Recently, the Times & Transcript chose to run articles of concern in respect to an alleged carbon tax that Liberal Leader Stephane Dion would impose on gasoline and home heating oil, if and when he forms the next government. That is a patently false portrayal of what Mr. Dion has offered Canadians.

Dion has talked about putting a price on carbon but notes that carbon-pricing is “a work in progress” not fixed policy. No one except Stephen Harper’s Conservatives, notably John Baird (Canada’s Minister of Energy) has ever suggested that Liberal plans include an increase in gasoline or heating oil taxes. In contrast, Mr. Dion says that a Liberal government will provide incentives to increase the use of clean and renewable energy like wind and solar.

Dion does not shy away from the issue of climate change. He promises an absolute cap on emissions (contrary to Harper’s “intensity” targets) and says he would put a price on carbon. He would target the three largest industrial sectors: electricity generation, upstream oil and gas production (Alberta oil sands) and energy-intensive industries (forestry, mining, petroleum refining, steel-making, etc).

Each company in these industrial sectors would be assigned a carbon budget. Companies that failed to meet their carbon budget would be required to deposit $20 per excess-tonne of produced carbon dioxide into a designated “Green Investment Account”. The deposited money could be earned back if the business invested in green technology to reduce its carbon polluting output.

None of the above would directly increase taxes on gasoline or heating oil, as the Transcript suggests, but in fairness, carbon-excess penalties could lead to an increase in the base cost of gasoline or electricity which in turn could result in a tax increase.

Dion’s plan is to use the tax system to change behavior. He wants to rewrite Canada’s tax law in a way that would penalize carbon emissions and reward those who cut back on their use of carbon-producing energy.

His tax changes would be “revenue-neutral” that is the total dollar amount of taxes collected would not increase even if tax on a “don’t want” item like pollution increased. This is where things get a little dicey.
How will he match a tax increase to an income tax reduction?
What if a person not paying income tax is asked to pay a pollution tax?
What if a pensioner’s electricity bill goes up in response to a carbon-excess penalty?
How would that person be compensated?

These are questions that need answers if Canadians are going to buy the notion of tax-incented carbon reduction as revenue neutral.

Robert F. Kennedy Junior reminds us that 200 years ago, slave commerce represented one-fourth of Britain's gross domestic product (G.D.P.) and provided its primary source of cheap, abundant energy. In British Parliamentary debate over abolition of the slave trade, vested interests warned that financial apocalypse would succeed its prohibition.

A year later, Parliament abolished the slave trade. Instead of collapsing, as slavery's proponents had predicted, Britain's economy accelerated. Slavery's abolition exposed the debilitating inefficiencies associated with zero-cost labor. Slavery had hobbled productivity and stifled growth. With abolition, creativity and productivity surged. Entrepreneurs seeking new sources of energy launched the Industrial Revolution and inaugurated the greatest era of wealth production in human history.

In New Brunswick, we worry about carbon taxes and the potential abolishment of carbon as an energy source even as we recognize its inefficiencies. The U.S. practice of borrowing a billion dollars a day to buy foreign oil has caused the American dollar to implode. More than a trillion dollars in annual subsidies to coal and oil producers have beggared a U.S. nation that four decades ago owned half the globe's wealth. Carbon dependence has eroded the U.S.’s economic power, destroyed its moral authority, diminished its international influence and endangered its national security.

There is evidence to suggest that nations that "decarbonize" their economies reap immediate rewards. In 2006, Sweden announced the phase-out of fossil fuels (and nuclear energy) by 2020. In 1991 the Swedes introduced a carbon tax - now $150 a tonne. As a result, thousands of entrepreneurs rushed to develop new ways of generating energy from wind, sun, tides, woodchips, agricultural waste, and garbage.

In the 1970s, Iceland was 80 percent dependent on imported coal and oil and was among the poorest economies in Europe. Today, Iceland is one hundred percent energy-independent, with 90 percent of the nation's homes heated by geothermal and hydro power. The International Monetary Fund now ranks Iceland as the fourth most affluent nation on earth.

New Brunswick’s energy-hub strategy is carbon-based. True self-sufficiency for the province will demand a balance between carbon and renewable energy. That will require investment in wind, solar, wave and tidal power.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

The United Sates appears ready to embrace huge change in the form of Barack Obama.

This week he passed an important milestone by winning majority support from elected delegates. According to the latest tally by Associated Press, Obama only needs another 70 delegates (elected or super) to completely secure the nomination. With the backing of the American people, Mr. Obama will become President of the United States.

Coincidently, it would seem that Canada’s version of change is to play backdoor politics with Senate reform. Canada’s Senators are appointed by the Prime Minister. Stephen Harper wants to reform the Institution by making it “equal, elected and effective”.

It’s not clear what he means by equal but let’s assume he means equal as in representative of the population. Constitutional reform would be required to make the Senate equal and elected. As to effectiveness, that also requires definition. A Senate representative of population would parallel the representation of members of Parliament. Would that be a good thing in a disperse country like Canada?

The United States elects two senators per state. Senate terms are for six years. One third of the Senate is up for election every two years. Members of Congress are elected for two years and the president holds office for four years subject to a maximum of two terms.

There are no limits on the number of times a senator or a member of Congress can be re-elected. In theory, the staggering of term-length holds government more accountable. As we have observed for the last eight years, theory doesn’t always translate into reality.

Canada’s Senate represents each province and territory but not in any proportionate way. Prince Edward Island has four seats. New Brunswick has ten but each of British Columbia and Alberta has only six seats. Constitutional change requires the support of at least seven provinces representing at least two thirds of the population. The problem is that there is no consensus among provinces about Senate reform. Some want it abolished, some want it changed and some are willing to look at alternatives.

Mr. Harper has a different idea and this is where the back door comes into play. Since becoming Prime Minister, he has made one informed Senate appointment, Michael Fortier in Montreal. It’s my recollection that he also accepted the recommendation of Alberta voters and appointed two others. There are now fourteen vacant seats in the Senate.

There is room for 105. There will be another dozen or more vacancies by the end of next year (senators must retire at age 75).

Mr. Harper’s strategy appears to be this (a) convince the provinces to hold senate elections that would deliver recommendations (the outcome of elections) for senate appointments and (b) starve the provinces who do not hold Senate-recommendation elections by not appointing senators from those provinces. In a few short years, that would leave some provinces with little or no representation in the Senate. For those who would say “so what” consider that legislation passed by members of Parliament must be approved by the Senate before it can become law. No representation, means no say.

Here’s the folly in Mr. Harper’s strategy. A recommendation is just that, a recommendation. Nothing in law compels the Prime Minister to accept the recommendations of voters although there might be a political price to pay if he did not. The provinces are entitled to Senate representation under the terms of Confederation. Both the provinces and territories are entitled to Senate representation under the Constitution.

As I recall, both documents are silent on the consequences of a prime minister not filling vacancies in the Senate but it seems reasonable to speculate that a province or provinces left out of the Senate indefinitely, would turn against the federal government responsible for that oversight.

As mentioned above, Alberta now holds Senate-recommendation elections. Saskatchewan is preparing legislation for similar elections. Manitoba is toying with the idea although Premier Doer favors abolition of the Senate as does Ontario’s Premier Dalton McGuinty. Quebec wants more Senate representation but does not support Harper’s backdoor strategy. Atlantic Canada is all over the map.

The real problem with Senate reform is that any change in seat configuration favors the more populous provinces, whether you provide minimum seat guarantees or not. I have no problem with an elected Senate but my guess is that it will never happen unless we resolve the configuration problem. Most important, to even have the debate, we need to reconfirm the purpose of a Senate.

If the purpose is truly “sober second thought” and regional representation as indicated in the original documents of Confederation, let’s design front-door reforms that will attract support of the majority.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

Elections Canada has long enjoyed an outstanding national and international reputation.

Nearly ninety years ago, it was established as a non-partisan entity that reported directly to Parliament. Its purpose was and continues to be the prevention of partisan manipulation and abuse of the electoral system by government and opposition parties.

Since the 1970s, Elections Canada has been a world-respected mentor for emerging democracies in the impartial management of elections, providing technical assistance and professional support. International agencies and the United Nations regularly request its services, expertise and counsel.

Between 1990 and 2004 alone, it was involved in more than 300 democratic development missions in about 80 countries.Stephen Harper’s government has elected (no pun intended) to assault this image of impartial professionalism. The Prime Minister has characterized Elections Canada as unfair and partial. His party has decided to sue the Agency.

The issue - an “in and out” financing scheme that the Conservative Party of Canada used to generate a $1.8 million over-spend in the 2006 election.Here’s how it worked. The National Conservative Party would send money to its local riding associations. Within hours, the riding associations would return the money to the Party’s national media-buying agency for the purchase of television advertising time.

The television time was then used to broadcast nationally-produced, nationally-messaged commercials. The (supposedly) locally financed media purchases caused the Conservative Party to exceed their national spending limits by the $1.8 million. To compound the issue, local candidates claimed the advertising expenditures as local expenses, hoping to have the Federal Government return the money to their respective campaign accounts.

In other words, you and I, as Canadian taxpayers were asked to finance the Conservative Party’s over-spend. Elections Canada correctly refused to reimburse the Party. It’s been reported that candidates, who were called by Elections Canada for information about their campaign expenses, were told by Party lawyers to stonewall the Agency.

The Conservative Party then declared war on Elections Canada and is suing the Agency to recover the “in and out” funds. Harper has done this kind of thing before. Recall his vendetta against the non-partisan, long-serving civil servant head of the Canadian Nuclear Safety Commission, Linda J. Keen who refused to bend to his will. He fired her just hours before she was to testify at a parliamentary committee.

In some respects, the law-suit should not be surprising. Lawsuits have become the way of Conservatives. In the past, Harper has threatened to sue Stéphane Dion.

Remember Brian Mulroney’s infamous airbus lawsuit. He recently sued the Honorable Robert G. Thibault to silence his questions on the Karlheinze Schreiber affair. Canada’s Ethics Commissioner (appointed by Mulroney) has ruled that Thibault can no longer pursue Mulroney because the lawsuit gives him a personal interest in the outcome. Stephen Harper would have us believe that Elections Canada’s credibility is suspect and faulty even though it provides the legitimacy and credibility that governs the Canadian electoral process.

What kind of a government would attack its own independent agencies?

How did we get to this unhappy state of affairs where public servants are sued for making judgments that the law requires of them?

It appears that implicit understandings that used to characterize the relationship between politicians and public servants are being challenged by Mr. Harper and his lawsuit.Not long ago it would have been unimaginable for the RCMP to raid the headquarters of a national political party, especially the governing party. They have done so in search of evidence from the Conservative Party to support the investigation of Elections Canada.

We have a potentially stolen election (in 2006) if the transactions are proven to be illegal and the result is an over-expenditure of funds. What then? The Elections Act covers everything from the details newspapers must report about the methodology of polls they publish during election campaigns, to how much they can spend in an election.

Elections Canada can annul an election result but can it do so two years after the fact and what are the implications of annulment? With the Mulroney and Harper lawsuits, we have entered an era of legal (read American) intimidation where laws, judges and prosecutors determine what used to be political outcomes. This could well be at a cost to our democracy.

In a world of litigation, issues once resolved behind the scenes by people and parliamentary debate give way to legal argument and the economics of legal staying power. However, in the court of public opinion, the Conservatives may have lost this case.

A recent survey reveals that nearly six in 10 Canadians side with Elections Canada against the Conservatives. Stephen Harper would have them believe that Election Canada’s credibility is suspect and faulty.

Canadians don’t believe him.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

This week, Exxon-Mobil, the world’s largest publicly traded company, announced first quarter profits of $11 billion on revenues of $117 billion.

Thanks go to the rising price of oil which has almost doubled in the past year and to higher gasoline prices, which on average, rose about 30% (in the United States) over the year. The irony is that Exxon-Mobil’s announcement caused the value of its stock to fall some 4% because it didn’t live up to Wall Street’s expectations.

Apparently, Exxon could have made more profit, had it not chosen to hold back on additional price hikes for gasoline. The current price of gasoline in the States is running above $3.60 a gallon. Some people are contemplating $4.00 a gallon (diesel fuel has already passed the $4.00 mark) in the next few weeks. That would still be less than what we pay in New Brunswick. At $4.00 a gallon, Americans would only be paying the equivalent of $1.06 a litre.

Exxon-Mobil wasn't the only oil company struggling with huge profits. Companies like BP and Royal Dutch Shell Plc had better than expected first quarter earnings, up 64% and 25% respectively. ConocoPhillips' first-quarter earnings increased 17% to $4.1 billion. Petro Canada’s first quarter profits were more than a billion dollars.

Presidential hopefuls Hillary Clinton and John McCain have suggested that one way to help Americans with their gas prices would be to give them a "gas-tax holiday," in which pump prices would be temporarily exempt from certain federal taxes, providing consumers with an 18.4¢ a-gallon price break if the full benefit of the tax holiday was passed on to them. Even then, the savings would only be temporary.

For those who advocate similar action in New Brunswick, there are two considerations (i) the U.S. proposal is only a temporary measure. (ii) an equivalent saving would only amount to about 4.5¢ a litre and (iii) the cost of the tax loss to the government would have to be borne by a service cut in some other sector of the economy – health, education, highways, whatever.
Senator Barack Obama doesn’t support the proposed tax holiday but he does support, as does Clinton a proposed windfall-profits tax on oil companies. In Obama's case, he would impose a tax on each barrel of oil priced over $80.

The Energy Information Administration, a statistical arm of the U.S. government says that World oil consumption is projected to grow by 1.2 million bbl/d in 2008. Almost all of the growth is expected to come from China, the Middle East, Russia, Brazil and India. If they are right, demand will keep prices high.

The highly regarded Ernst & Young Item Club in the UK warns of the potential impact on manufacturing from high fuel costs, believing the UK could move into recession by 2010. The think-tank's gloomy scenario follows OPEC president Chakib Khelil's recent warning that the price of crude could keep rising to top $200 a barrel.

Nineteen years ago, the fall of the Berlin Wall effectively signaled the end of the Soviet Union as the world's second superpower as it lost control of its satellites in Eastern Europe.
Less than a month ago, the United States may have ceded its claim to superpower status when the price of oil passed $110 a barrel, gasoline prices crossed the $3.50 threshold and diesel fuel topped $4.00. As was true of the USSR, the U.S. will no doubt stumble on like a superpower but if its economy is gutted to pay for its daily oil fix, it too could become an ex-superpower.

The United States was for a long time, the world's leading producer of oil, supplying its own needs while generating a healthy surplus for export. That is no longer the case.

Oil was the basis for the rise of giant multinational corporations like Rockefeller's Standard Oil Company (now Exxon Mobil). Abundant, affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, growth of the domestic airline industry, development of the petrochemical and plastics industries, the suburbanization of America and the mechanization of its agricultural sector.

Without an abundance of cheap oil, the United States would never have experienced its historic economic expansion post-World War II.

No less important was the role of oil in fueling the global reach of U.S. military power. Every Humvee, tank, ship, helicopter and jet fighter requires its daily ration of petroleum, without which America's technology-driven military would be forced to abandon the battlefield. The U.S. Department of Defense is the world's single biggest consumer of oil, using more of it every day than the entire nation of Sweden.

Let’s hope the next president can cut back on that military consumption.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com

The price of oil this week is running in the neighborhood of $117 U.S. a barrel.

Iraq is one of the world’s major oil producers.

There is a significant body of opinion in the United States that suggests that Iraq’s oil money should be used to help fund the reconstruction of Iraq and pay for the training of Iraq’s military and its police force. Given that Iraq was invaded by the United States, this seems to me to be a bit of a stretch.

In New Brunswick, the impact of high oil prices manifests itself in different ways. We see it at the gas pump where prices have jumped above the $1.20 a litre mark. We’ll soon be seeing it in the price of electricity and in the price of heating oil.

There are looming impacts for the airline industry and Moncton may feel it. U.S. airlines are struggling for survival. It’s estimated that ticket prices will have to rise by 15% to 20% just to cover the cost of fuel. Delta and Northwest have applied to federal regulators for approval to merge. United Airlines and U.S. Airways are in merger discussions.

U.S. flights are being slashed and equipment retired or sold off to reduce seat capacity. The impact will be increased demand for the remaining seats, a circumstance that will lead to higher prices. By this time next year there could be as many as 20% fewer seats available in the United States, if carriers respond to today’s high oil prices.

That would be the equivalent of shutting down a major carrier like American Airlines, the world’s largest airline, a carrier that operates 4,000 flights a day. Such huge cutbacks in seat capacity would transform the airline industry. There would be fewer flights to and from cities of all sizes. Planes would be fuller but passenger inconvenience would be exaggerated by longer connection times and a reduced number of non-stop flights.

Fully loaded small jets, such as those flown by Air Canada and Continental don’t generate enough money in fares to cover current fuel costs. U.S. airlines have raised prices ten times since December 2007 and several of them are considering an eleventh increase this week. Whatever, the consequence will inevitably be higher prices, reduced service or both for Moncton and other communities across Canada.

Cutbacks in service and higher prices could threaten our leisure/tourist market. It could make it harder to attract meetings and conventions to the Greater Moncton area. Indeed, higher airfares and higher cargo rates could affect every part of our economy that depends on air-service. If we are looking at fewer flights and/or higher airfares, we could be facing a much tougher environment in terms of attracting business investment.

Air travel in the United States has grown at a rate five times greater than population growth since 1978, when former President Ronald Regan introduced his “deregulation” policies that allowed airlines to compete in an open market by setting their own prices and selecting routes without government approval. I don’t know what Canada’s growth rates are for the period but I suspect they are significantly less than the U.S. experience, given the nature of our market and the fact we are effectively served by only two carriers, Air Canada and Westjet.

With today’s unprecedented fuel prices, American airline executives and aviation analysts are warning that only extreme fare increases and dramatic cutbacks in the number of flights offered to the public will enable the industry to cover its 2008 jet fuel bills, projected to be 44% higher than last year’s. We haven’t heard those warnings in Canada but I suspect we are facing the same circumstance.

Oil industry analysts say it could be years before new oil supplies can be tapped, new refineries built or alternatives to petroleum-based fuels are developed and produced in quantities to fuel the airline industry.

This week, the head of OPEC, Algerian Minister of Oil, Chakib Khelil told reporters that oil is likely headed to $200 a barrel and there is nothing that he or his colleagues in the Middle East can do about it. He may be a pessimist but the reality is that chances of a major and sustaining fall-off in prices is most unlikely given the relentless demand for oil from China, India and the world’s other fast growing economies.

The world of low cost airfares may be past. More importantly, the world of much higher priced energy for our cars, our homes and our businesses may be just around the corner. The notion that a small province like New Brunswick can influence the price of oil or control the price of gasoline at the pump or electricity in the home is not on.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at mailto:bill.bellstrategic@nb.aibn.com