner Syncrude Canada Ltd., told The Globe and Mail after the report that there is room for “some form of compromise,” saying: “A burden must be chosen that will optimize the eventual value of this resource.”

Canadian Natural, which is investing $7.6-billion to build an oil sands mine, said it will forge ahead regardless and plans to develop two more phases of its Horizon mine, costing billions more.

Don't be mistaken: The energy companies aren't content with all the royalty ideas for the oil sands. In the 1990s, before the boom, a very generous royalty regime was put in place to encourage development, with a rate of just 1 per cent of gross revenues until a project recouped its capital costs, plus a return similar to a government bond, before the rate jumped to 25 per cent of net revenues, taking out many operating costs before paying the government.

The panel proposed the 25-per-cent rate rise to 33 per cent, which hasn't really been debated, but industry is quite critical of a proposed severance tax to be charged from the first day of production if oil prices are higher than $40 (U.S.) a barrel, a level now considered to be quite low.

This tax, oil companies argue, is punitive to projects that don't mine the oil sands and instead recover it by drilling wells and injecting steam to draw it to the surface. This technique and future variations thereof will be used to recover most of the resource bitumen in the oil sands; mining scrapes off just a fraction of the available bitumen from the surface.

Petro-Canada (TSX:PCZ), which is working on a $14.1-billion (Canadian) mine, didn't complain about higher royalties but said the severance tax means steam injection projects can only work at $100 a barrel. The company said it believed a compromise could be worked out. Canadian Natural said $7-billion of steam-injection projects on the drawing board would have to be shelved. EnCana, which is a steam-injection pioneer, said its existing projects will work but the severance tax puts billions of dollars of future plans in jeopardy.

Like increasing the royalties on deep gas, the tax is criticized for taking too much too soon from multibillion-dollar projects that take years to develop.

But again, unlike earlier this year when oil companies weren't willing to compromise on anything, Tristone suggested a tax that started kicking in at $70 a barrel after a project recovers its capital costs and an increase of the initial nominal royalty rate of 1 per cent to 3 per cent on gross revenues – which would last through an oil sands project's entire life, rather than just the early years. On the 25-per-cent figure, Tristone said it should stay static, saying its plan would get more for the province than the panel's proposals.

Tristone's Mr. Gosbee said his firm's idea of compromise caused private grumbles among Calgary's top executives – but given that the debate has shifted radically from where it stood before the royalty report, the willingness to accept a pragmatic solution has caught on under the threat of something worse. Like comedian Larry David has joked, a successful compromise is when everyone's unhappy.

For Mr. Stelmach, in a job where he is supposed to keep as many people as happy as possible, the challenge is considerable. He is no stranger to struggle but now must deal with the greatest challenge of his life, to be made under the threat of an economic slowdown or worse, and try to shake off an image of economic ineptitude.

The government is completing a technical review of the royalty report and has met privately with a constant stream of industry representatives. This coming week Mr. Stelmach begins to draft his decision and craft his political message. On Oct. 24, he is slated to appear on television to explain at least some of his thinking to Albertans – with a full decision promised by Halloween.

Then, if it goes well, Mr. Stelmach calls an election, to seek a mandate to validate his decision and leadership after almost a year as premier, in a job to which he ascended only by a vote of Conservative Party members.

Keith Brownsey, a political scientist Calgary's Mount Royal College, said Mr. Stelmach has the opportunity to hit the delicate balance between Alberta as a whole and industry.

“Some concessions can certainly be made to the oil and gas industry without appearing to cave to their demands,” Mr. Brownsey said.

“For an election, he could wait until next spring but my inclination would be to strike while the iron is hot, hold up the royalty decision and declare it his platform.”

Big cheese stands alone

While amateur local pundits are eager to place Premier Williams front and center of the national stage, the shape of the political landscape for their hero points to growing isolation and continuing national irrelevance into the indefinite future.

When you clear through the noise of the regular fall Ottawa ritual of the rutting political parties bellowing and taking runs at each other, one thing becomes clear: there will be no election this year. Over the next month or so, each opposition party will make separate and independent runs at the government and the government will pretend that the runs actually mean something and will make their appropriate noises. Then everybody will go home satisfied that they have been seen to be doing something.

The Conservatives are still locked in minority territory, the opposition parties are still unprepared for an election, there are no burning issues to run on and nobody wants to call an election to be conducted over the pre-Christmas season. Layton already made that mistake once and even he has learned it's not wise to do that twice.

The real game will start with the spring budget.

And the more time goes by, the fewer national allies Williams has to count on. MacDonald of Nova Scotia has looked after the interests of his own province and made a separate peace with the feds. In truth, he was never a reliable ally at the best of times because there was so little money at stake for him. And now with a single bland assurance, Harper and McKay have neutralized that problem.

Harper and MacDonald's success in burying the hatchet lies in the fact that talks continued between the governments through the conduit of Peter MacKay. He was critical to making the deal happen.

Williams has no such conduit. He has emasculated Loyola Hearn and our Ottawa plenipotentiary is nowhere to be seen.

There's no doubt that the deal was in the works for a while and the announcement was held off until after the NL provincial election. For one thing it takes up to weeks to coordinate a federal-provincial announcement of this magnitude. For another, Harper knew full well that Williams would use the deal as the excuse to launch yet another provincial jihad against Ottawa.

That's the problem with being so predictable - it gives the initiative to others.

Whether the deal is good or not for Nova Scotia is irrelevant. MacDonald is now out of the game and the Williams' parting shots at him as "weak" will make him disinclined to be sympathetic in the future.

Meanwhile, Premier Calvert of Saskatchewan has called an election and his outlook is not bright. He is a familiar and tired leader heading a familiar and tired party that has been in power for 16 years and has been 15-20% behind in the polls for too long. There is always a chance that he might pull it out but that's not where the smart money is going.

As for the other provincial premiers, the Williams hobbyhorse of broken federal promises that nobody ever expected to see kept anyways combined with absolutely no interest in Equalization as an issue in any premier's suite of any note across the country ensures a big ho-hum response to his same old song.

The key to long term success in federal-provincial relations is in making friends and influencing people through a combination of tenacity, flexibility and the ability to make allies through the sharing of common interests. Predictable, incessant, inflexible, noisy combativeness excites the local nationalist extremists back home; nobody else cares anymore.

I'm back

This is post #400; I've given a lot of thought to the next 400.

Gone fishing . . . for votes

As of noon today, I am the Liberal candidate for the provincial district of St. John's North.

I've never hidden my political affiliations or my past connections with prior governments. In fact, it was those affiliations which have taught me about how government works and how government should work.

The general view from the street is that government is a black box with mysterious inner workings. It's not obvious how and why some things get done but not others. And reading government statements and releases rarely tells you the reasons why.

For better or worse, those things tend to be pretty transparent to me. That's the advantage of having worked alongside the most senior government levels of this province on and off since 1989.

It was that that experience behind me that has allowed me to write on a whole host of issues both here and in commercial publications over the last couple of years.

Some of those writings have been considered sharply critical of some government actions.

Partially it's because the last few years has not convinced me that the direction this government has been taking the province is the right one.

More importantly, I am convinced that the way this government goes about it's business - secretive, arbitrary, high-handed, intolerant of dissent, endlessly combative with industry and Ottawa, quick to label as enemies those who question - is just wrong for a province of one of the most civilized countries in the world.

And I believe this government has taken St. John's for granted in almost every conceivable way.

I have not been shy about asking the hard questions I felt needed to be asked. I have even come under personal attack from some quarters for daring to ask. I'm sorry to say I don't think those attacks will go away. In fact, I expect them to intensify.

But I hope I can ask the questions that you would ask if you were in my place.

I have no illusions that this will be an easy campaign - I read numbers too. But the "best time to run" is only obvious in hindsight. At some point one has to put their name, time and energy where their mouth is so you can look at yourself in the mirror in the morning.

As in my municipal campaign 2 years ago, I have some personal goals: raise some issues, don't go into debt, keep my integrity and win. If I can do 3 of those 4 things I will be pretty happy with that.

I'll be happier with 4 of 4 but that's in the hands of the people of St. John's North. And the people are never wrong.

My campaign will discuss issues which face this province now and in the future. This will include a focus on matters like the economy; elder care and other social issues; and effective local representation.

Too many critical issue have been pushed off the public agenda; it's time for someone to bring them forward.

I will not throw mud. Frankly, there are enough issues out there that it would take me 5 campaigns before I ran out of sensible things to say. Dirty tactics and personal attacks are the last resort of scoundrels and fools with nothing sensible to say.

Finally, I never intended to use this blog as a political soapbox and I don't intend to now. OffalNews is an outlet for information, issues, insights and ideas and I want to keep it that way. So until October 9, I will not be adding any more posts here.

A link to my campaign site will be added when it goes live.

Take care and see you October 10.

Don't go back to sleep

A milestone of sorts was reached today: the first ever open and public meeting of the successor committee of the House of Assembly Internal Economies Commission (IEC).

Outside of a few House of Assembly wonks, nobody had ever heard of the IEC. It was the rare member of the public or even media could tell you what it was and what it did. And as hard as it is to believe, even most MHAs were largely ignorant of IEC operations.

But as the center of the House of Assembly spending scandals, the dispenser of secret $2800 payments to MHAs and the committee which set the rules (such as they were) which for years permitted MHAs spend public money for private political purposes it was a critical part of the legislative/political system.

Now everyone has heard of it.

When politicians tell you that open meetings of the IEC are the beginning of a new era and marks the end of the bad old ways, don't take that too seriously.

Remember that much of the spending shenanigans were not directed by the IEC in isolation and away from the light. Much of the mess was organized in close partnership with the full House of Assembly in open and free votes in front of media representatives and televised across the province.

And just when you thought we were out of the dark times and into the new era of accountability, openness and transparency, this government and the entire House in general lets us down.

It was only in the last few months that Minister Rideout proudly trumpeted new rules for MHA spending. Only after the fact did we realize we were hoodwinked and that no rules would be in place until after the election.

We were misled about what was happening through a series of amendments delaying implementation which threw up so much smoke and mirrors that even the media watching from the galleries had no idea what was happening. More than a few voting MHAs were taken by surprise when they were later advised of what they had voted for.

An open and televised vote in the House, observed by the media, fooled us all. What's the lesson to take from this? That just because the new IEC meetings are public does not eliminate the possibility that they can pull the wool over our eyes.

So when they tell you to go back to sleep and everything is OK, don't. It means we have to watch what they do and scrutinise them more closely than ever.

Into the breach!

As of today, I am a candidate for the Liberal nomination in the seat of St. John's North.

Looking out at the political and economic landscape, I've reached the point now where it's time to put my name, time and energy on the line. So I'm offering the people of St. John's North a fresh choice.

It's something that I've been considering for a while but it's events over the last few weeks that really clinched it for me. Between the secret Hebron MOU, the high-handed treatment of MUN and the ongoing negligence of important issues like elder care, I want to do what I can to contribute to the public debate.

Last night I sent out a release (see below) and I think it pretty well says it all for the moment. There has already been some media coverage at the Telegram. And I appreciate the kind thoughts of support and positive reception from the blogosphere from Ed at the Bond Papers and Greg Locke; it gives me hope.

I will try to post when I can but you can appreciate that it won't be as frequently as normal. In the meantime there will soon be a campaign website with more information as it comes together.

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August 27, 2005

Simon Lono Declares for Liberals
in St. John’s North

Simon Lono today declared his candidacy for the Liberal Party nomination in the provincial district of St. John’s North.

"The people of St. John's North deserve strong, vigorous representation in the House of Assembly," said Lono. "They deserve more than the attitude that St. John's can take the hit in elder care, education and the economy."

This was not a decision taken lightly, Lono said. “It was not an easy choice; I have been thinking about this for a while. I’m running because I’m concerned about the direction the province going.”

“The Williams government has neglected important issues and has misplaced priorities,” said Lono. “They’ve taken no action to address the needs of our aging population. In education, they’ve decided to break up Memorial University without counting the cost to the public purse, the effect on post-secondary education or even if this is the best option for our students.

“As for the economy, we can’t be satisfied to accept mere crumbs of information on a project as important to our future as Hebron; we need more information than government has revealed so far, so we can judge for ourselves. Secret deals are not acceptable.”

Lono notes that it takes a strong representation to make the difference. “The people of St. John’s North have had no voice. We have too many silent, passive members sitting on the government side of the House,” he said. “This government has taken St. John’s North for granted and it shows.”

"Public service has always been important to me, and I know I can contribute energy and new ideas to this province as a member of the House of Assembly working for the people of St. John's North.”

-30-

MUN and Grenfell - To the Star!

I submitted this letter to the editor in response to this editorial ("Everyone is Having a Say") in the Western Star. No surprise they felt disinclined to publish it or even acknowledge receipt.

The Star's editorial staff are pretty keen and uncritical on the issues of goodies delivered by their MHAs. And that's fine for a small, local newspaper.

[**UPDATE**]
It turns out this letter was published. Oddly, they never called to confirm authorship and they don't have letters on their website so I had no idea.

-----------------------

Editor:

In your haste to stamp approval on government’s Sir Wilfred Grenfell College (SWGC) “university” project, your editorial skipped over facts and has rewritten the history of recent events.

First, it’s clear that government and the political boss for the Corner Brook region, Tom Marshall, put the cart before the horse. Behind closed doors he and his colleagues commissioned a report with a mandate which predetermined a conclusion of Grenfell “autonomy”.

This conclusion was decided for political reasons in advance of any research, consultation or evidence.

Little wonder that the consultants, constrained by that requirement, we left with no choice but to look at issues of “how” and left out issues of “why”. The “why” was because government said so.

And no public debate was has been invited or encouraged since.

So to say now that everybody is having their say, as your editorial states, is disingenuous in the extreme. There was no public discussion or consultation with university stakeholders prior to government’s decision. Issues of educational appropriateness, academic effectiveness or effects on budgets or staffing are dismissed as irrelevant or inconvenient.

Education Minister Joan Burke accuses people with legitimate concerns of “sabotage”.

Please explain how that encourages public debate.

Meanwhile, government spokespersons dissemble and spin. Minister Marshall smooths over financial issues as insignificant while his own report says Grenfell will become the most expensive university in Canada. And his explanations of what autonomy means and how it will be executed wander all over the landscape.

Government talks about previous reports. They neglect to mention that they were all reviewed by skilled and experienced public servants who recommended in each and every case that structural SWGC autonomy was uncalled for. So while Premier Williams lauds the quality of “his” public service, he ignore their recommendations.

There are legitimate public policy concerns over this course of action: academic, financial, and institutional.

SWGC has established itself as key component to Memorial's reputation. It has earned its own reputation in various fields, sometimes with and at times without the full understanding of the Board of Regents. But even under government’s plan, the same Board of Regents will continue to oversee SWGC.

If there are organizational problems, then government and MUN should address those in an open, accountable and transparent manner. It should not manufacture decisions on dubious grounds behind closed doors.

Over what better issues than university education and academic freedom can we have an open, transparent and free public discussion?

All the work done by Memorial University, and that includes SWGC, over the last 50 years to place themselves in the top tier of post-secondary institutions is potentially jeopardized over this hasty and short-sighted decision.

Sure, everybody is having their say now, after the fact. It’s like everybody having their say about the open barn door after the horse is long gone; it doesn’t bring the horse back.

Look under the bed

There are no shortage of evil conspiracies out there if you are just willing to open your eyes and see. These theories have at their root the idea that some secret club or person or persons has far reaching enormous malevolent power over you or your society.

There's no evidence of it other than conjectures and speculation. The cases are circumstantial and laughably ridiculous at best. At worse, they poison public discussion and lead to paranoia.

One of my personal favourites is the Trilateral Commission - a supersecret regular meeting of high level public and privet figures who covertly rule the world (so secret they have a website, I notice)*. Another is the New World Order which aims to subvert national sovereignty in favour of UN rule.

A particularly nasty conspiracy theory centered around the Protocols of Zion, a set of forged proceedings which claimed the Jews were working to take over the world. Lots of people suffered at the hands of the fools who fell for that one.

On the local level there's the famous conspiracy among people unknown, for reasons undocumented, who subverted the 1948 NL referendums to force us into Canada. And you know it must be the case because they made a movie about it!

These are all about secret meetings, murky motives and things which must be true because the conspiracy seems to explain so many things. Take this breathless explanation and warning from WebTalk about the latest international conspiracy, the “Security and Prosperity Partnership” or SPP:

The SPP exists only as a verbal entity and is not found in any official treaty or identified in any government legislation. Instead SPP is based on private discussions between the leaders themselves and closed door meetings with big business, lobbyists and political insiders.

From the Canadian perspective, the SPP is a means of completely overhauling Canadian business, military and social programs without having to adhere to normal democratic processes or contend with unwanted public scrutiny.

Since none of what is discussed or agreed upon during SPP meetings is ever reflected in official documents the public has no idea what is being done behind the scenes and no opportunity to have a say in the nation’s future. A future which, if SPP proponents like Stephen Harper have their way, will see Canada suffer massive job losses and lead to the destruction of the of social programs and benefits we all depend on.

Hmm. No documentation or evidence, supersecret meetings, blanket denials, far reaching influence, dire consequences. Sounds like every other wingnut conspiracy throughout the ages.

I guess if you get sucked in by one conspiracy, you have to accept them all.

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*At the risk of driving the local fruitloops into another lather, I actually know somebody who was a member of the commission and told me great stories about their sessions. He never let me in on their secret handshake. But he did tell me that virgin sacrifices were now restricted to only once at the beginning of each session and not at the end too as was their previous practice.

Blogs and libel

This came from CBC news.

Political blogging, in the end, is no different that any other kind of writing: responsibility must be taken.

A confession on stimulis and response, pokes and smears

There's an ancient principle of biology that goes back thousands of years - stimulus and response. The idea is simple - you learn about a biological system by providing a stimulus and then observing and measuring the response.

During the 1780's, biologist Luigi Galvani performed experiments at the University of Bologna involving electric charges and frogs. Charges could make frog legs jump even if the legs were no longer attached to a frog.

In neuroscience, a classic set of experiments provided fascinating results. They opened up the skull of a conscious subject and then probed the brain. The subject, in response to the probes, experienced smells, emotions and memories. Those results produced the first rough map of the brain function.

As with a frog leg or a brain, you can perform the same experiment on a body politic. Provide a stimulus, say a series of provocative blog posts or talk radio telephone calls, and check the response.

The results are complex. Depending on the region of the body politic observed, the response might be approval, agreement, delight. Other parts register disapproval, annoyance, anger.

And then there are those dank corners where the response is peculiar and disproportionate. It turns out that, on some topics, the response is more than mere disapproval. The response is paranoid, suspicious and irrationally hostile.

It's the response that tells you more about those rigid and claustrophobic corners than you ever wanted to know.

I must be in the secret pay of great forces, they muse. How else could a sole individual, on their own, dare to take on the powers that rule this province? I must be the tool of those who wish to do us harm. Why else stand before the tide?

Smears and sleazy, baseless questions about motivation come into the light. While speculation is offered, no evidence is provided or produced.

But of course, you don't need evidence to posit a conspiracy theory. That's what conspiracy theories are all about. It's the arched eyebrow, the knowing nod and the open-ended question that condemns through quiet implication. Evidence, sense, facts have no place in the conspiracy theory.

Now here's the confession part of this post: I poke.

When I see an issue where foolishness reigns, I poke hard to knock in some sense. When I see smoke and mirrors, I poke to dissipate the fog and break the mirrors. When I see darkness, I poke to let the light in.

And when somebody pokes me, I poke back. I can't help it.

I've spent most of my life studying, formally and informally, the objective underlying causes of public issues facing this city, province and country. I've studied and considered where they come from, how they come to be and what can be done about them with rational public policy. And I've studied and practiced how to communicate those things to others.

Some people like that about me and encourage me. I thank them.

Some people don't like it and prefer I just keep quiet. Go along to get along, they say, and come with us on the most-traveled path.

But I'm not good at checking my brain in at the door and letting others think on my behalf.

One thing for sure, one can't be all things to all people all the time so I don't even try. Besides being somebody that I'm not, I just can't maintain that kind of empty facade.

I got to be me.

And I want to make this province and people the very best, most successful and happiest we can be.

The fact is that I do what I do, write what I write, say what I say based on my own knowledge, my own experience, my own ideals. And I have no problem associating my name and face with that.

My views and opinions are not available for sale, rent or even a short term lease. If they were, I'm sure some of those I've irritated with inconvenient facts and would cheerfully cut me a cheque at the drop of a hat just to get me out of their hair.

So when you see the low reflexive response of paranoia to my political stimulus, recognise it for what it is: it's not a conspiracy.

It's a frog leg jumping in a dish.

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UPDATE: If all it takes is a blog post of denial to generate the withdrawal of a smear, it might be worthwhile to substitute research and thought in place of idle, baseless speculation.