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Another one on the climate emergency

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Calgary’s new mayor wants to declare a climate emergency. What could it mean for Canada’s energy capital? | CBC News

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Jyoti Gondek may have raised a few eyebrows when she said her first order of business as Calgary’s new mayor would be to declare a climate emergency in the city.

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Canada needs to reduce it's dependence on fossil fuels as this is financially and environmentally unsustainable.

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Opinion: The Clean Fuel Standard is going to cost the average Canadian a pretty penny

David Booth, Driving.ca, Special to Financial Post

Almost exactly a year ago, Motor Mouth - or, more accurately, experts Adam Rozencwajg and Dan McTeague - explained why we might be in for yet another oil crisis and a big jump in pump prices. Naysayers claimed it was just all clickbait and paranoid prediction. Fast-forward 12 months and we have the crude shortages Rozencwajg predicted, and the price spikes McTeague foresaw. Here's what they think is coming next.

Mark December 1, 2022, on your calendars.

That's the date Dan McTeague - who sees and tells all about gasoline pricing in Canada - predicts that 87 octane will hit the (not-so-)magical $2.00-per-litre mark. That's double what it was just 14 months ago, and will no doubt prove quite a shock for consumers who thought cheap gas - like low interest rates - was here to stay. As commonplace as gas-price increases may be, how we got to this shocking state of scarcity - remember that, until very recently, we were talking about an oil glut - is a story of media denial, market manipulation, and the complete suspension of the basic laws of supply and demand.

First, the mathematics of this most recent oil crisis. Oil, on the day this is written, hovers right around the $80-per-barrel mark, while gasoline, in my hometown of Toronto, sits at $1.45 per litre. The consensus, however, is that $100 per 159-litre drum is right around the corner and, according to McTeague, that $20 jump is going to boost prices at the pumps by another 25 cents. That would take the price of regular to $1.70.

But wait, as Ron Popeil used to say, there's more! First, we need to factor in Trudeau's carbon tax - which works out, according to McTeague, to just under three cents for every $10-per-ton. Now we're at a $1.73 a litre (and increasing every year).

As McTeague then points out (with not a little rancor, by the way) our nationwide Clean Fuel Standard is set to come on board that December 1, 2022. Officially "part of Canada's climate plan to reduce emissions, accelerate the use of clean technologies and fuels, and create good jobs in a diversified economy," CFS is just another tax dressed up as a clean-air credit.

And it's going to cost the average Canadian a pretty penny.

Already in place in British Columbia, the provincial Low Carbon Fuel Standard requires gasoline producers to buy credits to offset their higher than regulated carbon output.

Six years ago, a single B.C. credit was worth about a hundred bucks. The going price is now about $470, which, according to McTeague, works out to about 16 extra cents a litre, 18 cents if you include HST. Assuming our nationwide CFS credit emulates the provincial - and McTeague, the most accurate oil industry analyst in Canada, certainly thinks it will - we're now right up against that $2.00 mark; $1.91 to be exact. Factor in a touch more demand as well as a little corporate greed and you could easily be paying two bucks a litre.

The scary part is that $2.00 gas might be the good news

The scary part is that $2.00 gas might be the good news. Because while the rest of us seem to have been happy to ignore the good old laws of supply and demand, Adam Rozencwajg, he of those spot-on predictions, has been busy tracking the oil market these last 12 months. Based on how much oil is currently being produced - and more importantly, how much can be produced in the near future - he says the smart money sees the cost of oil soaring to US$150 and even $200 a barrel.

How the hell did we get to US$200 oil? In April 2020, West Texas Intermediate (WTI) was selling as low as US$20.10 a barrel!

It's an enormous understatement to say the formula for oil pricing is complicated. First, though, as Rozencwajg pointed out a year ago, exploration for new reserves was already dwindling pre-2020. COVID-19 then put what we all thought was going to be a long-term damper on demand. Exploration, especially in the U.S., was even more severely curtailed.

Instead, we got a much-more-rapid-than-expected return to boom times, followed by an increase in American oil imports. As recently as April 2020, the US was exporting as much as 2.3 million barrels per day (B/D); 18 short months later it's a net importer to the tune of 1.7 million B/D. Meanwhile, demand in China may have been as much as 1.4 million B/D higher than it was in pre-pandemic 2019. Globally, Rozencwajg says that the oil market is actually 1.2 million B/D in deficit, "the highest reading on record."

Meanwhile, geopolitics has derailed the supply side of the equation. Investment in the oil industry has virtually dropped off a cliff, mainly because investors are shunning oil exploration. Classic economics dictates that as a commodity's price increases, so does investment in sourcing that commodity. But according to The Economist, unlike other resources in high demand - copper, lithium, etc. - capital expenditures in the oil industry, including new drilling, are less than half of what they were six short years ago.

Rozencwajg says much of this seemingly self-destructive tightening of budget is due to activist investor groups. By way of example, he cites the case of Engine No. 1, an environmentally active hedge fund not even a year old; and ExxonMobil, the world's largest oil producer not sporting a Saudi flag. Through the vagaries of proxy voting - and truly, you don't want the entire intrigue explained - Engine No. 1, with but 0.02 per cent of ExxonMobil shares, somehow hoarded three board seats. Next stop, says Rozencwajg, is Chevron, the goal in both instances to choke off oil supply.

Now, before environmentalists start rejoicing that this price squeeze actually is the rabbit hole you want to follow these activist groups down, be aware that one of the main accomplishments of all these machinations has been to put OPEC+ back in control of the world's oil market.

With demand up and your activism shutting down non-OPEC investment, we're back on the same knife-edge precipice we were back the 1970s.

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That might not be the worst of it. According to Rozencwajg's analysis, if demand were to return to its previous peak of 101 million barrels a day, there simply might not be enough oil to go around. Indeed, this might be the oil crisis to end all oil crises. As Rozencwajg explains it, previous oil shortages were artificial - someone, usually the Saudis, cutting supply in a deliberate attempt to raise prices. There was enough oil to supply demand; they simply chose not to sell it to us.

Now imagine a situation where the Saudis, even if they don't want to hold us hostage, simply can't produce enough oil. In perhaps his scariest prediction yet, Rozencwajg says that, for the first time since the first American oil well was drilled in 1859, we may not be able to produce enough oil, even with OPEC pumping for all it's worth. In official analyst-speak, "if our models continue to be correct, global oil markets should remain in deficit even if OPEC+ returns to producing at its all-time high levels." That's why he's calling for the price of oil to reach as high as US$200 over the next few years.

That said, unlike oil crises past, I'm not sure we'll learn much from this one. Past shortages, old-timers will recall, ushered in all manner of technological and regulatory revolutions. The U.S. CAFE (Corporate Average Fuel Economy) standards were a direct result of 1973's embargo, and the turbocharged four-cylinder engine might be just a quaint Saab anachronism had it not been for the 1979 follow-up.

I'm not sure that's going to happen this time. Despite the Canadian preoccupation with gas prices, I suspect we might just ignore this one - as we did 2007's housing crisis and the recent pandemic downturn - and just continue driving our gas-guzzling pickups as if nothing has changed. Call me crazy all you like, but skyrocketing housing prices haven't done anything to dampen our lust for ever-more expensive houses. And last I looked, $130 plywood hasn't put a stop to very many reno projects. If pickup owners follow a similar pattern, maybe $200 fill-ups won't prove a hindrance to truck sales.

But, considering how prescient Rozencwajg and McTeague were a year ago in their predictions, it might be time we start bracing ourselves for $2.00-a-litre gasoline.

This column first appeared in Driving.ca, part of the Postmedia Network Inc. chain.
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Is gas really heading to $2 a litre in Canada?

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Opinion: The Clean Fuel Standard is going to cost the average Canadian a pretty penny David Booth, Driving.ca, Special to Financial Post Almost exactly a year ago, Motor Mouth - or, more accurately, experts Adam Rozencwajg and Dan McTeague - explained why we might be in for yet another oil crisis and a big jump in pump prices.

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Canada needs to reevaluate the first past the post system.

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Liberal Leader Justin Trudeau said Saturday that he remains open to getting rid of Canada's first-past-the-post electoral system if his party is re-elected, but added that it's not a priority since there's no consensus on the issue.

Trudeau said, however, that he would not favour proportional representation as an alternative, saying the system "gives more weight to smaller parties that are perhaps fringe parties."

Trudeau instead expressed his preference for a ranked-ballot system, saying such an approach contributes to less divisive elections.
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"I have always been a fan of ranked ballots where people get to choose first choice, second choice, third choice," he said during a campaign stop in Aurora, Ont. "I think it forces parties to come together and make a pitch to be the second choice of other voters, and therefore they are less divisive."

The Liberal leader first raised the prospect of electoral reform in 2015 by promising that the federal election held that year would be the last to use the first-past-the-post method, a pledge he would ultimately renege on.

Trudeau added Saturday that moving forward with electoral reform was "not a priority" since there was still no consensus among political parties on the issue.

"If ever there is more of a consensus, it could be interesting to follow up on and I'd be open to that, because I've never flinched in my desire for ranked ballots," he said.

With only two days before Canadians head to the polls, Trudeau clearly wished to keep his attention firmly fixed on the battle for last-minute votes.

Under sunny skies, he blitzed through a series of stops in Ontario - buying honey at a farmer's market in Newmarket, doing some lawn bowling in Richmond Hill and dropping by a campaign office to urge volunteers to "go flat out" to get the vote out.

"Knock on doors, talk to your neighbours," he urged them.

At most stops, Trudeau was greeted by friendly crowds who swarmed him for selfies, with the occasional protester or heckler throwing insults from the outside.

Over and over, Trudeau repeated his party's promise to fight climate change and promote vaccines, and insisted Conservative Leader Erin O'Toole would "take Canada backwards."

Trudeau has been coy in recent days about his own post-election future, saying that he wants to concentrate on Monday's vote and not engage in speculation.

But on Saturday, he said he's not done with putting forward his agenda on issues such as climate change, affordable child care and protecting seniors, adding he's enthusiastic "not only for the days to come, but the years to come together."

"There is lots of work still to do, and I'm nowhere near done yet," he said.

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Justin Trudeau says he is open to replacing first-past-the-post electoral system if Liberals elected

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Liberal Leader Justin Trudeau said Saturday that he remains open to getting rid of Canada's first-past-the-post electoral system if his party is re-elected, but added that it's not a priority since there's no consensus on the issue.

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canada ate 289,940,062.26 pounds of butter in 2018
WHATS NEXT?!?!?!