I read with great interest the interview of John Streicker by Josh Kerr, published in the April 8 edition.
In the interest of full disclosure, I should mention I have worked as a petroleum engineer for the last 35 years, on five continents and in about 25, or so, countries.
One thing I have learned in my career, as Streicker has undoubtedly learned in his, is that efficiency is always a winner; investments in efficient practices nearly always pay out sooner than expected, especially with rising energy prices.
That’s why I was the first person in the Yukon to install an air-source heat pump in a house in 2000 and why I’ve put in a second one and consulted on at least a dozen more installations, all of which have worked out pretty well.
For that reason, I was delighted to see that, according to Streicker, the Green party policy “calls for investments and upgrades to the nation’s electric grids and for energy efficient buildings.”
He goes on to say that “investments in energy projects and efficiencies would create thousands of jobs here in the Yukon and across Canada.
“If you consider retrofitting buildings there’s (sic) lots of jobs there. Nationally, we are talking about many thousands of jobs.”
Well, that’s great. What a terrific idea à to invest in our energy infrastructure and upgrade our buildings for efficiency. Why hasn’t anyone else thought of that?
Oh, wait, I seem to remember putting in deductions for some new windows on my income tax return a year or two ago.
I went for the expensive but efficient triple-paned ones too, as I recall. You know, I think that was the Conservative government who put that program into place and, if memory serves, it’s still in effect. I wonder if that was the same Conservative government that just put up half the money for that hydroelectric expansion at Mayo B? It must be, since the Conservatives have formed the government for about five years or so.
Gosh, who would have thought that something like that wouldn’t have come from the Green party first?
Well, so far so good. Then John goes on to say, “Stripping subsidies from fossil fuels would make renewable energy more cost effective.”
Huh?
Could I just ask one little question, Streicker? These “subsidies” would be what, exactly? As in, who gets them, how much and for what, exactly?
Merriam-Webster defines “subsidy” in this case as: “A grant by a government to a private person or company to assist an enterprise deemed advantageous to the public.”
Streicker and I are both engineers, but as far as I know only one of us has been running economic evaluations on petroleum projects for the last 35 years. With the possible exception of the so-called super-depletion boondoggle put forward by Pierre Trudeau and his minions in the ‘70s, to the very best of my knowledge there were, and are, NO subsidies available to the oil and gas industry in Canada.
None. Zero.
Zippidy-do-dah.
Exactly the same tax rates, depreciation schedules, and deductions for costs apply to the oil and gas industry as to any other industry. Well, almost; John Turner’s 1974 budget made Crown royalty payments non-deductible for federal income tax, but double taxation isn’t exactly a subsidy.
I have a hunch that Streicker might be basing his allegations of oilpatch subsidies on the claims of a Canadian Press article reprinted in the Whitehorse Star on November 3, 2010, which ran with the headline: “Canada’s oilpatch subsidies said to total $2.8 billion a year.”
Said by whom, I ask?
Well, that comes from an “economic study” prepared by the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD).
According to them, four types of subsidies exist, where:
1. Government provides direct transfer of funds or potential direct transfer of funds or liabilities.
2. Revenue is foregone or not collected.
3. Government provides goods or services or purchases goods.
4. Government provides income or price support.
I can certainly understand their point of view on No. 1, like the $6 or $8 billion or so the federal government just gave to the auto industry in Ontario. That’s a subsidy.
Point No. 4 qualifies too; Ontario Hydro will pay any idiot with a wind turbine 19.2 cents for every kilowatt-hour they can supply, but only charges consumers 7.5 cents per kilowatt-hour. That’s a subsidy too.
Similarly, Yukon Energy charges customers less than the true cost of electricity generated with diesel fuel. That’s also a subsidy but according to this supposed “economic study,” the IISD also considers the following to be subsidies to the oil and gas industry:
• Partial funding of a regulatory agency (p.33).
• Deductions for intangible capital expenses (p.38), deductible at 100 per cent.
• Tangible capital expenses (p.39).
This document from the IISD continues with another 70 pages of highly creative ‘subsidy’ details, (p.72 through 142, Annex 1). In every case, those monies not paid to the government as taxes, royalties, etc. for apparently any reason are to be considered ‘subsidies.’
Most telling: the Canadian Press article quoting the IISD paper states, in the next-to-last paragraph, “researchers say they expect some disagreement from oil producers and governments, mainly focusing on the definition of the word ‘subsidy.’”
Oh, really? That one gets my vote for “understatement of the year.”
The Canadian oil and gas industry pays the same tax rates, gets the same deductions and allowances on expenditures as any other industry and I challenge anyone to provide evidence of subsidies paid to the industry that meets the aforementioned Merriam-Webster definition.
Streicker goes on to say “stripping subsidies from fossil fuels would make renewable energy more cost effective.” What?
First, I question the existence of any subsidies at all and, if as Streicker says, “Oil and gas would be more expensive,” that certainly doesn’t make renewable energy more cost effective, whatever that’s supposed to mean, in fact it changes nothing at all, except that we all have less money.
Taking Big Macs off the menu at McDonald’s wouldn’t make the milkshakes taste any different.
In summary, I see us as having two choices:
1. Green party: jack up the cost of oil and gas, leaving us with less money and more government, or
2. Conservative party: leave oil and gas prices to the market, invest in efficiency and have more money and less government.
My vote’s going to No. 2.
Richard Corbet
Whitehorse