The Oil Drum

We have run several articles recently on nuclear power and without fail they have stimulated enthusiastic debate. This is an opportunity to continue that debate. To start us off we have three guest contributions:

Skip Meier - Nuclear Waste
Bill Hannahan - We have yet to design the Model T of nuclear power plants
Charles Barton - Thorium Reserves

Last week the UK's Business Secretary, John Hutton gave one of the most pro-nuclear speeches from a Government minister in which he compared the potential of new nuclear development with the North Sea: "the most significant opportunity for our energy economy since the exploitation of North Sea oil and gas," (Platts). Labour MP Colin Challen responded with a letter in The Guardian:

John Hutton's latest reflections on nuclear power demonstrate how rapidly British energy policy is regressing to its default mode - dig it up and burn it. At the same time as we are promised the nuclear pipe dream, we are also set to have new coal-powered power stations without carbon capture and storage. This comes at the same time as we have fought for one of the lowest renewables targets in the EU, are languishing third from bottom in current renewables provision out of 27 EU states, and are announcing yet another microgeneration review.

The message Hutton's department seems to want to promulgate in its energy policy is to reassure everybody that no serious change is needed, that we should carry on increasing our demand for energy and that climate change isn't as urgent as some people make out. One can only conclude that the Department for Business, Enterprise and Regulatory Reform is utterly unfit for purpose and should have the title Department for Fiddling While Rome Burns.
Colin Challen MP
Lab, Morley & Rothwell

Trust tax linked to private equity buyouts

The income trust structure was a major impediment to private equity firms buying up pieces of Corporate Canada, the Finance Department was told one day before Ottawa slapped a crippling tax on the sector.

"Private equity firms generally find it difficult to compete against the income trust alternative, said an Oct. 30, 2006, memo sent to Bob Hamilton, senior assistant deputy minister of tax policy at the Finance Department.

The memo was obtained by The Globe and Mail under access to information law.

For anyone at Finance who knew the trust tax was imminent, one conclusion that's easily drawn from the memo is that taxing trusts out of existence would likely usher in even more private equity buyouts by Canadian and foreign investors, which is what happened.

What Price Victory? (scroll down)

It’s reasonable to assume that, as professionals operating within a government department nominally charged with understanding affairs of finance, the folks working for Flaherty would have some rudimentary understanding of the way key players in the private space—private equity, for example—operate.

That is private-equity firms find undervalued, cash-generating businesses, strip them down and load them up with debt. Interest expenses basically wipe out taxes owed. That’s the nutshell.

What was that about “tax leakage”?

Either the professionals have no clue about their business, or they engineered the destruction of the trust sector. Secretive, incompetent and stupid is no way to run a government.

NAFTA Kicked Up A Notch

The North American Free Trade Agreement is the world's most advanced example of the U.S.-led free trade model. It's not just about economics any more. The expansion of NAFTA into the Security and Prosperity Partnership reveals the road ahead for other nations entering into free trade agreements. It is not a road most nations -- or the U.S. public -- would take if they knew where it led.

The first problem is that very few people know about this next step of "deep integration." In March 2005, Presidents George Bush, Vicente Fox and Prime Minister Paul Martin in Waco, Texas launched the Security and Prosperity Partnership with a splash. Although it had few visible results, the Waco meeting of the "Three Amigos" set into motion an underground process that spawned its own working groups, rules, recommendations, and agreements -- all below the radar of the legislatures and the public in the three nations. These rules and trinational programs have profound effect on the environment, the daily lives of citizens, and the future of all three countries.

The SPP not only further greases the wheels of corporate cooperation and potentially increases U.S. access to Mexican oil. Its security component represents a new and ominous form of integration, all in the name of counter-terrorism.

Canada must nationalize its oil and gas industry: Quebec accounting professor

Lauzon has been calling for the nationalization of Canada's oil and gas industry over the last several years.

He told a news conference the analysis has shown that major oil companies continue to eliminate their competition by either buying or merging them and most of the profits go to the shareholders rather than investing and building refineries.

"Currently Canada, self-sufficient in oil and gas as the third-largest producer of natural gas and the sixth-largest for oil, has prices imposed on it due to events that happen in Iran, Iraq or Saudi Arabia," he said.

"Among oil-producing countries, Canada is going the wrong way. It's the only western country to privatize this essential resource, largely to foreign interests," Lauzon said.

Petro-Canada (TSX:PCA) of Calgary was created as a government-owned company during the Trudeau era in response to an oil shortage during the mid-1970s due to a crackdown on supplies by the OPEC oil cartel.

However, subsequent Liberal and Conservative governments have since divested their ownership in Petro-Canada, which remains a major integrated oil company with exploration, production, refining, distribution and retail operations.

Oilsands growth now beyond regulator's ability to assess impacts

Oilsands development, they say, has become a speeding car with a gas pedal and no brakes....

...."It just doesn't work to have Alberta Energy pouring on the gas and not having another agency empowered to put on the brakes if necessary," he said.

Stelmach's signals have been mixed. He's promised to review Alberta's energy royalty regime and to put affordable housing at the top of his agenda.

But at his first news conference after winning the leadership, he pooh-poohed the notion that government should regulate development.

"There's no such thing as touching the brake," he said.

Some facts on oilsands development and its anticipated impact on northern Alberta:

• Oilsands spending, scheduled or proposed - $12.5 billion in 2007; $57 billion over the next five years; $94 billion by 2015.
• Revenue to government 2006-07 - $2.5 billion in royalties; $2 billion in lease sales, greater than last 10 years combined.
• Influx - 3,950 workers required for Suncor's Voyageur project alone; 27,000 people moved into Alberta in the second quarter of 2006; Fort McMurray population doubled to 75,000 in last nine years.
• Cost of living - $40,000 considered minimum "working poor" income in Fort McMurray, says president of Wood Buffalo Housing and Development Corp.
• Vacancy rate in oilsands communities - one per cent in Grande Prairie; less than one per cent in Fort McMurray for third consecutive year.
• Rents - Forecast to jump 20 per cent in 2007 in Grande Prairie; 25 per cent in Fort McMurray.
• "Shadow" population - 11,779 people live in work camps, campgrounds or hotels near Fort McMurray, says 2005 survey.
• Health gap - Fort McMurray needs twice as many doctors as current 44; will need three times as many within five years.
• Services gap - Fort McMurray needs $1.2 billion in infrastructure to accommodate growth, including new water treatment plant, police station, recreation centre and fire hall.

The Organic Sham

For those who lament the loss of the small organic grocer, it must be realized that this slide into the corporate mainstream was inevitable for the organic and natural-foods market. There is, after all, money to be made. The prize to date: 2.5 percent of the nation's food market. Before you scoff, know that this seemingly trivial portion is worth around $15 billion dollars. Given that the organic and natural-foods industry now receives more attention by corporate marketers than ever before, this figure is certain to increase.

Where there was once a tightly controlled, well-run 10-acre organic farm, there is now a 1,000-acre piece of the mainstream agri-business puzzle. What was once a well-defined organic movement headed by responsible farmers working their land in harmony with nature is now a muddled, politically dubious cash cow awaiting slaughter.

Oil and gas trusts to lose up to $2-billion in value: report

Canadian oil and gas trusts will lose up to $2-billion in net present value over the life of their assets because of the federal government's tax changes to trusts, a Scottish consultancy said in a report released Friday.

Anger, relief over tax move

Ottawa's decision to start taxing income trusts has opened up a sharp fault line in the executive suites of Corporate Canada.

The ruling has emerged as a divisive issue, pitting those who run trusts against those in non-trust businesses, according to a new survey of top executives.

The quarterly survey of 175 chief executive officers, chief financial officers and chief operating officers shows a dramatic split among those who back Ottawa's move and those who dislike it. The quarterly C-Suite survey was conducted by the Gandalf Group for Report on Business and ROB-TV.

About 58 per cent of those surveyed support or strongly support the decision, while 40 per cent oppose or strongly oppose it.