Tuesday, August 19, 2008

Going with the flow of Hebron

Though the deal was done in July the official announcement comes tomorrow, and according to Williams critic Ed Hollett at Bond Papers, just in time to precede the Corporate Research Associate quarterly poll. It would probably not be the first time a government timed a big announcement to affect poll results, especially with by-elections coming up. However, evidence to suggest that government lacks openness and honesty are something the public should be aware of and concerned about, and some NL bloggers have really driven that thread.

Most people do not analyze the fine internal political machinations that take place, but rather may dismiss it. What matters to most people are the economic benefits the Hebron project possibly has for them individually in terms of jobs and income levels, and the social, health and economic well being of the province. The field will pump 200,000 barrels of oil for 25 years (there could be more oil in the field, yet unannounced). It will not be as big as Hibernia, but the $16 billion worth of benefits to Newfoundland and Labrador is not too bad at all, and it will create over 3000 jobs in the first few years of development. The federal government will get $7 billion from the project.

The $16 billion is based on oil prices of $70 per barrel. Right now the prices are from the governments' point of view, wonderfully high at $115 a barrel - down from $147 over a month ago. It could keep going down. In recent months there are reports that consumer demand has fallen considerably. Might this be a see-saw situation? Once the fuel prices goes down enough will people go back to consuming more, hence driving prices up once again?

If alternate forms of energy like wind power, and electric cars continue their slow development, it seems to this non-expert that there will be a big demand for fossil fuels for many years to come, thus keeping the price of oil high.

Electric cars are promising. The Zap is a low priced electric vehicle, at $11,000 for the three wheeled city vehicle. Unfortunately, for many users it is not practical - low mileage per charge, and a bit too slow for arterial roads. Other more powerful electric cars may have the power, but for many the price is too out of reach, and therefore, not replacing the gas fed cars to any significant degree.

For now, the oil money from current and future sources seems like a steady flow - how to use this new found wealth to get rid of the provincial debt, maintain and improve health care, and other important needs, is a bigger challenge. Perhaps more government openness could be attained if a goal-oriented, long-term debt reduction, and economic outlook plan was produced. One that showed how much the provincial debt will be reduced each year for the next year, by 5 years, 10 years - 20 years. One that showed how much of our "have" status revenue will be devoted to reducing the provincial debt over the long run.

2 comments:

Table Mountains said...

we all look at it different. most where i live could care less about the timing or even motives of danny but see the facts instead. facts:200,000 barrels a day for 25 years or even longer. we have a stake in it.that speaks volumes.

no doubt it'll help the premier in the by elections and lets face it. no matter what party in power they would all seek to exploit the moment.

Charles Cheeseman said...

Thanks for your comment Wayne. People in your area have the same concerns as people anywhere in the province - how the project might benefit them and the province. I mentioned the government's openness criticism just to have it repeated as a reminder that while projects like Hebron, South Hibernia, or the Lower Churchill are great for NL, it's healthy for any population to be vigilant of the government in power, and not to take anything for granted.