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Global Growth? Retail Sales Flop in US, UK, Canada, Germany, Australia

Consumers unexpectedly threw in the towel in 5 countries but the central banks and the IMF insist everything is fine.

On February 14, I noted US Retail Sales Dive, Negative Revisions Too. This will impact both 4th quarter and first quarter GDP estimates.

On February 22, Bloomberg reported Canadian Retail Sales Drop Unexpectedly.

“Receipts fell 0.8 percent to C$49.6 billion in the last month of 2017, Statistics Canada reported Thursday. It was the biggest monthly decline since March 2016. Economists were expecting no change during the month.”

On February 16, the Financial Times reported UK retail sales figures disappoint. The results were positive but barely.

“The volume of retail sales grew by 0.1 per cent month-on-month, far below analysts’ expectations of 0.5 per cent growth in January, according to a poll from Thomson Reuters. On the year, sales were up by 1.6 per cent, from 1.4 per cent, far below expectations for a 2.6 per cent rise.”

On January 31, Reuters reported German Retail Sales Unexpectedly Fall in December.

Given the Fed’s outlook and increasing expectations of four rate hikes plus tapering in the US, tapering in the EU, and rate hikes in the UK, such reports must be meaningless.

Also note the IMF made a “Brighter Forecast” for the global economy in January. When has the IMF ever been wrong?

U.S., Canada Face Off For LNG Dominance

U.S., Canada Face Off For LNG Dominance

LNG

Considering that the North American shale revolution is the key global energy development of the past decade, it’s surprising that Canada’s natural gas production has actually been falling. Canada is still the world’s fifth largest gas producer, but output has dropped around 15 percent over the past 15 years to 16 Bcf/d.

As a free market economy without the over-influence of a national oil company, Canada’s future gas production is desired by the rapidly globalizing gas market. According to BP, Canada has about 80 Tcf of proven gas reserves, and with low incremental needs, this large endowment could make the country a worldwide gas exporter at some point in the 2020s.

The main problem for Canadian gas production is the decline of its sole export market, the U.S., where dry gas production has risen 35 percent to nearly 80 Bcf/d since 2010. In turn, over the past decade, Canada’s gas exports to the U.S. have been sliced in half to 5.5 Bcf/d. This decline will continue: The EIA projects that U.S. gas production will increase 40 percent by 2040.

Enter Canada’s necessity for LNG, the fastest-growing way to trade gas and a market that constitutes a rising 12 percent of all global use. There is great potential to export LNG off the coast of British Columbia, where cargoes can ship gas produced in western Canada to fast growing Asian markets. Western Canada accounts for around 70 percent of the country’s gas production.

Now already online, U.S. LNG will be a competitor for Canadian LNG. But, even with the Panama Canal expansion, the trip from British Columbia to Asia is still approximately two-thirds shorter than from the U.S. Gulf. Hampered today by a global supply glut, potential western Canada’s LNG projects should come online early next decade, right when expected higher oil prices will make Canada’s oil-linked LNG profitable, and the end of many long-term existing contracts will allow Asian buyers to seek new sources of supply.

…click on the above link to read the rest of the article…

Canada’s Oil Crisis Continues To Worsen

Canada’s Oil Crisis Continues To Worsen

Enbridge pipeline

Canadian oil producers can’t get a break. First it was the pipelines — there are not enough of them to carry the crude from Alberta’s oil sands to export markets. This pipeline capacity problem has been forcing producers to pay higher rates for railway transportation, which has naturally hurt their margins in no small way. Now, there is a shortage of rail cars as well.

The situation is going from bad to worse for Canadian producers who can’t seem to catch a break. Canadian railway operators are fighting harsh winter weather and finding it hard to supply enough cars to move both crude oil from Alberta and grain from the Prairies.

The harsh weather is just the latest factor, however. Before that, there was the 45-percent surge in demand for rail cars from the oil industry, Bloomberg reports, citing Canadian National Railway. The surge happened in the third quarter of last year, and Canadian National’s chief executive Ghislain Houle says that it took the company “a little bit by surprise.” This surprise has led to “pinch points” on the railway operator’s network, further aggravating an already bad situation.

As a result, crude oil remains in Alberta and prices fall further because Alberta is where the local crude is priced, Bloomberg’s Jen Skerritt and Robert Tuttle note. In fact, Canadian crude is currently trading at the biggest discount to West Texas Intermediate in four years, at $30.60 per barrel. The blow is particularly severe as it comes amid improving oil prices elsewhere driven by the stock market recovery.

The light at the end of the tunnel is barely a glimmer. Despite federal government support for the Trans Mountain pipeline expansion project, it is still facing obstacles that may result in it never seeing the light of day.

…click on the above link to read the rest of the article…

Is This New Tar Sands Technology a Game Changer for Exporting Canada’s Bitumen?

Is This New Tar Sands Technology a Game Changer for Exporting Canada’s Bitumen?

Hockey pucks

A new technology has the potential to transform the transportation of tars sands oil. Right now, the already thick and slow-flowing oil, known as bitumen, has to be diluted with a super-light petroleum product, usually natural gas condensate, in order for it to flow through a pipeline or into a rail tank car.

However, scientists at the University of Calgary’s Schulich School of Engineering inadvertently found a way to make tar sands oil even more viscous, turning it into “self-sealing pellets” that could potentially simplify its transport.

“We’ve taken heavy oil, or bitumen, either one, and we’ve discovered a process to convert them rapidly and reproducibly into pellets,” Ian Gates, the professor leading the research, told CBC News in September 2017.

Based on the initial description of this product, it appears that it could alleviate many of the risks involved with moving tar sands oil by rail. The research teams says this product floats in water, does not pose a fire and explosion risk like the diluted bitumen currently moved in rail tank cars, and would eliminate air quality issues related to the volatile components of diluted bitumen.

If true, this technology would appear to reduce potential risks to people and the environment, in comparision with moving diluted bitumen by rail or in pipelines.

Gates also suggests that the solidified bitumen can be moved in the type of open rail cars used for coal. That would be welcome news to railroads, which have been losing business transporting coal as demand has dwindled. Gates did not respond to multiple requests for comment on this article.

Canadian National Working to Commercialize Similar Technology

Meanwhile, similar research and development has been happening not within the Canadian oil industry, but instead, a Canadian railroad, which has patented another method of solidifying tar sands for transport.

…click on the above link to read the rest of the article…

Rising Interest Rates: New Era with Tough Outcomes

Rising Interest Rates: New Era with Tough Outcomes

 

What will the bond market do? The conniptions in the Treasury market are causing pain in existing portfolios but offer opportunities down the road. What’s the impact of these rising interest rates on the housing bubbles in the US and Canada? Where is the pain threshold? How will it differ in the US and Canada? And what will higher interest rates do to new- and used-vehicle sales? We’re at the beginning of a new era with potentially tough outcomes.

The Fed’s monetary policy shift is finally taking hold. It just took a while. The Louis Fed Financial Stress index spiked beautifully and suddenly, from historic lows back in November. Read…  “Financial Stress” Spikes. Markets, Long in Denial, Suddenly Grapple with New Era

Canada vs. Venezuela: Have the Koch Brothers Captured Canada’s Left?

Canada vs. Venezuela: Have the Koch Brothers Captured Canada’s Left?

Photo by Eden, Janine and Jim | CC BY 2.0

With a U.S.-backed military coup or invasion in Venezuela looking ever more likely, Canada’s progressive leftists are pushing for the federal New Democratic Party (NDP) to abandon its “reactionary” foreign policy position on that country. As well, at the annual NDP convention (February 15 – 18), the NDP Socialist Caucus will present a motion requesting the removal of NDP Foreign Affairs Critic Helene Laverdiere from that role.

In December, the Canadian Dimension published a lengthy Open Letter from Dr. John Ryan, a retired University of Winnipeg professor, documenting the “reactionary foreign policy positions” on a variety of issues that the NDP has adopted in recent years, especially through Laverdiere’s role.

Regarding Venezuela, Dr. Ryan wrote, “One would think that Canada’s NDP, as a social democratic party, would be supportive of the progressive policies that have been enacted in Venezuela. Surely the bulk of the people who vote NDP would be far more supportive of Venezuela than they would be of U.S. policies to undermine that country. So how is it that the NDP’s maverick foreign affairs critic is capable of aligning herself with American imperialist reactionary policies? There wasn’t a word from her when President Trump threatened to invade Venezuela and she has yet to criticize the recently announced Canadian sanctions” by the federal Liberal government. [1]

On February 12, Canadian writer Yves Engler extensively documented Helene Laverdiere’s stance toward Venezuela in recent years, and he noted: “In what may be the first ever resolution to an NDP convention calling for the removal of a party critic, the NDP Socialist Caucus has submitted a motion to next weekend’s convention titled ‘Hands Off Venezuela, Remove Helene Laverdiere as NDP Foreign Affairs Critic.’

…click on the above link to read the rest of the article…

Canadian Existing Home Sales Crash In January

After five straight months of acceleration, January saw Canadian existing home sales crash 14.5% – the biggest drop on record…

Home prices rose 2,3% over the past 12 months, but it appears a sudden close-eye on Chinese buyers has hit the market hard as Toronto home sales crashed a stunning 27% from December (prices down 4.4% YoY) and Vancouver sales down 10.5% MoM (prices up 18.1% YoY).

Canadian existing home sales are down 2.4% YoY.

Must be the weather, right?

This comes less than a week after horrific jobs data struck Canada – thanks to minimum wage-hikes.

The Canadian job market has never lost more part-time jobs – ever – than in January…

As a reminder, The Bank of Canada hiked ‘dovishly’ in January…

The BOC also noted that “while the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.”

We suspect that hike-trajectory may slow further.

The pumped hydro storage potential of the Great Lakes

The pumped hydro storage potential of the Great Lakes

The potential energy contained in the waters of the Great Lakes amounts to approximately six thousand terawatt hours, enough to supply the US and Canada with electricity for an entire year were the lakes to be drained to sea level. This of course will never happen, but there may be potential for partial utilization of the resource. A pumped hydro system that uses Lakes Huron and Michigan as the upper reservoir and Lake Ontario as the lower could theoretically generate 10 terawatt-hours, or more, of seasonal energy storage without changing lake levels significantly. The most likely show-stopper is the increased likelihood of flooding in the lower St. Lawrence River during pumped hydro discharge cycles. (Inset: Niagara falls runs dry in 1969).


The idea of using the Great Lakes for pumped hydro storage isn’t new – I remember reading about it once before but can no longer find the article. What brought it back to mind was a comment posted by Alex on the recent 100% renewable California thread in which he agreed that while there were indeed no fresh water lakes that no one cared about there were some that could perhaps be adapted for pumped hydro without anyone noticing:

Alex says:
January 18, 2018 at 5:02 pm

“The only existing fresh-water lakes that would be feasible targets for large-scale pumped hydro are in fact those that no one cares about.”

Or perhaps those that are so big you won’t notice the change. Here is a modelling challenge: Lake Ontario and either Lake Erie or Lake Huron.

I estimate 6TWh per metre elevation change in Lake Ontario.

…click on the above link to read the rest of the article…

Oh Canada! Part-Time Jobs Crash Most In History

The Canadian job market has never lost more part-time jobs – ever – than in January…

Canada’s unemployment rate rose to 5.9% as total job losses for January dropped the most since 2009, but it was the 137,000 collapse in part-time jobs that stands out.

So what is driving this collapse?

Simple – Minimum Wage Hikes In Ontario.

Ontario raised the minimum wage 21 percent to C$14 ($11.26), making it the highest in Canada.

And as Reuters reports, the steep minimum wage increase that went into effect on Jan. 1 in Ontario, Canada’s most populous province,has had a rocky start as some employers cut workers’ hours and benefits to reduce its impact on the bottom line.

The provincial government, controlled by the Ontario Liberal Party, positioned it as a measure to improve the livelihood of workers in Ontario, home to the nation’s largest city, Toronto, and its capital, Ottawa.

Yet some employers responded by implementing hiring freezes, cutting hours of existing workers, eliminating paid breaks and boosting benefits costs.

Shocker – sending minimum wage costs soaring leads to less demand for low-skill employees?

Will they never learn?

Of course, some see a silver lining as average hourly earnings jumped 3.3% (vs 2.9% previous month) thanks to the min wage hike, the fastest pace since 2015.

But, it appears the minimum wage hike has sent more people ‘out’ of the work force as the participation rate plunges to its lowest since 1999…

As a reminder, The Bank of Canada hiked ‘dovishly’ in January…

The BOC also noted that “while the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target.”

We suspect that hike-trajectory may slow.

The reaction in the Loonie is quite chaotic…

This Vigilante Scientist Trekked Over 10,000 Kilometres to Reveal B.C.’s Leaking Gas Wells

This Vigilante Scientist Trekked Over 10,000 Kilometres to Reveal B.C.’s Leaking Gas Wells

John Werring in the field

If you’d met John Werring four years ago, he wouldn’t have been able to tell you what an abandoned gas well looked like.

We had no idea whether they were even accessible,” said the registered professional biologist.

That was before the summer of 2014, when he headed up to Fort St. John, B.C., on a reconnaissance mission. At that time, much was known about leaking gas wells in the United States, but there was very little data on Canada.

All Werring had to work with was a map of abandoned wells provided by B.C.’s Oil and Gas Commission. Armed with a gas monitor and a metal detector, he headed into what the gas industry calls the “Montney formation,” one of the largest shale gas resources in the world. Shale gas is primarily accessed via hydraulic fracturing, also known as fracking.

Most of these places, there’s nobody in the field,” Werring said. “You won’t see anybody for miles and miles. Just well after well after well.”

In some areas, Werring — a senior science and policy advisor with the David Suzuki Foundation — could detect gas leaking from the wells just with his nose. His curiosity was officially piqued.

Out of sight, out of mind’

Fast forward three summers and Werring has now logged more than 10,000 kilometres on B.C.’s oil and gas roads in the hunt for leaking wells. In the process, he has revealed that B.C. is vastly underreporting its “fugitive emissions” — emissions vented or leaked during the natural gas extraction process.

The whole city of Fort St. John is surrounded by wells,” Werring said. “The further away we got from the centre of Fort St. John the worse the conditions were in the field in terms of well maintenance. Out of sight, out of mind. No company was immune.”

…click on the above link to read the rest of the article…

North America’s Next Big Shale Play

North America’s Next Big Shale Play

Montney shale

The oil price crash of 2014 not only weighed on Canada’s oil sands industry, but it also directed more company investment into shorter-cycle shale projects in the U.S. at the expense of more capital- and energy-intensive oil sands production in Canada.

While the oil sands will continue to be a growth story thanks to investments made before the downturn, Canadian energy officials and many oil companies — both Canada-based and supermajors — are increasingly looking to explore and drill in the two largest shale formations, Duvernay and Montney, estimated to hold billions of barrels of light tight oil and trillions of cubic feet of gas.

Currently, Canada’s shale oil production is around 335,000 bpd, according to estimates by energy consultancy Wood Mackenzie, quoted by Reuters. This is some 8 percent of total Canadian production, which the National Energy Board (NEB) says was nearly 4.2 million bpd in 2017. Wood Mackenzie expects shale oil production to rise to 420,000 bpd in a decade.

Some two-thirds of Canada’s oil production comes from oil sands. In 2017, Canadian oil sands production is expected to have exceeded 2.6 million bpd, according to IHS Markit. Production is expected to continue to grow, thanks to investments made prior to the oil price crash, while future investment is “to remain lower than historical levels”, the data and analysis provider said in a report earlier this week.

Investment in new oil sands production capacity has dropped by two-thirds since the oil price crash — from more than $30 billion to just over $10 billion estimated for 2017 — and may fall further this year before starting to recover, IHS Markit says.

…click on the above link to read the rest of the article…

Megadams Not Clean or Green, Says Expert

Megadams Not Clean or Green, Says Expert

Forty years of research show hydro dams create environmental damage, says David Schindler.

Politicians who describe dams as “clean energy projects” are talking “nonsense” and rejecting decades of science, says David Schindler, a leading water ecologist.

Former premier Christy Clark often touted the Site C dam as a “clean energy project” and Premier John Horgan has adopted the same term.

But that’s not the story told by science, Schindler told The Tyee in a wide-ranging interview.

In fact studies done by federal scientists identified dams as technological giants with lasting ecological footprints almost 40 years ago, he said.

Dam construction and the resulting flooding produces significant volumes of greenhouse gas emissions. Canadian dams have strangled river systems, flooded forests, blocked fish movement, increased methylmercury pollution, unsettled entire communities and repeatedly violated treaty rights.

Schindler, a professor emeritus at the University of Alberta and an internationally honoured expert on lakes and rivers, pointed to the increased mercury levels as a health and environmental risk. “All reservoirs that have been studied have had mercury in fish increase several-fold after a river is dammed,” he said.

“How can any of those impacts be regarded as green or clean?”

The Site C dam is no exception. A report by the University of British Columbia’s Program on Water Governance found the Site C project, which faced a federal-provincial Joint Review Panel in 2014, “has more significant negative environmental effects than any other project ever reviewed under the Canadian Environmental Assessment Act (including oilsands projects).”

…click on the above link to read the rest of the article…

How a U.S. Company is Suing Canada for Rejecting Quarry in Endangered Whale Nursery

How a U.S. Company is Suing Canada for Rejecting Quarry in Endangered Whale Nursery

When a Canadian federal-provincial environmental review panel ruled in 2007 that a proposed quarry would go against community core values and would threaten right whales and other marine life in the Bay of Fundy, groups that had fought against the project believed that was the end of the story.

But, that is not how the system works under the North American Free Trade Agreement (NAFTA), which has dispute settlement provisions allowing corporations to sue governments for compensation when they feel the local environmental approvals process has interfered with expected profits.

Instead of abandoning efforts to build a quarry and marine terminal on Digby Neck, Delaware-based Bilcon headed for the NAFTA Investor-State Dispute Settlement tribunal and, in 2015, the three-person panel ruled two-to-one that the environmental assessment panel had violated Canadian law by using the criterion of core community values.

Bilcon has claimed $300-$500 million in damages.

Bilcon project included shipping path in endangered whale nursery

The Bilcon NAFTA ruling was inexplicable to Nova Scotia residents as the company planned to blast within 50 metres of the Bay of Fundy and build a 600 foot pier with nearly 50 45,000 tonne vessels a year carrying quarried basalt to the U.S. through waters that serves as a nursery for severely endangered right whales.

ICYMI: 3% of the World’s Endangered Right Whales Died This Summer, Mostly in Canada’s Unprotected Waters

This week, the federal government and environmental organizations are in federal court arguing the NAFTA arbitration panel overstepped its bounds and, with NAFTA renegotiations underway, the case is being watched closely.

Ecojustice, working with Sierra Club Canada Foundation and East Coast Environmental Law, is arguing that Bilcon had the opportunity to ask a Canadian court to rule on the alleged breach of federal law, but, instead, went through NAFTA, which is supposed to decide only on questions of NAFTA law, meaning the tribunal stepped outside its legal expertise.

…click on the above link to read the rest of the article…

Lament for Canada

Lament for Canada

Lament for Canada

I immigrated to Canada in 1967, not quite fifty-one years ago. At the time I was young, naïve and did not know much. Well, I knew a little since I was caught up in 1960s America, then roiled with opposition to segregation and Jim Crow and to the US war of aggression in Southeast Asia. Americans did not call it that of course; for them it was the “Vietnam War”. I walked on the last day of the march from Selma to Montgomery, Alabama in 1965. We travelled in a train from Washington, DC to Montgomery and back, with the shades drawn, so crackers would not have good targets to shoot at. It was the year after Ku Klux Klansmen murdered Chaney, Goodman, and Schwerner in Mississippi. It was dangerous to be black in America, and it still is. It was dangerous too for naïve young whites to stick their nose into business that did not concern them. But of course when you are young, you don’t see the danger, or think that it could come looking for you. Death was still a rather abstract thing. Then we “graduated”, so to speak, to opposition to “the Vietnam War”. That was more personal because you had to decide whether—and I put this politely—you were going to fight in a war in which you did not believe.

It was the year after Ku Klux Klansmen murdered Chaney, Goodman, and Schwerner in Mississippi

I headed to Canada. At the time it was a pretty quiet place compared to the United States. Sure, there was Expo ’67, and there were demonstrations and campus sit-ins for this and against that. Many Canadians opposed the US war of aggression in Southeast Asia, and I remember there was an underground railway to help deserters and “resisters”, or “draft dodgers” (if you did not like them), get into Canada.

…click on the above link to read the rest of the article…

Minimum Wage Fallout Is Caused by Government, Not Businesses

Minimum Wage Fallout Is Caused by Government, Not Businesses

Employees don’t magically become more productive because businesses have to pay them more, so they need to make up the losses elsewhere.

Both in Canada and in the U.S., many jurisdictions have “listened” to the people and enacted feel-good legislation like increasing the minimum wage, sometimes up to $15 an hour. Now that the consequences of such actions are being felt, people naturally blame… private corporations.

In Ontario, famous doughnut chain Tim Hortons sent a letter to all their employees saying that many of their benefits, such as paid breaks and dental benefits, will be scaled down or canceled altogether. Meanwhile, the Great Canadian Bagel chain has announced a price increase to pay for the newly imposed wages.

Unhappy with these changes, an Ottawa-based labor council set up a “bully hotline” so that employees can anonymously denounce employers who “violate the spirit of the new law.” Many “Timmies” regulars are even calling on a boycott of the chain to show their discontent.

In the U.S., a recent picture from a Subway restaurant in Seattle, Washington, shows the franchise owner stating that, because of all the costs incurred (including high minimum wage), he cannot accept one-dollar coupons for the footlong of the day.

It is almost a miracle that the chain hasn’t cut back on employees altogether.

Market Forces Affect EverythingWho is to blame for those changes on both sides of the border? Unfettered-capitalist-neoliberal-puppy-eating-Koch-brother greed? Heartless managers who just want to exploit their workers?

No, the cutting back of hours, benefits, and discounts is a working of the markets, i.e. of every customer’s decisions. Since franchises like McDonald’s have, on average, a profit margin of 2.4 percent, the slightest sudden increase in costs will eat that margin away. It’s a highly competitive and difficult world; as much as 30 percent of Quiznos franchises default on their government-backed loans.

…click on the above link to read the rest of the article…

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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