Last Monday, I purchased gasoline in Shediac for $1.39 a litre.

On Thursday, I was in Toronto and gasoline was actually selling for $2.11 a litre and lineups were a block long waiting to fill up. I’m told there were similar happenings in Moncton and elsewhere in the Maritimes.

Yesterday morning gasoline prices were back down to $1.14 a litre in Shediac.

The irony is that $1.14 suddenly seemed to be a bargain and a $1.14 is 50¢ a litre more than it was a year ago. Maybe these price scares are intended to precondition us for the realities of future pricing regimes.

That aside, it turns out this week’s price fluctuations were a form of mass hysteria and panic based on little more than speculation and rumour. The lineups and the price-spikes were fueled by a fear that an approaching hurricane in the Gulf of Mexico will severely damage the offshore oil industry, shut down refineries on land and reduce the supply of gasoline across North America. That may or may not prove to be the case but by the time you read this column, the picture may be a little clearer.

It begs the question. If fear of the unknown can spark such gas-pump panic, how vulnerable are we to real disaster, whether natural or terrorist-induced? My guess is that Canadians are totally unprepared for disaster. We watch it on television and think it could never happen to us. It can and one day it will. It’s time to take the idea seriously.

Earlier this week, our provincial politicians were clamouring for the Federal Government to provide some relief for rising oil prices. There was talk of rebates and subsidies. Others talked of price controls. In my view it’s ridiculous to consider any of the above because the Government of Canada has no control over global pricing or global supplies of oil. Subsidy would be an endless sinkhole. Rebates would be no different.

The one thing that our governments could do is exempt heating oil and electricity from federal and provincial sales taxes because both are essential to life in a Canadian winter. They could also reduce their take on gasoline sales taxes but my guess is that the oil companies would quickly fill the void.

There is one other thing that could be done but it would be very controversial. Alberta exports most of its oil at global prices. If the price of oil in the United States rises to $80 a barrel, the price in Canada follows suit and Alberta reaps the benefit. If Canadian oil was priced for Canadians at $60 a barrel in an $80 environment, Alberta would be penalized to the tune of $20 a barrel.

Is that fair? Dare we ask Alberta to wear the burden?

Former Prime Minister Trudeau tried it in the seventies and the backlash was fast and furious. A recent poll conducted for the Globe & Mail and CTV suggests that times may have changed. When Albertans were asked about the principle of sharing resource royalties, 47 % of Albertans felt that at least some of the royalties should be shared nationally while 13% thought they should be shared equally.

If the numbers are accurate and truly reflect Albertan’s feelings then Ralph Klein would seem to be out of step with popular feelings in his Province when he tells Canadians to keep their hands off Alberta’s oil.

Logic might tell you that Canadians would be willing to share a price benefit or protect against a price-shock but common sense would suggest that regional differences and regional tensions are so significant in this Country that it would never happen unless we were facing real disaster. Webster defines disaster as a sudden calamitous event bringing great damage, loss or destruction, a sudden or great misfortune or failure.

Gasoline shortages would be inconvenient but not disastrous unless prolonged and major. $2.00 a litre for gasoline would be very expensive compared to what we have been used to paying but it would not be disastrous unless it fueled an inflationary spiral that ended in a collapse of our economy.

A disaster is what could happen to Texas and Louisiana in the next few hours and days. I bet that people in those states would be delighted to pay $2.00 or even $3.00 a litre for gasoline if it would protect them from disaster. Europeans have been paying those prices for years and they’re still functioning, thank you very much.

My point is that we Canadians and particularly we Maritimers spend too much time whining about hardship and demanding subsidy. Our biggest enemy is ourselves. We have the people and the resources to control our destiny. We have the ability to protect ourselves from most disasters. Let’s do so and while we are doing it, let’s be thankful for what we have.

Two things were made apparent by this week’s gasoline panic: one, we are lacking an emergency communications system in Canada. There were no gas shortages. There were no industry price hikes. The shortages were created by a public that responded to rumour and speculation about the potential for future shortages. The price spikes in Toronto were real but they were just individual dealer responses to the age old supply and demand equation.

Gasoline lineups create the impression of shortage and permit the unscrupulous to raise prices. A quick response from someone in the know should have warned consumers that supply was not in danger and would not be in danger for the foreseeable future. That would have eased the pressure at the pumps and made it impossible to price gouge.

The second thing that becomes apparent from the panic is that Canadians are not prepared for disaster. We have no contingency plans. We have no evacuation plans. We have no way to deal with either disaster or hysteria.

We are extremely vulnerable.

In October 2002, Premier Lord and his Cabinet approved a plan by NB Power to convert its Coleson Cove generating facility from heavy oil to Orimulsion.

When the approval was announced, there was no signed Fuel Supply Agreement (FSA) in place between NB Power and Petroleos de Venezuela, S.A. (PDVSA) or Bitumenes Orinoco S.A. (BITOR).

BITOR is/was owned and controlled by PDVSA which in turn is wholly owned and controlled by the Venezuelan Government. As a matter of interest, Venezuela is the only supplier of Orimulsion in the world.

A year and a half after Mr. Lord’s announcement, there was still no fuel supply agreement and NB Power sued BITOR and PDVSA. In a Statement of Claim filed with New Brunswick’s Court of Queen’s Bench in February 2004, NB Power said that it had spent or committed $463.7 million to the conversion project.

Further, it claimed damages of $2 billion as representing the cost differential between Orimulsion and heavy oil, fuel-cost savings that NB Power would have realized over the next twenty years if Venezuela had agreed to supply the Orimulsion.

The 2004 lawsuit was dropped by NB Power when its current President David Hay announced he would return to the negotiating table with BITOR. Apparently negotiations hit a brick wall because two weeks ago, NB Power quietly launched a second lawsuit, this time claiming damages of $2.2 billion, an increase of $200 million over the first claim plus $560 million for the Orimulsion conversion, an increase of nearly $100 million.

It’s instructive to review the sequence of events recorded in NB Power’s Statements of Claim. On July 12, 2001, the utility filed an application with the Public Utilities Board (PUB) for approval of the Coleson Cove Orimulsion conversion.

On December 17, 2001, BITOR provided NB Power with a “draft” fuel supply agreement setting out the terms under which BITOR would sell Orimulsion to NB Power. In January 2002, the PUB heard NB Power’s application and approved its Orimulsion conversion plan. Ten months later, Premier Lord announced Cabinet’s approval for the project.

On March 17, 2003, six months after Premier Lord’s announcement, Stewart MacPherson, then President and CEO of NB Power sent a letter to Dr. Hercilo Rivas, Managing Director of BITOR advising that “a (revised) draft Orimulsion Supply Agreement” had been prepared and that he was planning to meet with officials of BITOR America to finalize the Agreement. Dr. Rivas responded on March 21, 2003 advising that the Agreement still required approval by BITOR S.A.’s Board of Directors and PDVSA’s Board of Directors.

In late April 2003, PDVSA’s Board of Directors approved the Agreement that NB Power had negotiated with BITOR America and Mr. MacPherson and his Director of Business Planning, David Reid traveled to Caracas to execute it. BITOR S.A. refused to sign the Fuel Agreement.

In January 2004, Mr. MacPherson flew to Boston to meet with PDVSA in-house lawyers. They indicated the FSA deal was back on but asked MacPherson to send a letter to Dr. Ali Rodriques Araque, the President of PDVSA to help expedite the Agreement. Dr. Araque did not reply to the letter and in February 2004, NB Power filed its first statement of claim against PDVSA and BITOR.

In November 2004, AJM Consulting Inc. presented a Report to the New Brunswick Legislature’s “Crown Corporations Committee” chronicling the Government’s handling of the Coleson Cove conversion. The Report indicated that Cabinet approval for the conversion was given without anyone being aware of contract problems between NB Power, PDVSA and BITOR or that delivery of Orimulsion could be problematic.

Apparently no one bothered to ask NB Power if it had a firm contract for the supply of Orimulsion. It’s hard to imagine how someone could make a $750 million decision without knowing whether the decision was based on fact or wishful thinking.

And what about the news of the day?

Just a few weeks after Premier Lord’s go-ahead announcement, a national strike was underway in Venezuela. Employees from PDVSA joined the strike, shutting down a large portion of the Venezuelan oil industry. Surely someone in the New Brunswick Government was aware of the situation and must have sensed there could be a problem with Orimulsion, even though it wasn’t until six months later on May 7, 2003, that the Venezuelan Government ordered PDVSA and BITOR not to sign an FSA agreement with NB Power.

To drive home the point, PDVSA announced in September 2003, that it was dissolving BITOR and would not be increasing production of Orimulsion. That didn’t seem to slow down the conversion process at Coleson Cove.

In its second Statement of Claim, NB Power says that between May 7, 2003 and December 31, 2003, the Utility awarded an additional 39 engineering and construction contracts to complete the Orimulsion conversion at Coleson Cove. By December 2004, the conversion was approximately 60% complete and NB Power was on the hook for $559.9 million. It appears from the Statements of Claim that nearly $100 million (the difference between the first claim and the second) was spent on the Coleson Cove conversion after Venezuela killed the Orimulsion deal.

This lawsuit, even if successful will drag through the courts for years. In the end no one will benefit except the lawyers because there will be no way to collect damages. BITOR’s assets and PDVSA’s assets are in Venezuela not in New Brunswick.

The people who will pay the damages will be the residents of New Brunswick. The loss in fuel cost savings is estimated to be at least $100 million a year for the next 20 years. If the price of oil continues to rise, it could be much higher.

When Judge Gomery is finished with his Sponsorship Report, he should move to New Brunswick and take on Coleson Cove. It’s ten times bigger than the Sponsorship fiasco.

Published on September 10, 2005 The other night, I watched George Bush Senior defend his son’s handling of the New Orleans Katrina catastrophe.

It was a commendable performance if accepted at face value but it ignored the point of the moment. Katrina has opened major sores in American society that have been covered for years. They were open to the world as the distinctions of class, economic circumstance and colour paraded across our television screens.

Mr. Bush sounded like a caring father but he ignored the stark reality of an America in crisis, an America unprepared for disaster, a disaster that was long predicted, a disaster that produced a slow and convoluted response from the U.S. Government and its agencies. He ignored the fact, that with hesitation in its response, the U.S. revealed vulnerabilities to terrorist attack and provided potential scenarios for future attacks. He washed over the energy shocks that were sent around the world as the result of damaged refining capacity, pipeline disruption and the loss of oil and gas production in the Gulf of Mexico.

What was it that Mr. Bush didn’t get?

Bodies were still being collected from flooded houses by the end of this week. Hundreds of thousands of people have been displaced, without homes or jobs or the money to replace them. About 40,000 people are still unaccounted for and the Mayor of New Orleans, Ray Nagin has suggested that 10,000 dead would not be an unthinkable number.

Television images from the Houston Skydome and the New Orleans Superdome dramatically underlined the dichotomy of the haves and the have-nots. You could see the growing anger of reporters who initially reported on white man escapes and then gradually realized that the homeless and the sick and the starving were poor and black. You could see the networks turn their attention to good news stories to counter the on -ground reporting realities. Suddenly, the re-builders were front and centre and re-united families were interviewed with a vengeance. That wasn’t enough to hide the cynicism of survivors reacting to the President’s orchestrated photo-ops.

Floodwaters in New Orleans are contaminated with crude oil and potentially deadly E-coli bacteria. This is the bacteria that infected the Ontario town of Walkerton a few years back. Failure of the levees (embankments built to contain water) system left about 80 % of the city flooded with water up to 20 feet deep. The City’s Deputy Police Chief, Warren Riley is quoted as saying “the city has been completely destroyed”. He urged people to get out of New Orleans because there is no power, no drinkable water, no food supply, no jobs and no reason to stay.

A disaster that might have been prevented with a $14 billion federal infrastructure investment to shore up the levees could cost seven to ten times that amount when the loss of property, the loss of economic activity and the cost of relocation and reconstruction is calculated. And that does not begin to measure the loss of human life and the suffering of survivors.

We have no reason to feel smug about this situation. Disaster knows no borders. Two years ago, Hurricane Juan hit Halifax with a vengeance, albeit not as severely as the hurricane that hit New Orleans. Vancouver is an earthquake waiting to happen. We have huge forest fires in Canada that regularly threaten our towns and cities. We have ice-storms, blizzards, tornados and storm surges. One day, they could bring disaster.

We don’t have a National Guard. Our total military, including reservists is only about 75,000 and many of them are stretched around the world as peace-keepers. We don’t have a standby military force of ten or fifteen thousand men waiting to be dispatched to a disaster area and we don’t have the quick-response airlift capacity to move thousands of troops into a disaster zone.

We have no reason to feel smug on a social scale either. Canada has its own class, racial and economic distractions. The poor in Canada, the sick and the elderly would be highly vulnerable in a moment of disaster. We can however, learn from the New Orleans experience. The absence of planning and fast response in that city was devastating. The absence of crisis leadership and early command cost hundreds, if not thousands of lives. One has to wonder if Canadians would do any better.

By the end of this week, there were still 10,000 to 15,000 people holed up in New Orleans. Armed gangs and looters were roaming the area in search of food, water, generators and valuables. Television was rife with images of submerged houses and weeping survivors. The U.S. military was forcing people to leave the city and armed militia were bashing down doors to search out the hold-outs.

It was a picture of near anarchy and reminded me of the Postman, a 1997 movie directed by Kevin Costner.

In the movie, a war had decimated the government and most of the population of the United States, civilization had all but destroyed itself and people struggled to survive against starvation and rogue groups of armed men. A lone traveler (played by Costner) is captured by a fascist military group called the Holnists. He escapes, finds an abandoned U.S. Mail Jeep and a uniform and travels through small, makeshift towns and villages, telling people he is a postman, representing the restored United States. At first, no one believes him but soon he has followers and they start to prepare a revolt against the Holnists.

The movie was panned by critics but it has an eerie resemblance to current day New Orleans. Could there be a message here for George W. Bush the son?

Could there be a message here for our own leaders. Disaster response and disaster preparedness should be everyone’s concern in this day and age. The time may have come for Canadians to lose their complacency.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant as the principal of Bell Strategic, where he can be reached.

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