Wednesday, December 31, 2014

Stakes are high and LNG bet is not safe

Some years ago, Premier Gordon Campbell announced the Gateway Program for improvement of roads and bridges throughout Greater Vancouver. It included a new Fraser River crossing and reconstruction of Highway 1 from Vancouver to Langley. Also in the plan was the South Fraser Perimeter Road for port, industrial and regional users along the south side of the Fraser River.

The budgeted cost for the Port Mann / Highway 1 Corridor was $1.5 billion and for the South Fraser Perimeter Road, $800 million. Actual costs were at least $3.32 billion and $1.24 billion respectively. Despite each of the projects opening a year late, with a combined cost overrun of 98%, BC Liberals announced the projects as on-time, on-budget.

Other major projects - notably BC Place, Northwest Transmission Line and Sea to Sky Highway - experienced similar budget blunders. Lately, the least competent managers in BC history have been aiming to make the province a major exporter of natural gas. This is a costly and risky proposition. Actual and forecast cash and tax expenditures for natural gas currently amount to more than a billion dollars a year and the $8.8 billion Site C dam, not needed for domestic consumption, is intended to provide power to LNG facilities. Beyond subsidized power, taxpayers are likely on the hook for material amounts for infrastructure to support gas transport and processing.

Liberals are betting with taxpayers money, the stakes are high and the bet is not safe. From Asian LNG prices seen falling by up to 30 pct in 2015, a recent report by Reuters:
Asian liquefied natural gas (LNG) prices are expected to fall by up to 30 percent in 2015, according to a survey of analysts and consultants, as the market enters a period of oversupply and the impact of lower oil prices kicks in.

The explosive growth in LNG consumption seen in recent years has stalled on cooling Asian economies and with a resumption of nuclear energy and a greater use of coal in some markets.

At the same time new LNG production has been coming on stream, meaning tight supply conditions that had been expected to last until the end of the decade are ending more quickly.

"Demand is a lot weaker than we anticipated just six months ago," said Gavin Thompson, head of Asia-Pacific gas and power at consultancy Wood Mackenzie.

Asian spot LNG prices LNG-AS have more than halved since the start of the year to below $10 per million British thermal units (mmBtu).

Average import prices into Japan, the world's top buyer, are forecast to fall to about $11 per mmBtu next year, down from an estimated $15.50 this year and $16.45 in 2013, if Brent crude averages around $75 a barrel, according to David Hewitt, co-head of global oil and gas equity research at Credit Suisse...
A December 30 report by The Telegraph newspaper stated that Brent crude plunged below $57 per barrel as traders bet that the global oversupply of oil will continue. According to the paper, oil traded in North America is poised to crash through the $50 per barrel level. Those levels indicate a greater decrease is likely for Asian LNG.

Lower prices would be an insurmountable barrier to development of a gas liquefaction industry in BC if the investment decisions were left to the private sector. However, the BC Liberal government has demonstrated willingness to take on massive debt and contractual commitments to further its primary agenda, which is political, not economic.

Oil price crash claims first U.S. LNG project casualty, Reuters, December 30, 2014
Excelerate Energy's Texan liquefied natural gas terminal plan has become the first victim of an oil price slump threatening the economics of U.S. LNG export projects.

A halving in the oil price since June has upended assumptions by developers that cheap U.S. LNG would muscle into high-value Asian energy markets, which relied on oil prices staying high to make the U.S. supply affordable.

...Excelerate's move bodes ill for thirteen other U.S. LNG projects, which have also not signed up enough international buyers, to reach a final investment decision (FID).

...Stiff economic headwinds are making new developments tough going.

Prices that LNG projects can charge for long-term supply are falling from historic highs as new producers crowd the market, which is already oversupplied due to slowing demand and rising output that has seen spot Asian LNG prices halve this year...

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Wednesday, December 24, 2014

Merry Christmas, Happy Holidays and Thank You to All

Thanks people for kind wishes in comments and private messages. We can hope that matters raised in alternative media and the blogosphere gain wider exposure and more complete discussion in 2015.

Traditional press and broadcasters face constraints that dictate silence or one-sided reporting on many issues and they're seldom willing to kick the shins of economic and political interests. (Ian Jessop is an exception and his Bell Media bosses deserve thanks.) A blog like this one has no advertisers to dictate what is said and no industry organizations or commercial operations spreading cash to influence content.

I don't expect readers to agree with everything said here but I'm proud that thousands find it regularly worth attention. I'm also proud to know and appreciate other bloggers who write sincere opinions and information about public issues. I find much of it thought provoking and informative and some of it even argument provoking. Many blogs are well researched and well written; others are the opposite, most are somewhere between those poles.

However, readers will typically find content somewhere that suits their individual interests. Most of us are comfortable with material that reflects the opinions we already hold and, while understandable, that's unfortunate if it prevents us from challenging our own attitudes. I believe that we can have dialogue with people who hold different points of view and we can do that with mutual respect. It's always disappointing when potential contributors to this blog ignore civility and act like anonymity gives licence to spread misinformation or say anything. Their efforts quickly move into the deleted file. I'll tolerate disagreement but I won't tolerate libel or invective. Happily, there's not much of that.

Again, to all, but especially the regulars and financial supporters, thank you. It's your involvement as readers that makes this effort worthwhile. I hope we can make it more relevant to us and our neighbours.

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With Ian Jessop on CFAX1070, Dec. 23, 2014

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Tuesday, December 23, 2014

Buy high, sell low - make up losses with volume

Is B.C.'s Site C dam a gateway to dirty energy?, Calyn Shaw, CBC News Network, December 22, 2014
The provincial government has made it clear that Site C is about meeting future electricity demands. But the province is currently energy self-sufficient; we are a significant net exporter of power.

According to BC Hydro's own growth forecasts, by 2024, the annual energy demand, after the current conservation plan, will almost equal the projected annual energy supply — without Site C.

This would seem to indicate that when Site C comes online, almost all of the 5,100 gigawatt hours of electricity produced annually will be in excess of projected demand within the province.

So, where will this power go?
The CBC analysis suggests two possibilities: Power for LNG operations in British Columbia or power for tar sands extraction.

Clearly, Site C is not intended to meet the needs of existing BC Hydro customers. As noted, demand and supply are in balance for the next decade, even without aggressive efforts of conservation, the greenest solution to energy shortages.

There is another source of electricity readily available. It is Revelstoke Unit 6

The above is from a BC Hydro factsheet. At $420 million, Revelstoke Unit 6 would provide almost half of the output of the $8.8 billion Site C dam.  This represents the capital cost per-megawatt, but excludes the social costs of destroying prime farm lands and disrupting lives of First Nations:

Is there a business case that would prioritize Site C over Revelstoke 6, a facility that would face almost no opposition? If there is a detailed business plan, it has not been disclosed by the provincial government.

BC Hydro has been contracting with independent power producers at prices in the $110-per-MWh to $130-per-MWh range. Site C was projected to cost between $87 and $95 but that was before its capital budget increased by 11.4%. Electricity sales agreements with industrial users, in place and proposed, exceed BC Hydro's projected costs. Perhaps the Liberals believe the apocryphal story about making up for losses on every unit by selling more units.

Seriously though, the government's energy policy does not pass the smell tests that citizens are likely to apply. The questions to answer:
  • Why proceed with a project that produces power at almost 10 times the cost of a simpler alternative?
  • Why create capacity that is to be sold below cost?
  • Is there a comprehensive business plan that justifies proceeding with Site C in 2014?
  • Is there a comprehensive business plan that justifies provision of below-cost power to industrial users.
  • Is clean hydro power intended to facilitate carbon-saturated emissions?

Who needs Revelstoke power, when we have IPP and Site C contractor friends to reward.

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What's this "fat" and "gravy" they speak of anyway?

Are schools and hospitals fat? Are veterans' pensions gravy?

So what have we cut already?
  • 32% of Veterans Affairs staff supporting disability, death and financial benefits for veterans.
  • One-fifth of Canadian food inspector positions.
  • One-third of Statistics Canada's data analysts.
  • One-quarter of positions in the department that handles EI claims.
  • And in other news, Canada Revenue Agency is slated to kill 3,000 positions in a division specializing in offshore tax avoidance at the same time as it ramps up what increasingly looks to be politically motivated audits of progressive and environmental charities.
And those are cuts at the federal level. In British Columbia, Liberals have managed the civil service with a similar style of hack, whack and smack. From the time they took office in 2001, the economy has expanded by half, in constant dollars. Yet the professional service, provider of much needed expertise, has declined by a quarter. The combined effect means the public has roughly half the professional capability it once had to manage the business affairs of government.

More at Press Progress:

How to respond to your grumpy Conservative uncle's tax rants at Christmas dinner

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Monday, December 22, 2014

Wrong path, wrong time

Christy Clark, Rich Coleman and Liberal friends are like 1980 promoters excited to spend someone else's money to open a giant disco club, despite unmistakable signs the dance craze was soon to end.

Focusing on a costly fossil fuel start-up is a mistake of giant proportion for British Columbia. The overwhelming consensus of climate scientists says we must curtail, not expand, output of greenhouse gases. Undoubtedly, fugitive methane from unconventional gas production is far worse as a greenhouse gas than CO2 and that is a fact ignored through contrived ignorance of industry and government regulators.

For people caught up in climate change denial, another argument to consider is that alternatives to current practices offer a safer and more certain path to economic prosperity. The Global Commission on the Economy and Climate is a major international initiative to analyse and communicate the economic benefits and costs of acting on climate change. The Commission comprises former heads of government and finance ministers and leaders in the fields of economics and business. The New Climate Economy is the organization's flagship project and a lengthy report concludes:
…that countries at all levels of income now have the opportunity to build lasting economic growth at the same time as reducing the immense risks of climate change. This is made possible by structural and technological changes unfolding in the global economy and opportunities for greater economic efficiency…

The next 15 years will be critical, as the global economy undergoes a deep structural transformation. It will not be “business as usual”. The global economy will grow by more than half, a billion more people will come to live in cities, and rapid technological advance will continue to change businesses and lives…

Future economic growth does not have to copy the high-carbon, unevenly distributed model of the past. There is now huge potential to invest in greater efficiency, structural transformation and technological change… Rapidly falling costs, particularly of wind and solar power, could lead renewable and other low-carbon energy sources to account for more than half of all new electricity generation over the next 15 years. Greater investment in energy efficiency – in businesses, buildings and transport – has huge potential to cut and manage demand…
The report suggests nations focus on:
  • Raising resource efficiency by phasing out fossil fuel subsidies, which are estimated to be six times higher than clean energy incentives;
  • Investing in low-carbon forms of infrastructure;
  • Stimulating innovation in technologies, business models and social practices to drive both growth and emissions reduction.
Observers and pundits understand that LNG was the Liberals' brilliant, if cynical, election ploy for the 2013 election. However, ability to sell a big lie is not a quality much valued by historians. If, in the long term, Christy Clark wants respect, she should pay less attention to politics and have more regard for doing what is right for the future of British Columbia. However, that would require a thorough housecleaning of policy advisers.

Mike Myatt, a writer on leadership, innovation and problem solving warns about dangers that decision makers must consider when taking advice:
  • Credibility: What is the track record of your source? Is the source reliable and credible? Are they delivering data, information or knowledge? Will the source tell you what you want to hear, what they want you to hear, or will they provide the unedited version of cold hard truth?
  • Bias: Are there any hidden and/or competing agendas that are coloring the input being received? Is the input being provided for the benefit of the source or the benefit of the enterprise?
There is ample proof that the advisers within and without government are ideologues certain to deliver a tightly edited version of truth and their agendas could have Clark lead this province to economic disaster. Even in this late hour, the Premier should have independent experts conduct a unconstrained cost/benefit analysis of LNG proposals and subject the entire process to full public scrutiny. If the current plans are correct, they will stand up to examination. If they are not correct, the faults would be revealed.

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Before we follow the LNG path

The Liberal Premier of New Brunswick announced a moratorium on hydraulic fracturing and he offered advice that Christy Clark should note,
“We’re not interested in putting all of our eggs in a single basket."
Premier Gallant says the moratorium won’t be lifted until these conditions are met:
  • A social license in place;
  • Clear and credible information about the impacts of hydraulic fracturing on our health, environment and water, allowing us to develop country-leading regulatory regime with sufficient enforcement capabilities;
  • A plan that mitigates the impacts on our public infrastructure and that addresses issues such as waste water disposal;
  • A process in place to respect our obligations under the duty to consult with First Nations;
  • A mechanism in place to ensure that benefits are maximized for New Brunswickers, including the development of a proper royalty structure.
If British Columbia followed the same policies, hydraulic fracturing in this province would end because not a single one of the conditions is in place. I don't expect Liberals to adopt the plan because, truly, they decided to put all of our eggs in a single basket.

Fracking begets a surplus of natural gas and requires massive quantities of water. More produced gas would have no ready market so LNG is offered as the solution. But international markets are uncertain and creation of export capacity requires risky investments for transmission, liquefaction and transport. Beyond that, converting gas to liquid demands massive uninterruptible energy inputs. That requires construction of the Site C dam but its power will cost three times BC Hydro's energy charge for large industrial users. High priced power would kill LNG deals so BC Hydro's residential customers would have to pay price increases even higher than the 30% hikes they face before any new subsidies to business customers.

Even if the province finds money for capital and operating subsidies for processing and transport, there remains no certainty that delivery of much higher gas production can be achieved without negatively affecting the traditional territories of First Nations people. Given Supreme Court of Canada decisions recently, that could end the LNG initiative by itself.

Regardless, Liberals may be forced to admit that LNG plants, fueled with royalty-free gas, constructed with machinery sourced outside Canada and largely assembled by foreign crews, provide benefits to relatively few people. There is certainty though of rising costs of living for everyone, including much higher home heating bills because international pricing would drive up domestic gas prices. Even BC Ferries, which plans to convert from diesel, will be forced to impose fuel surcharges again to cover higher gas prices.

Other than industry claims and discredited statements of government that LNG will produce enormous wealth for British Columbians, there is no evidence that even modest benefits for the province exist. The time to shut down this fantasy is now. If this choice is delayed, it is another cost that will rise dramatically.

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Friday, December 19, 2014

Give even more money to Translink

Yes, if you are bothered by waste and lack of accountability, Bill Tieleman explained on CKNW that there is an easy solution: ignore it.

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Hidden subsidies to big business

In June 2011, Postmedia reported comments about Site C by David Conway, Community Relations Manager with BC Hydro.
When you get down to the cost per megawatt, this option even at 7.9 billion, this is one of the most cost-effective options for ratepayers in British Columbia." Conway said the cost per megawatt of energy out of the Site C dam will be in the range of $87-95 per megawatt.

"To keep that in perspective, our last call for energy for micro, hydro and wind projects came in at $129 per megawatt," he explained…
Since the capital cost estimate is now $8.8 billion, the cost of Site C power would be $97-$106 per megawatt.

That happens to be almost three times BC Hydro's energy charge to large industrial users under Schedule 1823.

So, when you hear politicians congratulating themselves for enabling the "greenest LNG operation" in the world, remember that all residential electricity users, rich and poor, will pay for the subsidies that allow foreign owned operators to ship royalty and tax free gas to Asia.


Doug Morrison, writing in the Squamish Chief about Woodfibre LNG, June 2014
Since liquid natural gas LNG plants are notorious power hogs, and this small operation alone would consume 120 megawatts (conservatively estimated from its 140 mw transformer, and known power consumption of LNG process “trains”), this comes to a subsidy of more than $80 million per year. Again, who will pay for this subsidy? The residential customers and small businesses of British Columbia.

It’s almost humorous that Giraud would quote private power lobby “Clean Energy Canada” frontman Merran Smith who says that “… Woodfibre LNG is off to a good start powering the plant with [subsidized B.C. Hydro] electricity, and that it sets the standard for others to follow,” because it’s also easy to see that if the rest of the proposed northern LNG export operations (50 megatons per year of LNG in total, compared to Woodfibre LNG’s two megatons a year) also “go electric” with B.C. Hydro grid power at the bulk industrial rate, our subsidy would then be $2 billion per year.

Squamish: the real LNG ground zero, Bob Mackin, December 2014
Pacific Oil and Gas of Singapore hired former Enron executive Anthony Gelotti to run Woodfibre LNG. Despite its bumph about being Canadian-owned, the company is ultimately owned by Indonesian billionaire Sukanto Tanoto…

Human Rights Violation and Violence History of Sukanto Tanoto, Wendy Tanoto
I have some facts to present to people in BC and Premier Christy who are thinking if they should support the Woodfibre LNG project and why I think Sukanto Tanoto is not a suitable person to invest in Squamish, BC.

In a sunny afternoon, villagers in Gading Permai were ready to meet with the management of RAPP to discuss the outstanding land disputes that have been going on for long. The villagers were panic and angry when the time arrived because they were faced with 300 armed private militarists instead of a peaceful talk with the company officials. Read the following article to find out what happen to the villagers.

Feeling surprise? Don’t be. This is actually a very common practice of Sukanto’s entities.

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Tuesday, December 16, 2014

PDF version of preceding article

I've had a number of requests for copies of this article by people wishing to share the information. Readers can download a copy from SCRIBD.

Sorry poor people

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Monday, December 15, 2014

Sorry poor people, we have other priorities

Clearly, government revenues from natural resources have declined substantially in recent years. This is in spite of rising metals and minerals prices and growth in production volumes. Here is an example.

In any economy, there are winners and losers. Among the winners is Teck Resources Limited. This company, its affiliates and associates have contributed millions of dollars to the BC Liberal Party. It has invested wisely and, as a result, its assets have grown seven fold since the beginning of 2002, from $5 billion to $36 billion.

In British Columbia, taxpayers are losers. So too are the province's most vulnerable residents: like the single parents on disability who suffer clawbacks of family maintenance payments and have had benefits frozen for seven years. Paul Willcocks commented in Clark's pension costs taxpayers $76,000 a year, but disability rate increase not 'affordable'
"Clark said [in June 2014] that she knows the benefits, frozen since 2007, are too low.

"But British Columbia is just too poor to provide any increase. That will have to wait for some unknown future when it is "affordable," she said..."
If the priority of government is to subsidize and steadily reduce the obligations of big businesses that exploit provincial assets, the day when social services are more affordable will never come.

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Truthiness - UPDATED

December 15 update:

The bright minds at Kinder Morgan have re-refined advertising in their effort to build support for the inner harbour of Vancouver becoming a site for major bitumen exports. Now the tag line used is,
"Committed to safety since 1953."
Of course, this remains fundamentally false since the Trans Mountain pipeline, built in the mid 20th century, was not acquired by Kinder Morgan until 2005. Previous pipeline operators may have been committed to safety but those people are long gone. Today, Kinder Morgan chooses not to stand on its own record across North America; they prefer to appropriate the reputation of Trans Mountain's departed owners.

After reading the report by Sightline.Org, people will deduce that Kinder Morgan's commitment has been to profitability, not safety. Here are excerpts:
  • In Louisiana, Kinder Morgan’s coal export facilities are so dirty that satellite photos clearly show coal dust pollution spewing into the Mississippi River.
  • In South Carolina, coal dust from Kinder Morgan’s terminal contaminates oysters, pilings, and boats. Locals have even caught the company on video washing coal directly into sensitive waterways.
  • In Virginia, Kinder Morgan’s coal export terminal is an open sore on the neighborhood, coating nearby homes in dust so frequently that even the mayor is speaking out about the problem.
  • In Portland, Kinder Morgan officials bribed a ship captain to illegally dump contaminated material at sea, and their operations have repeatedly polluted the Willamette River.
  • Kinder Morgan has been fined by the US government for stealing coal from customer’s stockpiles, lying to air pollution regulators, illegally mixing hazardous waste into gasoline, and many other crimes.
December 12 update:

A short while ago, Kinder Morgan ended an advertising campaign that stated,
"Trans Mountain, operating safely in your community since 1953."

That falsehood has been replaced in new advertising with,
"Trans Mountain, operating safely in your community."
That, of course, is debatable. With extreme weather hitting two coasts of North America this week, no participant in the fossil fuel industry is operating safely in any community. Moreover, this is just one more illustration of Kinder Morgan playing fast and loose with the truth. Trans Mountain was incorporated by Imperial Oil and Canadian Bechtel 65 years ago and Kinder Morgan acquired it in 2005. The Texas based operation had been taking credit for "operating safely" when the company was owner of the pipeline for less than 15% of its lifetime. Additionally, economist Robyn Allan says,
"Part of the [company's] strategy is to deal in complexity that avoids scrutiny,"
During Kinder Morgan's ownership, numerous serious deficiencies have been apparent so continuing to claim safe operation is, as polite people might say, disingenuous. Others would call it outrageous lying. Of course, given the high stakes, British Columbians cannot trust this company and we cannot believe any promises they make, no matter what warm and fuzzy claims are made by their paid advertising.


It's not been a good week for Trans Mountain Pipelines hereabouts. Nor has it been a good week for myths that the NEB is an objective regulator and the RCMP is an even-handed enforcer of public order. Essentially, to protect the pipeline company's interests, police exceeded court authority and established a line across Burnaby lands not covered by the Supreme Court injunction. Then, they arrested people for crossing the misplaced barrier.

BC Civil Liberties Association Executive Director Josh Paterson reacted after the court threw out contempt charges facing Burnaby Mountain demonstrators,
“The RCMP made an unacceptable mess of this injunction, improperly arresting nearly 100 people. Today the court has cleaned up the mess. The RCMP arrested demonstrators for violating the court’s order when those people hadn’t crossed the line. Some of these people were deprived of their liberty over an entire weekend. The court made clear that the police had no authority do to that. This is a victory for the constitutional right of people to demonstrate and to express themselves.”
Earlier, Paterson had complained about police conduct,
“We have been extremely troubled to see video and photos of people being choked, thrown to the ground, and pinned to the ground, and we are looking into whether complaints should be filed against the RCMP and other participating police forces.”
One might think this situation would embarrass the RCMP and be an expensive mistake for American owned Kinder Morgan but taxpayers are stuck with the already 7-figure police cost, an amount that will increase when lawyers begin to argue about damages owed children, elders and others for wrongful arrest and imprisonment. However, the reality is that Trans Mountain got what it wanted. Police actions ensured the company was able to complete the disputed work and further its preparations for turning Burrard Inlet into a more significant port for export of diluted Alberta bitumen.

That outcome fits the Harper Government and its oil industry sponsors quite nicely but provides further evidence the RCMP has become an obedient servant of political masters, a status resisted by non-commissioned personnel as well as civilians opposed to what Toronto writer George Jonas referred to as "Canada’s drift from a free society to a police state."

Some people believe that, despite complaints about unnecessary force, the RCMP response in Burnaby was restrained, since there were no reports that snipers were deployed, as happened in New Brunswick.

In various processes recently, including Burnaby Mountain, the NEB demonstrated its loyalty to the fossil fuel industry. Regular readers will not be surprised by another example of subservient regulators serving interests of regulated parties.

On October 14, after noting a Trans Mountain commercial that included the dishonest tag "operating safely in your community since 1953," I filed a complaint with Advertising Standards Canada, a non-profit organization established by the industry to "self-regulate" and ensure integrity of advertising.

The issue was straight forward since Trans Mountain had been charged and convicted for not operating safely in the community of Burnaby. CRED (Conversations for Responsible Economic Development) reports in Assessing the risks of Kinder Morgan’s proposed new Trans Mountain pipeline,
"Kinder Morgan, Inc. is an U.S. energy transport company headquartered in Houston, Texas. Kinder Morgan was formed in 1997 when former Enron executives Richard Kinder and William Morgan bought Enron’s liquid pipeline assets, Enron Liquids Pipeline, L.P...

"Carl Weimer, executive director of the Pipeline Safety Trust, a US-based non-profit organization, has noted that Kinder Morgan has a poor safety record since acquiring a huge network of pipelines in a short time period. The National Response Center, the the sole federal point of contact for reporting oil and chemical spills in the U.S. and its territorial waters, has found Kinder Morgan responsible for more than 1,800 violations since it was incorporated in 1997, nearly 500 of which are pipeline incidents...

"Since purchasing the Trans Mountain pipeline in 2005, Kinder Morgan has been responsible for four major spills:

"Abbotsford 2005: A ruptured pipeline dumped a total of 210,000 litres of crude oil into the Abbotsford area and into Kilgard Creek. In a 2007 report from the Transportation Safety Board of Canada, Kinder Morgan was criticized for a delay in response time because the line between the Sumas tank farm and the Sumas pump station was not part of a leak detection system.

"Burnaby 2007: A road crew ruptured a pipeline, causing 250,000 litres of crude oil to flow into Burrard Inlet Bay via the Burnaby storm sewer system. Eleven houses were sprayed with oil, many residential properties required restoration and approximately 250 residents voluntarily left their homes. Cleanup took more than a year. The Transportation Safety Board ruled the accident was the fault of Kinder Morgan as it was responsible for ensuring the excavation crew knew the pipeline’s exact location before they started digging.

"Burnaby 2009: 200,000 litres seeped from a storage tank into a surrounding containment bay at the Burnaby Mountain tank farm, causing strong fumes locally.

"Sumas 2012: 110,000 litres of oil leaked from a Sumas Mountain holding tank, caused by freezing water placing pressure on a gasket. The National Energy Board’s investigation found that “the leak was detected later than it should have been,” the company’s management of procedures was “inadequate” and that the operator “failed to recognize the leak situation” on two occasions. It took three alarms and a shift change before someone was sent out to investigate.

So, following my complaint, and similar complaints from others, was Advertising Standards Canada (ASC) effective in ensuring integrity of Kinder Morgan's message? I doubt the sincerity of the ASC process and it certainly did not prevent Corus, Global, CTV and others from running KM advertising that they knew, or should have known, was false.

As noted in the "confidential" response from ASC, almost seven weeks after my complaint,
"The advertiser advised ASC that it is in the process of replacing the statement, 'operating safely in your community since 1953,' from its advertising. Given this ASC has closed its file on this matter."

Bada bing bada boom!

By the way, I noted but reject ex parte statements about confidentiality, which I assume are aimed at protecting advertisers. I made no agreement to keep this particular matter behind closed doors and I believe matters of public interest deserve complete reporting and full disclosure.

Trans Mountain exposed its lie to millions of people over many weeks. When the campaign was drawing to a close, they agreed to change the offending words but didn't promise to avoid mistruths in the future, nor did they issue retractions and apologies. Since the falsehoods continued long after being noted publicly, Kinder Morgan demonstrates it is dishonest, not unlike Enron, its direct ancestor.

Following is the Northern Insight article published October 15, 2014 after my complaint was filed online with CSC.

This week, radio Station CKNW played commercials aimed at promoting public confidence in the absolute safety of Trans Mountain pipeline operations and marine shipments of petroleum products on the west coast. The spots end with this tagline:
"Trans Mountain, operating safely in your community since 1953."

News report, October 2011
"Three companies pleaded guilty Monday, Oct. 3, 2011 for their part in a 2007 oil spill in Burnaby that damaged nearby homes and leaked into Burrard Inlet. Trans Mountain Pipeline, which owns the pipeline, and two contractors, B. Cusano Contracting and R.F. Binnie and Associates, each pleaded guilty to one count of polluting the environment under the Environmental Management Act. A total of 26 charges were laid after work on a sewer project ruptured the pipeline in July 2007, setting off a 12-metre geyser of crude oil that showered 11 nearby houses and led to the evacuation of 250 residents."
The Canadian Code of Advertising Standards contains this clause:
1. (a) Advertisements must not contain inaccurate, deceptive or otherwise misleading claims, statements, illustrations or representations, either direct or implied, with regard to any identified or identifiable product(s) or service(s).
Anyone who believes Trans Mountain advertising noted above is inaccurate or deceptive is entitled to lodge a complaint with Advertising Standards Canada.

Filing a complaint is a relatively simple process.

Addendum, November 29:
Please read Rafe Mair at The Common Sense Canadian, Critics of Burnaby Mountain citizens are out of touch with public will for change. He comments on a Vancouver Sun editorial that states,
"It is time for those protesting against Kinder Morgan work crews on Burnaby Mountain to stand down. They have made their point and are now breaking the law…It should be remembered that pipelines are of national importance, with international trade implications, which is why, ultimately, the federal cabinet bears responsibility for sanctioning such enterprises."
I wonder if Posthaste editorialists might next advocate legalization of marijuana since trade in that commodity is another matter of national importance, with international trade implications.
BC Liberal Premier:
"Cutting red tape is a priority."
The BC Government also promised increased access to parks and other Crown lands for mining, forestry and oil and gas exploration and alteration of building codes, workers' compensation, Agricultural Land Commission and other regulations in a plan to reduce and simplify business obligations.

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Sunday, December 14, 2014

A crime family depends on its enablers - rerun

The bulk of this item was written in 2010 and it was moved to the top a year later. I've done a little editing to recognize the political environment of 2014 but not much has changed, in the article and in BC politics. Indeed, the winners kept winning and most of our fellow citizens barely noticed. - Dec 2014
I quoted from a Lewis Carroll poem The Walrus and the Carpenter in a comment thread at the Vancouver Observer. My obvious suggestion was that Tzeporah Berman had been like oysters that naively went for a stroll on the beach to be consumed by their ushers, the walrus and the carpenter. It will not surprise regular readers that I think Lewis Carroll gave us important words. Here is a rerun from a year ago that provides more of the poem, with polemics added by me. - May 2011
Premier Gordon Campbell, his back room puppet masters, greedy co-conspirators and BC Liberal Party members are devoid of honour. Campbell, head of this west coast crime family, long ago lost his integrity and moral compass. His aim has been to simplify conversion of public assets to private control, for private benefits.

Soulless self-dealing manipulators, operating in the shadows, hold Liberals in place to achieve goals of personal enrichment. In the past few years, appetites have grown because they learned that restraint is no longer necessary. With hundreds of misinformation officers on the public payroll and a servile media close at hand, a new realities - even false ones - are achievable.

We see the rewards, taken in the form of padded contracts, consultancies, extravagant salaries and supplementary pensions, directors' and meeting fees, unquestioned expense payments, sports event tickets, travel junkets,  severance payments, etc. The always understood quid pro quo is silence, loyalty and kickbacks to the party.

What better example than the BC Rail insiders, executives and directors scooping millions while conducting less business than a neighbourhood Canadian Tire manager. Despite the costly executive, Liberal insider Patrick Kinsella also dipped his substantial wick into the easy takings.

The received wealth of those granted privileges by senior Liberals is through private influence peddling. People with ordinary skills, except for ability to operate in shadowy corridors of government, draw incomes that would leave ordinary citizens gasping, if revealed.

The enablers of the Liberal crime family are backbench MLAs, some once honourable folk who aimed to serve the community for good. Now, they are fleshy fungi, kept in the dark, fed an individually designed diet of composted droppings, hopeful their heads will one-day poke above the putrid layers.

But four young Oysters hurried up,
All eager for the treat:
Their coats were brushed, their faces washed,
Their shoes were clean and neat--
And this was odd, because, you know,
They hadn't any feet.

Worst of all are the seasoned professional pundits, claiming to report objectively as servants of the public, but in reality, little more than water carriers, supporting the party line, aiming to share comforts of the ruling class. Vaughn Palmer issued a typical example in his September 16 column, HST was 'game changer' in plan to reduce deficit.

This fits right in to the new Liberal strategy. First, they said this "revenue neutral tax change" was "the single best thing we can do to stimulate the economy." That did not fly when their shill economists were discredited and the real story was revealed from the government's own studies.

The truth was that consumers were to face five years of higher costs without offset. Therefore, the Liberal spin machine designed a new strategy. The ever loyal Bill Good and then a broadcaster Christie Clark ran with this for weeks. We needed HST to avoid cuts to social programs; no alternatives existed. This story stumbled a bit because a tax described as revenue neutral could hardly ensure continuation of government programs.

The latest claim rolled out is the need to reduce deficits because those unfair impositions force future generations to pay for our current benefits. Inarguable, supposedly. However, the claimants feel zero remorse for loading future citizens with tens of billions in contractual commitments for energy ($60B in 2014). For electricity, Liberals gave all the upside to private producers and all the economic downsides to tomorrow's power consumers.

Vaughn Palmer has been beavering away for the Liberals these past weeks. He's a crafty old pro who sells only a part of his soul, unlike many media colleagues, Bill Good for example, wanders only between government apologist and government cheerleader. Palmer leads his story with a pre-election memo written by Campbell's agent at the Finance Ministry, Graham Whitmarsh. The story reinforced is that HST was not on the Liberal radar, but it might be later if conditions dictated the move. Sure enough, days after the election, the conditions existed. According to Palmer, a "pissed-off" Premier demanded options to meet the promised $495 million deficit, a figure they already knew to be impossible. Two days later, a deal with Ottawa was set, including a $1.6 billion federal transition payment.

Palmer is no fool. He knows how slowly negotiations grind between governments and that underlings do not make major policy commitments without directions from superiors. If appointed functionaries were allowed that option, political masters would have abdicated traditional responsibilities. No, Palmer knows the real story; he simply will not report it. That is not in the BC Business Party's interest.

Does anyone else find it strange that Liberals gave Palmer the Whitmarsh memo but did not include it in any of the FOI responses to which it would have belonged, if it were real? No, this is simply crass news management by a dishonourable government aided by a helpful commentator.

"The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings.

Diogenes, for the uninitiated, was a Greek philosopher born in the late 5th Century, BC.  An influential member of a school of philosophy known as the Cynics, Diogenes believed in living a simple life of virtue in harmony with nature.  The image of Diogenes most familiar to the modern world is that of a man walking through city streets in broad daylight and carrying a lantern in search of an honest man.  Reports of Diogenes’ search efforts indicate that he did not find that which he was seeking.
I had opportunity to listen to Friday's Dull Edge from the Ledge on CKNW. Wow. Online political and media critics are no longer merely nincompoops. Now we are akin to anonymous child pornographers and conveyors of malicious libel.

The elitist triplets do not like to be held to account for their wobbles, fearfulness and shaded truth. Bill Good is consistent. After complaining about critical internet voices, he introduces featured and favourite caller Sam. Good old reliable Sam. No embarrassing discussion of media failures from him. Why would there be?  He has his own ticket to the front of the parade.

"I weep for you," the Walrus said:
"I deeply sympathize."
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

"O Oysters," said the Carpenter,
"You've had a pleasant run!
Shall we be trotting home again?'
But answer came there none--
And this was scarcely odd, because
They'd eaten every one.

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Friday, December 12, 2014

Lies my energy minister told me

October 15, I listened to Energy and Mines Minister Bill Bennett provide detailed assurance that, unlike budgets of numerous BC megaprojects that suffered runaway costs, the $7.9 billion Site C dam budget was final, fully reviewed by specialists and reliable because it included a contingency well above prudent amounts. Nothing left to chance, uncertainty or politics because number were developed by the world's top experts.

Well, that was then... this is now.

It's just talk. Otherwise, Mr. Bennett
would have mentioned it in his speech.
Liberal spokesman Vaughn Palmer is explaining that "$8.5 billion is within the range of the revised cost estimate.” Put simply, in two months, costs escalated $600 million, a rate of more than $10 million a day.

Remember the years of proMedia outrage after a different Premier named Clark offered assurances that the cost of fast ferries would be $210 million, "right down to the toilet paper." He was wrong... to the tune of about $240 million. Today, top news at The Province Online includes "how to book the cheapest airline flight," a Calgary man's claim that bigfoot DNA had been "plucked from a BC tree" and a report about an Afghani Bruce Lee lookalike.

It seems budgets in British Columbia, in the words of Paul Willcocks, "are apparently written in pencil, to make it easier to rewrite the numbers as costs kept rising."

In October, I reported Bennett's reassurances,
With keen perception of a man certain of the road he follows, Bennett recognizes uses that might overwhelm present generating capacity if a ten or fifteen billion dollar commitment to Site C is not made.

"There are new and increasing uses for electricity: electric cars, the things that we tape our favourite television shows with, our phones, our iPads, our laptops, etc.; a lot more electricity being needed."
In the same speech, he admits that Site C would provide power for mining and gas projects but he failed to mention that the established industrial rate would be less than BC Hydro's costs, either from Site C or its many private power suppliers. The eventual amount of that subsidy remains a matter of negotiations that will affect whether proposed LNG projects go forward. With large up-front infrastructure costs, negligible gas royalties and no LNG taxes until operators declare all costs are recovered, BC taxpayers should hope Liberals soon propose a different reelection strategy.


Here is another small excerpt from Bennett's October statement. You'll hear him being corrected by his minder when he uses the word WE when he's supposed to speaking ME. In Bennett's words, the decision will be,
"based on what's best for ratepayers in the province. That's going to be the overriding consideration for us... [whispers...] or, for me, as I go to cabinet and make a recommendation to them on this project..."
Since government has not made arrangements with First Nations, it will have difficulty arguing that negotiations were meaningful if the project launched prior to completion of agreements. The strategy is to pretend a "final investment decision" is not yet made. Therefore, all activities complete or underway are without cabinet approval and no costly project is certain without authorization from the highest level.

Sure, the committed public investment measures in the hundreds of millions for design, engineering, assessments and approvals. The Petronas deal is done and it has been promised cheap, secure power. The Site C pre-construction phases is substantially complete; if it were not, Bennett wouldn't have a "reliable" final budget. They have environmental certificates issued after a lengthy process and BC Hydro is involved in contracting for worker accommodations and site preparation. By every practical measure, Site C is underway. Calling an end to the enterprise would result in huge losses that would not be "what's best for ratepayers in the province.?


H/T to RossK at The Gazetteer for pointing the way to Vaughn Palmer's column.

Also read Certainty of Site C massive cost overrun is 86%

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Wednesday, December 10, 2014

Ian Jessop on Kinder Morgan

On his CFAX1070 afternoon show this week, Ian Jessop interviewed Eric de Place, Policy Director of, which Tuesday published a new report, “The Facts about Kinder Morgan” that examines the company’s behavior.

The report reveals Kinder Morgan’s track record includes below industry standard maintenance, pollution, law-breaking, and cover-ups. In one California community, the company was convicted on six felony counts after one of its pipelines exploded, killing five workers.

This foreign company is the kind of enterprise facilitated by Canada's Conservative Government. Facilitated with pride too, as demonstrated in a Vancouver Observer report, Waterloo woman finds NEB e-mail lauding public’s inability to question pipelines.

On his CFAX1070 program, Ian Jessop regularly examines subjects not often covered by competing news operations. If the station's signal is not available in your area, listen online, from 1pm to 3pm daily, or by downloading the podcast.

Here is the 19-minute segment about Kinder Morgan from December 9.

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Monday, December 8, 2014

Talk about Kinder Morgan, updated

If you want to know about Kinder Morgan's methods of communication, read As Pipelines Expand, So Do Fears of Clearcuts, Spills, by Bryan Zandberg, The Tyee, November 2006:
When pipeline heavyweight Kinder Morgan began felling a thousand trees along its right-of-way on Burnaby Mountain last September, it touched off a protest it clearly didn't see coming.

Early in the morning last Sept. 18, a handful of local residents, angry they hadn't been told about the clearcut being made behind their homes, banded together and told the loggers and backhoes to stop cutting.

The work stopped, and the residents demanded a meeting with Kinder Morgan and called the media. CBC and CTV showed up and got some footage and sound bites, and then the matter seemed to quietly fall by the wayside.

Since then, the National Energy Board has approved the first phase of an expansion project that seems to guarantee clashes with North America's largest petroleum transporters will become much more common in the future…

[Paul Blundin, a spokesman for the angry Burnaby homeowners, said] they were appalled at the mega-company's poor attempt at consultation…

Blundin said Kinder Morgan sent out some vague e-mails -- to the wrong people, he adds -- warning that some "thinning" was to be done, but just days prior to the when the first trees hit the ground.

According to him, the public meeting with Kinder Morgan the protest had given rise to was in danger of being hijacked by the company's PR machines.

"If you can imagine a gym set up with all these various booths, like a trade-show kind of concept," recalled Blundin of the event. He criticized Kinder Morgan for trying to adopt a smug open-house approach rather than openly dealing with residents' concerns. No chairs were set out, said Blundin, and Forest Grove Elementary gym, where the meeting was held, was booked reluctantly by company officials, and only after considerable pressure.

"What they wanted was [for] people to walk in and kind of mingle with the staff, be schmoozed, give them a cup of coffee and a cookie and then kind of wander out…"
The Facts About Kinder Morgan, Sightline Daily,
Last week, a financial research firm, Hedgeye, released a scathing report on Kinder Morgan that supports many of Sightline’s conclusions. Aptly titled Is Kinder Morgan Maintaining its Stock Prices Instead of its Assets? (no longer available online), the report is mainly concerned with Kinder Morgan’s books, but it includes a few bombshells that should worry the public.

Consider just this sampling from the summary section:
We believe that Kinder Morgan’s high-level business strategy is to starve its pipelines and related infrastructure of routine maintenance spending in order to maximize Distributable Cash Flow…
In our view, Kinder Morgan cuts, defers, and eventually finances the [Limited Partnership’s] maintenance spending…
A broader, and more important concern is the reliability and safety of Kinder Morgan’s pipeline’s. In 2012, Kinder Morgan acquired El Paso, then the largest natural gas pipeline company in the US, in a +$30B deal; Kinder Morgan has already cut maintenance expenses by 70-99% and maintenance [capital expenditures] by ~60% on most of those assets. In our view, it is alarming that Kinder Morgan supporters believe that this is a sound business practice.
The report goes on to detail specific maintenance spending deferrals, and it enumerates a few of the mishaps—some of them deadly—that Kinder Morgan’s pipelines have suffered in recent years.
The Facts about Kinder Morgan, Sightline Daily
Many of Kinder Morgan’s coal export operations in the US blight neighborhoods and foul rivers. The company’s track record in the Northwest and beyond is one of pollution, law-breaking, and cover-ups. Moreover, the proposed Oregon terminal would be the company’s biggest yet.
  • In Louisiana, Kinder Morgan’s coal export facilities are so dirty that satellite photos clearly show coal dust pollution spewing into the Mississippi River.
  • In South Carolina, coal dust from Kinder Morgan’s terminal contaminates oysters, pilings, and boats. Locals have even caught the company on video washing coal directly into sensitive waterways.
  • In Virginia, Kinder Morgan’s coal export terminal is an open sore on the neighborhood, coating nearby homes in dust so frequently that even the mayor is speaking out about the problem.
  • In Portland, Kinder Morgan officials bribed a ship captain to illegally dump contaminated material at sea, and their operations have repeatedly polluted the Willamette River.
  • Kinder Morgan has been fined by the US government for stealing coal from customers’ stockpiles, lying to air pollution regulators, illegally mixing hazardous waste into gasoline, and many other crimes.
  • Kinder Morgan’s pipelines are plagued by leaks and explosions, including two large and dangerous spills in residential neighborhoods in British Columbia.
In public, Kinder Morgan likes to point out that the firm already operates coal export facilities in Virginia, South Carolina, and Louisiana. “It’s just a location,” a company’s spokesperson said in the Portland Business Journal about the planned site near Clatskanie.

“What we’re proposing is not something we don’t already do.”

And that’s exactly the problem.


Who is Kinder Morgan? Conversations for Responsible Economic Development (CRED), 2014
Kinder Morgan, Inc. is an U.S. energy transport company headquartered in Houston, Texas. Kinder Morgan was formed in 1997 when former Enron executives Richard Kinder and William Morgan bought Enron’s liquid pipeline assets, Enron Liquids Pipeline, L.P. Its core business is to move fossil fuels such as coal, oil, natural gas, and, increasingly, diluted bitumen from mines and wellheads to utilities, refineries, and manufacturers. It is the 84th largest company in the world and the fourth largest energy company in the United States and owns or operates approximately 80,000 miles of pipelines with an enterprise value of $94 billion.

Safety track record

Carl Weimer, executive director of the Pipeline Safety Trust, a US-based non-profit organization, has noted that Kinder Morgan has a poor safety record since acquiring a huge network of pipelines in a short time period. The National Response Center, the the sole federal point of contact for reporting oil and chemical spills in the U.S. and its territorial waters, has found Kinder Morgan responsible for more than 1,800 violations since it was incorporated in 1997, nearly 500 of which are pipeline incidents.
Kinder Morgan’s Trans Mountain pipeline shut after second leak in month, Globe and Mail, June, 2013
As one Kinder Morgan crew worked on stemming an oil leak from its Trans Mountain pipeline in British Columbia on Thursday, another worked on winning over the province’s reluctant public for a major expansion of the line.

For the second time in as many weeks the company was forced to shut down the only pipeline linking the Alberta oil fields with a westcoast shipping port because of a leak, this one about 40 kilometres east of Hope, B.C. 
Trans Mountain Pipeline operators ignored alarms warning of Abbotsford oil spill, Vancouver Sun, November 2012
A National Energy Board report reveals that Trans Mountain Pipeline operators ignored warning alarms for three-and-a-half hours before responding to a gasket failure that resulted in a crude oil spill last January at its Sumas tank farm near Abbotsford.

It took six hours after the first warning sounded for Trans Mountain’s Sumas operator to arrive on the scene, where a spill was discovered. 
Merritt pipeline spill raises maintenance concerns, CBC News, June 2013
Kinder Morgan said the spill was detected during regular maintenance on the Trans Mountain pipeline in a remote area near Kingsvale, B.C.…

"The public should be very concerned. This is the fifth spill on that pipeline since 2006 and we're just very lucky it wasn't a spill of diluted bitumen as the new pipeline is going to carry," said Sierra Club of B.C. executive director Sarah Cox.…
Pipeline Investigation Report P05H0044, Transport Canada
A 20 inch pipeline owned by Kinder Morgan leaked crude oil near Abbotsford for more than a week after the company first received complaints. Crude oil was released into the surrounding area and made its way into Kilgard Creek. The pipeline was 43 years old.
Kinder Morgan's historic oil spills are double the Kalamazoo disaster, Vancouver Observer, May 2014
[Kennedy Stewart] The outspoken MP, well known for his opposition to Kinder Morgan’s $5-billion proposal to now expand the Edmonton-to-Burnaby pipeline, released new federal data on the existing pipeline's spills. The NEB records date back more than half a century, and show the total volume released by Trans Mountain was 40,000 barrels.

The Kalamazoo disaster by Enbridge released 20,000 barrels.

“Over the lifetime of this [Trans Mountain] pipeline, it’s leaked double the amount of the Kalamazoo spill,” said Stewart on Wednesday.…

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Sunday, December 7, 2014

David Mitchell on investor immigrants

Through the magic of search engines, this item, first published August 2012, draws regular attention from readers. Mitchell is talking about Britain but similar rules for moneyed immigrants apply in many nations, including Canada. It's a short piece, worth a listen.

From Channel 4's 10 O'Clock Live
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Saturday, December 6, 2014

Fool me once, shame on me, fool me twice...

Promises vs. 'political speeches:' Tories' honesty questioned on support for injured veterans, Matthew Coutts, Yahoo News, Dec. 3, 2014
…A group of veterans known as the Equitas Society have launched a class-action lawsuit suggesting that the benefits paid out under the New Veterans Charter is inadequate, and does not live up to promises the government had previously made…

…the government had unsuccessfully tried to have the B.C. Supreme Court reject the lawsuit and is now appealing the case to the B.C. Court of Appeal, claiming promises made to veterans were not to be taken as gospel.

In a written submission, government lawyers argued that “these statements were political speeches not intended as commitments or solemn commitments.”

Take a moment to ruminate on that comment, on what it confesses, and then try to take politics seriously ever again.

The Conservative government made speeches – political speeches – promising support to Canada’s war veterans. And those speeches were intended to curry favour from military families and supporters. But not intended to be taken seriously in any particular way.

Essentially, anything we are promised in a politician’s effort to form government is not legal tender. It’s an empty promise. A purposeful white lie, or at least no indication of truth…

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Understaffed and incapable, by design

In The Tyee, Scott McCannell, executive director of the Professional Employees Association, asserts,
The B.C. government has slashed professionals in the public service to the point where it doesn't have a full picture of what's happening. In a March 2014 report, the Professional Employees Association (PEA) demonstrated that the province has reduced its complement of scientific and technical professionals by 15 per cent since 2009.

Looking back to 2001, there are 25 per cent fewer professionals in the public service...

Government policy over the last 13 years has been to dramatically reduce in-house government professionals, deregulate natural resource industries and to reduce the role of public service professional staff in monitoring, compliance and enforcement.

We believe that government policy increases the risks of disasters like Mt. Polley and may have significantly contributed to this event. Watchdog agencies, including the Forest Practices Board and the Auditor General, have already voiced concern over the lack of on the ground monitoring happening in natural resource ministries.
The 25% reduction of professionals in public service, despite the economy growing by 46% ¹ (in constant dollars) tilts the balance in favour of private parties with deep pockets, able to hire never-ending parades of consultants who will fortify the aims and objectives of their paying clients. These specialists have little concern for public interests; they are like lawyers paid to defend "every person, however wicked, depraved, vile, degenerate, perverted, loathsome, execrable, vicious or repulsive he [or she] may be."

The very large companies who exploit British Columbia resources understand the advantage of a mismatch and I've heard it expressed crudely, as in "Bullshit baffles brains." Urban Dictionary defines that as,
"A deception. To put on such a good show the inspector is so impressed (s)he won't bother with a detailed check or to question anything."
Not just taxpayers suffer from disadvantage. Small businesses - the putative economic backbone - typically cannot afford to muster similar resources and, by comparison, they become easy pickings for bureaucrats. I recall an example from my own career. An obdurate tax auditor argued that a supplementary regulation superseded a section written in the Provincial Sales Tax Act that formulated our position. He issued an assessment that could have cost tens of thousands of dollars. Our dispute fell on deaf ears for the longest of time, despite clarity of the Act. Only after we spent a considerable sum on lawyers and demonstrated willingness to go to trial was our position reviewed at the highest level and accepted as correct. Had our company been unable to afford defensive actions, we'd have faced a serious financial burden.

That story may sound like a complaint about government service but my intention is to reinforce the importance of employing skilled and knowledgeable professionals throughout government. Downsizing public agencies has eliminated or reduced functions seen as expendable, including optimum levels of supervision and human resource training and development. Inevitably, that results in a civil service that is less effective than it ought to be. For most of us, that is unfortunate. For laissez-faire capitalists, it is movement in the right direction.

My examination of public revenues from the resource industries began after a knowledgeable person offered a tip that material revenues were failing to reach government coffers because industry routinely undervalued and under-reported production. The individual said this continued because government's enforcement resources were inadequate to ensure collection of amounts properly due. An additional allegation was that mid-level officials were aware but believed corrective action was not welcome at the highest levels.

I also heard a separate claim that top managers of the resource and environment ministries have less commitment to pollution abatement than the major resource businesses they regulate. The reasoning behind this situation was said to be philosophical, the belief of classical liberalism promoted by the Fraser Institute that governments should minimize involvement in the private sector and trust participants to make acceptable decisions in unfettered economies. Believers reject the need for government to act as conservators or guardians of public assets. They believe that private enterprises should be left to maximize their own economic returns.

We've reached a strange point in political history where the BC Liberal message machine spins in overdrive, proclaiming more and more accomplishments of government, while the functioning reality is that, in the trenches, managers are looking for government to initiate and achieve less and less.

1. Statistics Canada, CANSIM Table 384-0038, Expenditure-based real GDP, chained (2007) dollars

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Friday, December 5, 2014


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Another fleet sunk

When financial people mention "sunk costs," they refer to expenditures that cannot be recovered. Almost 15 years ago, BC politicians learned the investment of hundreds of millions for fast ferries had to be reclassified. If the PacifiCats had not themselves sunk, their costs had. That outcome provided a field day for government's political opposition and their media allies.

BC is soon to finalize another 9-figure financial disaster involving a transportation fleet and it also was a pet project of an overenthusiastic Premier. There is a difference though; the bus fiasco has attracted little attention from BC's political reporters and commentators. Having written an excellent article a year ago, Brian Hutchinson of the National Post is an exception.

Prior to the 2010 Olympics, Gordon Campbell decreed the "hydrogen highway" would become a reality. With support from his Californian pal, The Governator, Campbell imagined the alternative fuel route would extend from Whistler to San Diego by 2010. His government issued a press release celebrating "the arrival of the first bus of what will become the world’s largest single hydrogen fuel cell bus fleet today." It went on:
The arrival of 'Bus 1' of the hydrogen fuel cell bus is a major step forward as we work to build a Hydrogen Highway that stretches from Whistler to Victoria and beyond,” said Premier Campbell. "This fleet will reduce greenhouse gas emissions by 1,800 tonnes per year in B.C. and it will showcase British Columbia’s expertise in cutting-edge hydrogen and fuel cell technology to the world.
If those words sound familiar, it is because the NDP had a similar idea that building aluminum ferries in BC would showcase the province's cutting edge skills in high speed ship construction.

Today, the 20 hydrogen fuelled buses are in storage while BC Transit searches for buyers. These units reportedly cost four times as much as diesel buses but capital costs accounted for less than half the program budget. Operating expenses were unusually high, partly because hydrogen had to be trucked in from Quebec. Repair costs were substantial compared to standard buses because vehicles were not suited to the conditions.

Hutchinson quoted Ben Williams, president of Unifor Local 333.
“The hydrogen buses don’t run properly in the cold Whistler environment,” he said Tuesday. “You’d think someone would have considered that, before any cash was spent.”
Yes, you'd think that but spending other people's money is just so damn easy when it's for the boss's flavour of the day.


There have been a stream of "ticking bombs" crossing Canada in the form of diesel trucks carrying hydrogen to fuel the Whistler bus fleet. Was truck operation safe and free of fatalities? Were GHG emissions from production and transport of the clean fuel higher or lower than what a battery equipped hybrid fleet might have created while it shuttled around Whistler?

At least the fast ferry project aimed at creation of jobs and skills in British Columbia.

The decision to end the hydrogen project does not please everyone. Former BC Transit Chair Eric Denhoff complains, saying the buses should remain as a demonstration project, "Even if there was a bit of additional cost to running these things.” (CBC quotes Ballard Power as saying the per kilometre cost of hydrogen bus operations is double that of diesel.) Denhoff denies this was a failed experiment and maybe he’s right.

Denhoff knows about Skytrain and Canada Line from his days as an SNC Lavalin official. Those have served as demonstration projects for the world, demonstrating how not to build mass transit systems. Sure enough, just about everyone everywhere did something completely different.

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