fbpx
Connect with us

Opinion

LITTLEJOHN: Alberta is collateral damage in the Saudi-Russian price war

The Saudi-Russian trade war is about more than just economics, but the Syrian civil war and US shale producers.

mm

Published

on

When elephants fight, the grass gets trampled.  In the fight between Saudi Arabia and Russia, Alberta is the grass. 

This week began with changing the clocks. There’s a full moon, and it ends on Friday the 13th. Oil producers and politicians from Oslo, to Caracas, to Calgary are feeling the bad luck. As the spreading Corona Virus deflated oil demand, Saudi Arabia decided to open the flood gates on production. This triggered a 30 per cent drop in oil prices Monday morning. Western Canada Select dropped nearly 20 per cent to $22.71 a barrel as West Texas Intermediate (WTI) fell to $32 a barrel.

Saudi Arabia made this decision after talks among OPEC+ – aiming for a 1.5 million barrel per day reduction – broke down with Russia refusing to participate.

There are a few reasons for the Russia- Riyadh stalemate. Since the 2014 price war – aimed at eliminating U.S. shale market share – failed, OPEC and its allies have cut production again and again to maintain price. OPEC production fell to a 17 year low. Russia believed this strategy was simply propping up US oil producers at the expense of everyone else. However, US shale production was already beginning to crumble, so it is hard to know how much this played a role.

This isn’t the first time the Saudis expanded oil output in order to hurt Russia. When Saudi Arabia opened the floodgates in the 1980s, it helped lead to the Soviet collapse. The Syrian Civil War is ending and the Iranians and Russians are on the winning side, while the Saudis are not. The oil price drop is a parting economic shot at both the Russians and Iranians, simultaneously, reminding the rest of the world of the Saudis market dominance.

It is quite possible that the Saudis overshot their mark. No one has perfect information regarding how much oil is being produced, consumed or stored at any given moment. It is also difficult to predict market reactions. It’s unlikely that the Saudis accurately predicted how their increase in production would impact price. One lesson from the 2014 price war was that the Saudis cannot sustain a low price for long. Although they require only $2.80 to get a barrel of oil from an existing Saudi Arabian Oil Co. fields, the price at which the country’s budget breaks even is $83.60 a barrel. They need the oil revenue to fund the bread and circuses which keep the house of Saud in power.

Russia’s fiscal breakeven is $42 a barrel, but a price war will impact their foreign exchange reserves and lead to inflation which could impact Putin’s ability to hang onto the reins of power. It is unlikely that Russia will want a long price war either.

It is hard to know who will say chicken first, but there is a third consideration and that is the U.S.  

The last time prices dropped so precipitously was the 1991 Gulf War. At that time, the U.S. welcomed a drop in oil prices as they were a consumer, not a big exporter. The situation today is different. The US has a big stake in the game and Americans need a price of $44-$55 to break even. It is unlikely that President Trump will allow this war to go on for too long before intervening. Given that neither Saudi Arabia or Russia will wish to continue the fight, there is a high probability they will use the excuse to stand down. Trump will be roundly condemned for his actions – as he always is – but it would be the best-case scenario for Canada.  

Alberta needs a price of approximately $45 a barrel, and a long price war would utterly decimate an already struggling province. The repercussions would reverberate across Canada. The 2014 price war led to a Canada-wide recession and this time would likely be much worse. All Canadians should be hoping the bombastic leader to the south will get involved -sooner rather than later. 

Tessa Littlejohn is a Columnist for the Western Standard 
Twitter: @GTessam

Opinion

MORGAN: When Kenney keeps moving the goalposts, ‘benchmarks’ mean nothing

“Businesses need to push back and it’s time for UCP caucus members to stand up. There is nothing left to lose now, and threatening fines for businesses going bankrupt means little.”

mm

Published

on

When I was a kid, I had a cousin who used to invent new card games. I would play by his rules and the game would go smoothly, unless I began winning. Whenever I would try to play a card which would win the game, he would suddenly invent a new rule and explain why that card could not be played. The only answer was to stop playing his games.

The Alberta government is playing the same same game with its citizens and businesses, and it is time that we stopped playing by their rules.

As infections plummeted this year, desperate businesses began opening in open defiance of government regulations forbidding it. It was clear that the second coming of the plague was not materializing, but the very real possibility of bankruptcy was looming and businesses could no longer afford to wait for the government to let them open. It began with the Whistle Stop Diner in Mirror, Alberta and the rebellion began to spread like wildfire as food service establishments across the province joined the Restaurant Revolution.

This rebellion put Premier Jason Kenney in a tough spot. The optics of having police enter and arrest dozens of desperate small business owners in Alberta would be terrible, but if he let the revolt continue, it would be clear that his government had lost its authority to impose continued COVID-19 restrictions.

In a rushed Friday afternoon press conference, a clearly upset premier announced a plan for reopening businesses in Alberta. It was clear that nothing would stop businesses from flaunting laws if the owners couldn’t see a light at the end of the tunnel. People needed to see a plan and Premier Jason Kenney provided it.

Step one of the plan came into effect on February 8th and allowed for very limited restaurant dine-in options along with allowing some outdoor children’s sports activities and some one-on-one fitness training in gyms. More important than these small reductions in restrictions was the clear establishment of benchmarks for further reopening. Businesses could see where things had to be before reopening and they could see which businesses would finally be able to reopen.

This plan bought peace from rebellious business owners as they saw a route to reopening. If hospitalizations stayed below 450 cases after three weeks of step one of the plan, they would be to step two. Retail restrictions would ease, conference centers, hotels and banquet halls would see the ability to host limited gatherings and gyms would see restrictions reduced. People trusted the government and settled down to wait and see if hospitalizations would remain low.

On the morning of March 1, business owners were jubilant. We hadn’t just met the benchmark for reopening, we had crushed it. Hospitalizations were at 250 and dropping. We had reached the benchmark for step three opening. Surely, the government would keep its promises to move to step two.

It didn’t. Instead, the UCP government changed the rules of the game at the 11th hour and moved the goalposts yet again.

As can be seen in the image below, the government changed its plans at the last minute. Eager businesses were left to languish in an indeterminate state of limbo yet again.

At a press conference attended by Premier Kenney himself, he proudly announced that gyms could allow low-intensity activities such as pilates, while libraries would be able to open to with 15% of their capacity. This watered-down step two helps nearly nobody, and makes little sense. Why did they shut out all the step two businesses, while adding library openings (which were supposed to be part of step three)?

What is wrong with these people? What are they thinking? Did they just change their minds at the last minute, or was this phased reopening a lie only designed to keep rogue businesses from defying their rule?

Support for the UCP is already low. This betrayal of small business owners is only going to bring it lower still.

Infections are low, hospitalizations are low, and the ICU levels are outright tiny. There was no need to back off on the reopening plan. Is it only that the government has fallen in love with its new powers so much that they just can’t let it go? Nothing much else makes sense.

What hope is there now for business owners? Clearly none of the benchmarks and paths to reopening set out by the government mean anything. Any of the plans can – and clearly will – be changed arbitrarily. How can this government be trusted? They are either completely dishonest with their reopening benchmarks, or are completely incompetent. Neither scenario lends confidence to struggling small business owners.

It is time for the rebellion to begin again. It appears that this is the only way to get the government to relinquish the control over people’s lives that they so relish. Economic and health statistics clearly don’t matter.

This government is making its decisions in a bubble, and only through pending mass civil disobedience are they willing to back off. Businesses need to push back and it’s time for UCP caucus members to stand up.

There is nothing left to lose now, and threatening fines for businesses going bankrupt means little.

Cory Morgan is the podcast editor and a columnist for the Western Standard

Continue Reading

Opinion

NAVARRO-GENIE: Computer modellers are still driving the COVID-19 fear wagon

“Meanwhile, we can hope that media learn to treat #COVIDzero experts the same way they treat those claiming the virus doesn’t exist.”

mm

Published

on

Renewed calls for prolonged lockdowns to deal with the new SARS-CoV-2 mutations are wrong headed. It has been a year since emergency measures were declared. Yet, the policy response to the COVID-19 crisis has been and continues to be moved by fear that is in turn propelled by statistical models incapable of accounting for risk and of pondering consequences. SARS-CoV-2, the virus causing the disease identified as COVID-19, is a reality. It poses health risks to a well-defined segment of the Canadian population. And while SARS-CoV-2 can infect everyone, the models and responses largely pretend everyone can equally suffer and die from COVID-19. The logic of this pretense points toward lockdowns and heavy restrictions for all instead of carefully-designed protection of the vulnerable. 

The initial reaction to this logic may have been reasonable in mid-March 2020, were it not for the fact that the panic-prone politicians discarded existing pandemic plans designed precisely to prevent panic. Their lockdown strategy, they argued, would bend the curve to protect the integrity of the medical system until it could be reenforced. Such reinforcement would help to save lives. 

The system did not become more resilient and the infections did not stop after nearly two months in lockdown: the strategy was a failure. But such failure has not prevented the continuation of wrongheaded policies and restrictions. There are now misguided calls for #COVIDzero (or #zeroCOVID), which pretend to drive COVID-19 cases to zero by wiping out the virus and all its variants, if only we locked down hard again for another seven weeks. Like the previous failed strategy, this one also is driven by modellers and their flawed mathematical models.

In March 2020, the world seemed gripped by images from Italy, Iran and China, and one model stampeded policy-makers into various forms of lockdowns. It was the work that College of London theoretical physicist Neil Ferguson led. Their “Report 9: Impact of Non-pharmaceutical Interventions (NPIs) to Reduce COVID-19 Mortality and Healthcare Demand,” called for 510,000 deaths in Great Britain and 2.2 million in the US. Ottawa’s model version “showed deaths would easily top 300,000 (but only 46,000 with a lockdown) in Canada, while Edmonton said 32,000 Albertans could die here and 1.6 million could be infected. World-wide, Ferguson and his team expected seven billion infections and 40 million deaths. None of that has happened.

Ferguson’s model raised troubling questions. First, Ferguson refused to publish the original source code and Imperial College refused a British Freedom of Information Act request. Writing in the Financial Post in June 2020, Peter St. Onge remarked that Ferguson’s code was unreliable and fragile, “giving different answers depending on the processing speed of the computer running the model.” Similarly, Chris von Csefalvay noted that the code was practically antique (13 years old), and it was written to model an influenza pandemic. Moreover, thousands of lines of code were “undocumented,” making impossible to take it apart and examine for errors — or to correct them. In his view, the code was “a tangled mess of undocumented steps.” Accordingly, von Csefalvay wondered how the British government assessed and validated the model. He concluded that only Ferguson’s reputation made the Imperial College model authoritative. 

Except that there was no reason to hold Ferguson’s work in high esteem. Ferguson’s “apocalyptic” predictions were gross exaggerations. An earlier model of his predicted 150,000 deaths from mad-cow disease in 2002 (the number of fatalities was 2,704). In 2005, Ferguson’s model predicted 200 million deaths from avian flu (455 persons died). Eventually, Ferguson resigned from the British Scientific Advisory Group for Emergencies (SAGE), not because his COVID-19 model was so inaccurate as to be worthless but because he was found violating the lockdown that he so vocally supported for everyone else by entertaining someone else’s wife in his London residence. After the fact, commentators wondered why anyone listened to Ferguson in the first place. 

As if modellers were not discredited enough after Ferguson’s exaggerated predictions, CBC’s Laura Glowacki promoted Robert Smith? (the question mark is part of his name) in September 2020. Smith? is a mathematician at the University of Ottawa. He builds models for infectious diseases. As case numbers rose at the time, Smith? called for a “ruthless” and “draconian” return to a full lockdown “for a few months … [that] … could bring numbers down to zero new infections.” There was no mention of previous model failure. The country had already locked down hard for a couple of months, and close to 10,000 people had died, mostly in Ontario and Quebec where the vast majority were vulnerable people whom policy makers had vowed to protect and save. Alarmist modelling like Smith?’s pushed the second round of bullying restrictions. Smith? is not among the experts who see a tension between health and economy. In his opinion, the economy would be ruined without a full lockdown.

In November, CTV Infectious Disease Specialist Abdu Sharkawy expressed similar alarms. “We need the hammer, and that hammer needs to be applied with conviction. It needs to be applied with some assertiveness, and we need to apply the support that’s necessary from an economic point of view to the people that would suffer if that hammer is laid down,” he said partially conceding to economic harm. Earlier, with some awareness of greater harm, he said: “You can call it authoritarian, you can call it dictatorial. The fact of the matter is, there’s no more room right now for a balanced approach. It’s simply too late.” Medical experts calling for the confinement of entire populations a new tyranny of “expert opinion” passing for scientific advice. No matter how one slices it, the forced confining of entire populations is not a medical measure.

What is worse, achieving zero infections by locking people down is impossible. If that was not clear in March 2020, it is clear now. The virus cannot be made to disappear at will, and no amount of hiding will eliminate it. But model builders keep driving up the fantasy. In Alberta, for instance, there are dreams of creating a zero-infection zone, in the same way the province is rat-free. Last October, CBC found Malgorzata Gasperowicz, an assistant researcher in the Faculty of Nursing at the University of Calgary. She studied biotechnology at Gdansk and has a doctorate in biology from Freiburg. 

From a series of tweets based on her personal calculations, Robert Brown of CBC News Calgary gave her a platform for her alarmist prognostication of rising cases, warning of disaster is nothing was done “right now.”  Gasperowicz’ motivation appears in a pinned Tweet from July 2020 (@GosiaGasperoPhD). It announces “we can achieve COVID-19 elimination in Canada.”  She advocated turning Canada into a new New Zealand.  Her October 29, 2020 tweet caught the attention of people looking for scary materials and warnings of impending disaster: “It’s too late for soft measures. We need strong decisive measures + $$ support for businesses and people ASAP, in order to substantially [sic] *reduce the scale* of the upcoming disaster. It takes 3-4 weeks from the shutdown date till the peak in cases and hospitalizations[,]” it read.  Note the alignment of language with Smith? andSharkawy. Note how the tweet implies that there will be disaster regardless, but only strong medicine can reduce its scale. 

Gasperowicz pointed out that the number of cases in Alberta was doubling every 16.9 days. Nothing was said about what hospitalisations or ICU cases would be.  Nothing was said about the rate of hospitalizations being a fraction of what it was in the Spring. No extrapolations were offered, except to mention that there would be more “upticks,” as Brown called it. It was all about cases. Modelling for actual illness, hospitalization rates and ICU interventions may have proven far too complex.  

While Gasperowicz predicted 2400 cases for December 5, there were 1765 cases at the peak of the case curve on December 8. The predictions were off by 27 percent, but it did not stop Calgary Herald’s Jason Herring from qualifying her projections on 12 December with “impressive precision.” Gasperowicz described the accelerating rate of cases each 2.5 weeks in an ominous-sounding calculus category no calculus professor is likely to teach: “über-exponential.” Predictions for thereafter were even worse, and were adorned with a catchy slogan: “If we shut down on Nov 15, we will reach 3000+ daily new cases before numbers start to decrease. Either we control the virus, or the virus controls us.” Alberta did not shut down on November 15th and the predicted onslaught for early December 2020 never materialised. Robert Brown did not once ask questions about the origin of the data Gasperowicz crunched, the methodology she used, the assumptions built into the calculations, why the model stopped at calculating case numbers, or any shortcomings the calculations might have. Her “results” were all taken as Gospel. If all one wanted was to drive up fear, there was no need for additional information. 

With no mention of the significant error spread in her October calculations, in January 2021 Gasperowicz tweeted new warnings about the new SARS-CoV-19 strands, which she finds “terrifying.” She particularly worries about B117, the British strand, claiming it is “60 percent” more virulent. Elsewhere, she claimed its virulence is 30-50 per cent higher, and constitutes a “super-danger” Presenting freshly raised fears of the mutations, her model predicted that B117 will spread in Alberta above 2,000 daily cases by the third week in April, 2021, unless Jason Kenney implements another full shut down for 7 weeks. Seven weeks!  

On January 22, Gasperowicz tweeted: “#COVIDzero (aiming to eliminate all community transmission of Sars-CoV-2 as fast as possible) is the solution: 7 weeks of effort and AB can be like NZ.” And on January 27, she said: “B117 is in the community[.] Current restrictions are not enough to prevent its spread. Assuming 10 cases on Jan25 & 50% transmissibility of B117, we can have: 1000+ daily cases on Mar 23 2000+ daily cases on Mar 31[.] This model does’t [sic] include the effect of schools reopening.” We’re a month away from March 23rd, Kenney has relaxed some of the restrictions, and the number of cases is not growing. One can guess that April 23 will not likely bring “disaster,” if we go by previous predictions but Global News was sufficiently impressed to make the claim that Gasperowicz’ modelled projection “shows how a seven week lockdown will drop new COVID-19 cases to zero in Alberta.”

Gasperowicz has not described what the lockdown she recommends for seven weeks looks like, but given her intention to eliminate the virus from circulation, one can assume that it includes stringent stay-at-home directives, shutting down most economic activity and government services.  She also wishes to stop all travel, and published a co-authored column in the Calgary Herald in February 2021 arguing that if Alberta can keep rats out of its borders, it could certainly keep the coronavirus out. Although the column mentioned New Zealand as a model jurisdiction that had kept virus-free, they do not mention re-infecting flare ups. New Zealand had declared itself victorious over SARS-CoV-2 twice by mid-February 2021, only to call for another one in Auckland for three days. There was no thoughtful consideration of the spin-off and collateral damage of stopping and starting time and time again every time cases pop up. By the end of February 2021, with no explanation for the change in the face of the “super danger,” Gasperowicz’s recommendation for total confinement in Alberta, reportedly, was now only 6 weeks.  

According to Global’s Jacqueline Wilson, Gasperowicz says “all non-essential businesses would need to close and all international and inter-provincial travellers would have to quarantine.” That most jurisdictions in Canada, including Alberta, have made a monumental mess in imposing what is “essential” for everyone was not part of the discussion. 

A glance at the New Zealand case charts shows that the country has been at zero cases but for a few consecutive days here and there. Given that their standard reaction to reappearing cases (“outbreaks”) is locking down, chances are they will have more lockdowns. We have seen the same with PEI in early March, 2021. As Sweden’s ranking epidemiologist, Anders Tegnell, puts it: “fighting Covid-19 is a long-term undertaking, meaning temporary lockdowns will ultimately backfire. …once they’re lifted, infection rates will again rise.” And vaccines will not get us there by incantation either. Even with the vaccines, serious scientists do not expect the elimination of the virus. “Even if you vaccinate, you’ve still got a fairly large number of susceptible people there,” says Michael Head, a senior research fellow in global health at the University of Southampton. “So, we will still see outbreaks happen. Viruses simply aren’t rats. And when cases keep popping up, #COVIDzero is a misnomer or a deceitful expression, if zero means zero.

Alberta’s economy is plugged into the world’s and depends on its ties to the rest of the world, whether in agri-foods, tourism, energy or mining.  It could not easily close its borders, airways, highways and railways, much less for another 6-7 weeks without returning to the enormous damage to human lives and to the economy already caused by the first and second rounds of confinement.  Alberta is no island, making the virus here much more difficult to contain. Not that the issue is geography. The reason PEI has had so few cases is because not many people go to or through PEI. Conversely, Manhattan has been one of the most disastrous COVID-19 areas in the world.  The difference is many people want to go to, or need to go through, Manhattan.   

Although PEI and New Zealand are hailed as lockdown successes, they demonstrate the opposite point: it is impossible to hide from the virus, let alone make it disappear. #COVIDzero is a well-intended but irresponsible fantasy posing as medical advice that, if instituted, will again bring greater social and economic harm. So, let’s say no to #COVIDzero and to the fear it inadvertently peddles with the fantasy of virus elimination. Meanwhile, we can hope that media learn to treat #COVIDzero experts the same way they treat those claiming the virus doesn’t exist. After all, denying the existence of the virus seems as detached from reality as it is claiming that it will disappear if we hide from it. 

Marco Navarro-Génie is a columnist for the Western Standard, president of the Haultain Research Institute and a Senior Fellow at the Frontier Centre for Public Policy. He is co-author, with Barry Cooper, of COVID-19: The Politics of Pandemic Moral Panic (2020).

Continue Reading

Opinion

McCOLL: Frig it. Navy’s new ships over budget and behind schedule. Again

The cost of replacing Canada aging surface fleet skyrocketed $82 billion, and will be at least two years late.

mm

Published

on

The Office of the Parliamentary Budget Officer (PBO) released a new report on February 24 about the escalating costs of the Canadian Surface Combatant (CSC) project. The program to build fifteen new Type 26 frigates in Halifax is behind schedule and billions over budget. Again.

The original 2008 budget from the Department of National Defence (DND) and the Harper Government – a number that many defence experts suggested was an impossibly low estimate – was $26.2 billion. A 2017 PBO estimate put the cost at around $62 billion. DND then updated their own estimate to between $56 and $60 billion.

In 2019, the PBO revisited the program, and again the budget increased; this time to $69.8 billion. The latest 2021 estimate is a staggering $77.3 billion if the ships are built on time, $79.7 billion if COVID causes only a single year delay, and $82.1 billion if the program is delayed by 2 years.

The PBO attributes these increases to a combination of factors “including a significant increase in lightship weight (from 6,900 to 7,800 tonnes) and a shift in the start of construction.” 

Much of this 13 per cent weight gain is attributed to the Navy requesting Canadian customization of the British Type 26 design. Lockheed Martin – the design team lead – will be responsible for managing the $4.4 billion development work budget. 

It is quite lucrative to reinvent things for the Canadian military, but not nearly as lucrative as being the local provincial government. Nova Scotia charges the military a 10 per cent PST on these ships.

In a Western Standard interview with the PBO’s Yves Giroux and the two lead analysts who wrote this report, I asked if Canadian taxpayers could save over $7 billion by building these ships in PST-free Alberta – hypothetically, of course – and their answer was a simple: “Yes.” 

That PST bill is worth more than Nova Scotia’s last three years of equalization transfers combined.

The only Navy procurement that currently seems to be going well is Canada’s new Saab CU-176 Gargoyle maritime helicopter drone program. The Navy’s new Swedish drones are being assembled in PST-free Medicine Hat, Alberta.

An odd aspect of the PBO report was the cost comparison to alternate designs: the FREMM and Type 31e. A Navy expert interviewed off-the-record said that including the FREMM makes sense, but that the Type 31e should never have been considered.

The United States Navy recently selected the French/Italian FREMM design to be the basis of its new Constellation-class frigate program. 

The PBO estimated the cost of Irving building 15 Constellation-class frigates in Canada at $71.1 billion. The PBO clarified in the interview that this was based on the US Constellation-class estimates, not on the $30 billion bid the FREMM consortium submitted to the Canadian government in 2017 that was rejected for failing to meet industrial benefit requirements.

The British Type 31e does not yet exist. It is a proposal for a much smaller, less capable, and more affordable frigate based on a Danish design. So why was it included? Because a politician ordered it at a committee. In my initial call, a PBO PR person said that they only looked at the FREMM and Type 31 because that is what the Government Operations and Estimates Committee motion ordered them to investigate.

When I pointed out that the Bloc MP who made the motion – in French – requested that the PBO investigate the FREMM, Type 31, “et de tout navire de catégorie comparable” (and similar ships) but that the official English record of the motion was mistranslated; there was an awkward pause followed by an invitation to interview the PBO.

Two hours later in said interview, the fluently bilingual PBO Yves Giroux explained that they fully understood the French motion but only investigated the FREMM and Type 31 due to time constraints. 

He went on to say that the PBO would be happy to do a cost estimate for the F-105 and De Zeven Provinciën-class frigates (the two other bids that lost the 2017 design competition) should the Committee order a second report.

Perhaps instead of forcing nationally regulated private businesses to provide bilingual service, the Trudeau Liberals should concentrate on getting Parliamentary Committee motions correctly translated into English.

Alex McColl is the National Defence Columnist for the Western Standard

Continue Reading

Recent Posts

Recent Comments

Trending

Copyright © Western Standard owned by Wildrose Media Corp.