The Oil Drum

Canada's economy is moving and shaking. The loonie reached parity with the US dollar for the first time since the Gerald Ford presidency. But don't be fooled: it's not the Canadian economy that does so great, it's the US that sinks ever further ever faster, and the rest of the world is sinking with it, including Canada.

The long-awaited report on the royalty rates for the Alberta tar sands was published, and it recommends raising the royalties significantly. Both the industry and the business-friendly media in Canada cry foul, and worse. Just a few months ago, Shell said their tar sands operation was immensely profitable, but now the tune has changed.

Some voices say raising the royalties reeks of too-big government, and comparisons with Hugo Chavez fly everywhere. But those same voices do want the government to pay for the Mackenzie Valley pipeline.

Go here for the full report.

Caracas on the Bow River

Tim Hearn, chief executive officer of top oil sands producer Imperial Oil, said any additional royalties would harm companies already facing sky-high labour and construction costs for their projects.

“I'm not in a position today to say whether we've reached a tipping point or not because I can't tell you,” Mr. Hearn said. “But there's enough things working against us that if all this stays in place as is, there will be an effect in the industry, clearly.”

A former oil executive who was on the review panel lashed back at energy executives, saying they should concentrate on better managing their own businesses and contain cost increases rather than “whining” about higher royalties.

“I don't have any sympathies,” said Sam Spanglet, who ran Shell Canada Ltd.'s oil sands operation before retiring several years ago. “[Alberta is] still going to be very competitive. I feel very confident.”

Some Calgarians were angry, with one broker e-mailing his clients with the subject line: “Caracas on the Bow River,” comparing Alberta with Venezuela and its socialist President Hugo Chavez, who expropriated oil assets this year.

“If [the report is] enacted, investment decisions will be impacted … [the report] reads a bit like a Chavez-style manifesto,” Steve Larke, a Peters & Co. Ltd. broker, said in the e-mail.

Update 4pm Friday: Thankfully the grid held yesterday in Midtown, Murray Hill and Gramercy areas, although one building in Kips Bay lost power for a day, that seemed to be the worst of it. Hats off to everyone who helped reduce power at that critical time last night. Special recognition to Councilmember Dan Garodnick who personally went out with his entire staff to canvass the neighborhood to ask folks to reduce power dramatically.

Update 10:01pm: NY1 has some new coverage, including the fact that a building in Kips Bay is without power and the rest of the neighborhood is still on the brink

Manhattan's East Side is the latest part of the city to be hit with outages. Con Ed crews are working to fix manhole fires and feeder cables along the Lower East Side, as many residents are left without power. Con Ed says the feeders serve more than 50,000 customers, and that could mean hundreds of thousands of people are without power. One of the buildings without power is the Kips Bay Towers. Residents NY1 spoke with there say they are doing their best to cope with the loss of both power and water to the building. “It was a brownout [Wednesday] night. The lights were low, the air conditioners were not as functional as they usually are, so I knew something was happening last night,” said Kips Bay resident Karen Braglia. “And then when I woke up this morning the air conditioning wasn't working at all."

Update 4:15pm: NY Times has some more depth

The utility reported that it had lost the use of multiple feeder cables in each of two networks on the East Side, 3 of 12 at Kips Bay and 4 of 24 at Madison Square. The networks cover the area between 14th and 40th Streets, Fifth Avenue and the East River. Three manhole fires in the morning, at 30th Street and First Avenue, 29th Street and Lexington Avenue, and 24th Street and Third Avenue apparently started the problem. Power was still on at midday today in the high-rise, heavily commercial neighborhood. The utility said it had 53,000 customers in the area, but a customer could be an entire building.

Update 4:08pm: Crain's has just put up this story

Originally reported by Con Edison as a small isolated power outage affected at most 2,000 people, it was determined yesterday that the outage really affected something like 100,000 in Astoria, Long Island City, Sunnyside, Woodside and Hunter's Point sections of Queens. The power outage was caused by a mixture of aging infrastructure, high temperatures, high electrical demand and thunderstorms that flooded certain areas since last Sunday. And there is currently no end in sight, despite original promises of 1-2 days.

Here's today's coverage: NY Post, NY Times and more NY Times, NY Newsday and NY Daily News.

It probably will become clear over the next few days, but currently I'm proud that once again New York has shown that it can handle disruptions like this without going crazy. See an old classic PO-NYC post comparing the peaceful 2003 city-wide blackout to the more violent and distructive 1977 blackout and my review of James Goodman's book "Blackout"

There was a short period of time last Saturday when Denver was subjected to a rolling blackout as demand met up with a limit on natural gas supply.  The company has now explained the problem (under the fold).