Wednesday, August 14, 2013

My take on Line 9

Over the last year, there has been a huge amount of debate over Enbridge wanting to reverse the flow of oil in a major pipeline -- "Line 9" -- from east to west, to west to east.   The claim has been made that an already fractured pipeline could become even more of a threat when raw tar sands oil makes it way from Alberta through our our neck of the woods.   Indeed a lot of the protests have focused around the North Westover section in the mostly rural Borough of Flamborough which turn is part of Hamilton.   This station is one of several where pressure is added on its way downstream -- not unlike compressing stations for natural gas we see along the highways and byways of this part of the world.   A court hearing today around three of the protestors against Line 9 turned particularly nasty.

It's been hard to put a finger on where I should be.   Here are the issues as I see them and they are in no particular order:

First, the federal government has really changed the way environmental assessments are done.    Several groups asking to intervene have been rejected by the National Energy Board.  The decision is rigged -- Enbridge is going to win no matter what anyone has to say about it.    But its refusal to turn over even some basic documents the NEB wants is what I find truly unacceptable above all.   It amounts to contempt for the government and for Canadians, and we deserve better from our energy companies.

Second, the oil that will be shipped through the pipeline is not (contrary to what many protesters claim) raw tar sands.   Bitumen of the kind that is stripped mined in Saskatchewan, Alberta and British Columbia would eat away at the line and cause it to be destroyed from the inside out.   Rather it is refined oil, or dilbit (diluted bitumen).   The dilution normally happens with naptha and synthetic crude (what comes out of 'sour' or high sulphur oil after going through an upgrader).

There are also some other chemicals used that we really don't know much about.    Point is, what usually comes out is at best medium grade oil -- which can be used at a refinery but is nowhere near as valuable as "light sweet", the kind that is normally referred to when we talk about the price of oil.   And we don't know nearly enough about those chemicals.   I'm sure Material Safety Data Sheets exist for them but presuming we can access them they could run for pages with dozens of known hazards and side effects.    One only has to think about the disaster along the Kalamazoo River in Michigan in 2010.   It's cost in the tens of millions and several hundred homes still have to use bottled water.

Can't safer chemicals be found, plain and simple?   No answer about that from Enbridge yet.

Third, there's the issue of the company donating about $44,000 to the Hamilton Police Service earlier this year.   The protesters claim the police were bought out and that's why they have been so belligerent in enforcing an order to vacate the pressure station.

Well, it is private property.    If a highway was shut down, then free speech considerations would kick in and the police would then really have no leg to stand on.

But as far as the donation?   It went towards the cost of an improved stable for the city's Mounted unit.   Yes, we have at least four police horses.   They're not just there for symbolic reasons or cuteness for the benefit of the city's kids, the horses do have a major role in deterring crime, particularly for crowd control situations that can get nasty.   They may appear to pace slowly on the urban and rural streets of our city, and they do shit quite often on streets without being cleaned up after (making our poop and scoop law a joke), but they do pursue at a fast pace if a suspect decides to run on foot and one of the horses is within the vicinity.

If it wasn't Enbridge, someone else would have donated the money and they'd also be accused of buying off the cops.    No win situation there for anyone.

Fourth, no guarantees from the company they will fix a decades old line to meet safety standards.    If the Kalamazoo disaster is any indication, one should really be worried about that since Line 9 runs through multiple watersheds -- including the Rouge Valley, which is on track to become an urban federal park, not unlike the Plains of Abraham or Stanley Park (both managed by local boards but still federal property).    Obviously, I think, the line has to be rebuilt from scratch or at least those portions that are in desperate need of replacement, and they run for dozens of kilometers.

So what's fifth?   It's something that could override all of the above.   And sadly, it does for me:   Energy independence.

With all of our oil in Canada, it often shocks many in Central and Eastern Canada that most of the oil used here doesn't come from out west, but rather from OPEC.   In particular, Venezuela -- not a friend of Canada by any means even though it draws a lot of our tourists, especially to Margarita Island.   The oil refined in Saint John, Montréal and Sarnia is foreign oil, not domestic.   And that's wrong.   Because OPEC is a cartel, the pool of petrodollars or increasingly petroeuros is divided up proportionately which means a lot of our gas purchases finance countries in the Middle East that sponsor terrorism, especially Saudi Arabia and Iran.

I happen to think Canadian oil should be used by Canadians first.   I'm not talking about a return to the National Energy Policy which forced the West to sell the oil east at a 20% discount.   By all means, price the oil at the West Texas Intermediate price, which would actually mean less expensive gasoline for those of us in this part of the world (by as much as five cents a litre).   If there is any left, then export it to whomever we deem appropriate (or not, as long as they have the money).

But it does us no good to stay on the current course.   We should not be a slave to a foreign cartel.   We have enough cartels in Canada as it is (i.e. marketing boards which are both a blessing and curse).

My position:   Very reluctantly, I agree the flow does needs to be reversed.   We should all be using Canadian oil, not OPEC oil.   I don't want to support terrorism, period.

But in return, Enbridge has to take out a huge liability policy (say, $10 to $20 billion) in case there are any fuck ups.

Rebuild the entire line too, from scratch -- the jobs will be mostly temporarily, but the line will also use Canadian steel designed to last.

And finally the company has to let us know exactly what's in the dilbit, including the supplementary chemicals and not hide behind the wussy term "trade secrets".   A hazard diamond with a four digit number, the kind we see on 18 wheelers and rail cars, may assist firefighters telling them what chemical they're dealing with in determining how to attack a disaster situation, but shouldn't we know what those numbers mean too?

(There is a HAZMAT guide of this nature that details the rules for hazard diamonds, published jointly by the Canadian, US and Mexican Transportation Departments, but it runs 392 pages -- including a list of 2516 (!) of HAZMATs shipped by all modes of transport on 69 of its pages, with painstaking details on how to deal with disasters on all of them, fire or not.  I'm sure even most shippers want something more straightforward.   We need something simpler, too.).

That more than anything would ensure that if we have to give the pipeline a wide berth, we do so.

Tuesday, August 13, 2013

What? Wireless companies can't take the heat?

Over the last few weeks, the three big players in Canada's wireless business -- Bell, Telus and Rogers -- have been running two separate but related series of ads which are related to the almost certain reality that America's largest phone, cell and IPTV company, Verizon, will made bids to buy out two of the smaller and financially troubled carriers, Mobilicity and Wind Canada.   They never mention the company by name, but we all know that's who they mean.

One set of ads tries to make us believe that wireless rates are actually lower in Canada than the United States.  Indeed it's laughable.   Where did the industry come up with the claim our cell rates are lower 65% of the time?   Did they create the scenarios to prove their self-served point?  (Yes!)

Briefly:  Do the math.   With a population south of the border nine times larger and therefore lower economies of scale, that's just not possible.   It's bunk, plain and simple.   We need real competition.   If it's an American company does it really matter if the service is better and tariffs lower?

The second set of ads involves people who claim to be actual employees of the Big Three.  Maybe they really are.   Maybe they're just voice actors.   But the point they try to make is that it's unfair that a company that had no role in building up the wireless infrastructure in Canada will be able to just piggyback onto what we have.   As well they complain that foreign companies are able to buy their way in while Canadian companies are forbidden from buying their competition even if they're in dire straits.

Let's break that argument in two, starting with the second.

The ban on pan-Canadian mergers, well I agree with them that part makes absolutely no sense.   I wrote about this some time ago, when the feds stopped Telus from buying Mobilicity.   At the present time, Telus is suing the federal departments of Industry (licensing) and Heritage (communications) saying the rules aren't fair.   As well as they should -- a government that claims to support free enterprise while tying our own companies behind the back is wrong-headed.   And if they're wrong-headed on that it just goes to show they're like that on a lot of other things.   The loophole should be closed so everyone is on a level playing field.

The first:   Well it can be argued that letting a company in that wasn't involved with the buildup would be fine if the conclusion was, they shouldn't be allowed in at all.    But why not?    Wind and Mobilicity are bleeding money.   The fact they're willing to sell out at a discount is proof.   There are other regional players, such as Cogeco Cable (mostly in Québec, almost no penetration in Ontario although they have way more cable customers here), Videotron (owned by Quebecor / Sun Media) and MTS (Manitoba's main telco).   They should be allowed to bid too since they have their own infrastructure by that logic, but they can't either.

The reason why so many Canadians are salivating at the possibility that Verizon could come here is the fact they have two things going for them -- a willingness to be here for the long term; and more importantly since they already have a huge share of the market in the States, they would be the only company with operations on both sides of the border and that could mean making Canada and the United States a single coverage area with the end of roaming charges.   That would be a huge competitive advantage.   Imagine, no roaming charges, especially when we're close to the border and our devices "accidentally" link to a cell tower on the other side of the border.   The incumbents make a huge part of their profits from roaming.  How are they going to survive having to cut or eliminate them?   I wonder.

The Canadian companies say they believe Verizon would only want to focus on big cities to the disadvantage of smaller ones.   But isn't that part of the reason why Wind and Mobilicity got into so much trouble?    A behemoth would be stupid not to offer the same coverage and services to rural areas as to urban ones.   People wouldn't stand to have 4G or better service in cities (if we can get it most of the time) but 3G, 2G or even analogue service in the back country, especially when we're travelling as many of us do.

Heck, when discount companies like Virgin come here they can do the same piggybacking.   In that case in particular, they got into a partnership with Bell until about four years ago when they were bought out.  Fido was actually T-Mobile (read:  Deutsche Telekom) in disguise until they were bought out by Rogers.    Koodo started out as Solo and Telus had a partnership with Amp'd until they declared bankruptcy.   So spare me the claim that this is a first time venture.   T-Mobile just didn't have the chance to ramp up fast enough -- and they're way bigger than Verizon worldwide.

It's the old saying:   If you can't stand the heat ... you know the rest.   By all means, do close the loophole so the incumbents can have a real crack.    But it does the consumer no good by stopping any company, even a foreign one, from coming here.   Competition is good for consumers, and it's also good for businesses.   We get lower prices, and the old players have to wake up from their complacency -- and greed.