A lot of discussion happening about pipelines, market access and crude differentials these days. I’ve started using this map as a means of illustrating the various levels to this debate. First, it’s important to always note that all oil is not equal – if you’re looking at a WTI-WCS differential and getting really upset about it, keep in mind that you’re conflating heavy crude in Alberta with light crude in Oklahoma – there are pricing differences due to location and quality involved. It’s generally more useful to look at apples-to-apples comparisons, and for that a Maya-WCS differential is very useful. Today, Maya is trading at almost $25 per barrel above WCS based (almost entirely) on geography. Pipeline tolls to the Gulf Coast are less than $10 per barrel and so, if efficient infrastructure were in place, we could expect to see at least $15 more per barrel for our product today than we are currently receiving. That hurts.
By Andrew on February 5, 2018
By Andrew on February 4, 2018
It’s been two and a half years (wow) since I’ve written anything on this blog site, and more than three years since I’ve updated in on any kind of a regular basis. Over the next while, I’m going to get back to more writing so hopefully that will change. I hope that a few of you are still interested in reading what I have to say.
By Andrew on March 22, 2015
Edmonton faces a choice with the design and construction of the Valley Line LRT project – either the project can be designed to include or accommodate a future re-animation of the legacy creek bed and delta – which is a provincial priority according to the Environmental Assessment of the Valley Line – or it can render even more permanent the decisions made in the 1960s and 1970s that transportation infrastructure trumps our natural environment.
Figure 1 Mill Creek bed. Source: Spencer Environmental and City of Edmonton.
The City has completed both their initial environmental assessment for the project, tabled in July of 2013, as well as an updated assessment, released in February, 2015.
In the initial environmental assessment, it is stated that, “The City of Edmonton and Alberta Environment and Sustainable Resource Development (AESRD) have committed to evaluating the potential to reestablish connectivity of the Mill Creek system, including the reach located within the study area. Based on this strong desire to retain the channel in its current condition, and the long-term restoration efforts required if disturbed, disturbance and backfilling of parts of the channel is rated as an adverse, minor, long-term and predictable impact. It is minor not because of its importance but because of the small reaches included in the project area.” While it is true that preserving the existing delta and remaining abandoned channel is important to eventual re-animation, it’s also important to consider what additional infrastructure is being placed in the creek’s historic path – in this case, a rail line, a 300 ft rail siding, and the Muttart Conservatory station – and how that infrastructure could accommodate a re-established creek. That the station for the Muttart Conservatory would be placed on or adjacent to a lost creek bed is, perhaps, an unwelcome irony. Having the station adjacent to, and/or designed to accommodate a re-established creek would be more fitting.
In the most recent assessment, the City has stated that they have redefined project boundaries to minimize impacts on the abandoned Mill Creek channel, but they haven’t addressed the more important point – what about the impact of the project on potential efforts to re-animate the channel in the future?
Figure 2 Valley Line LRT Project Boundaries in the Mill Creek Ravine. Source: Spencer Environmental and the City of Edmonton
Figure 3: Historic Mill Creek Channel, circa 1960. Source, Army Survey Establishment
On the two maps above, you’ll see that the project boundaries, from the south bank of the North Saskatchewan River through to the Connors Road footbridge encompass the entire legacy creek bed, with the exception of small areas on the north side of 98th avenue. Building the Valley Line in this exact right-of way would, potentially, preclude the reestablishment of connectivity of the Mill Creek, or render it prohibitively expensive. That said, the Valley Line LRT construction project, done right, could provide the best opportunity to re-establish the Mill Creek that we’ve seen since it was diverted in 1970.
The City has established that P3 contractors for the Valley Line must provide means for wildlife to cross Connors Road and the tracks by means of an underpass, providing access for smaller animals (skunks, coyotes, rabbits, etc.) to Gallagher Park and the Edmonton Ski Club grounds. Further modification to the plans, involving a daylighted creek channel and wildlife access along with the creek flow under 98th ave as part of the project would allow the project to have a positive impact on the natural environment, enhance regional biodiversity, and allow for the re-establishment of an important historical attribute of the City of Edmonton. Given the height of both Connors Road and 98th Avenue relative to a re-established creek bed, it is unlikely that major roadwork would be required to complete this project.
Re-established creeks are amazingly resilient – in Burnaby, BC, the long-diverted Still Creek was re-established and today, salmon spawn in the creek. A properly-designed Valley Line could bring thriving fish populations back to the Mill Creek and re-establish an important link in the North Saskatchewan river ecosystem.
If you think this is an initiative you could support, contact your City Councillor, your MLA, or your MP – all three levels of government matter here. While the LRT is a City of Edmonton project, it will be funded by all three levels of government so they need to hear from us.
Want to get involved? Contact Andrew Leach at firstname.lastname@example.org.
PDF Version of this flyer: Bring Back the Mill Creek7
PDF of a Presentation to the Transportation Committee of Edmonton City Council for March 25, 2015.
By Andrew on November 15, 2014
I don’t update this blog much now, as most of my writing goes to Maclean’s – please check here for the latest – as well as occasional posts at the Globe and Mail here. I hope to post move back to posting more technical analysis here in the near future.
Thanks for checking-in.
By Andrew on May 5, 2014
This week, Press Progress and the Vancouver Sun’s Peter O’Neil reported that Kinder Morgan had quantified the economic benefits of oil spills in its application to expand the Trans-Mountain Pipeline from Edmonton, Alta. to Burnaby, B.C. Yes, the benefits of oil spills—they create jobs in the communities where the spills occur. Beyond being a public relations disaster for the company, this should lead us to re-examine what we accept as proof of the economic benefits of projects in general.
Companies facing regulatory hearings like Kinder Morgan, groups promoting events like the Vancouver Olympics, or politicians justifying public expenditures like the new hockey arena in Edmonton generally talk about the benefits of their projects using a tool called economic impact analysis. This technique takes spending, runs it through a statistical model, and predicts impacts of that spending on both GDP and employment.
There are, basically, two issues with this method, and both are wonderfully illustrated by the oil spill example. First, the method is agnostic as to what the money is spent on, so money spent cleaning up an oil spill looks remarkably similar to money spent building a new hospital or school in terms of economic impact. Second, the technique generally does not account for where the money comes from, or how it would otherwise have been spent. Money spent on a hockey arena in Edmonton might otherwise have been spent on light rail or tax reductions, both of which would also have economic impacts. In the case of an oil spill cleanup, the costs are likely to be directly incurred by an insurance company, but the premiums paid for that insurance come at the expense of the value of the oil transportation service—the higher the expected clean-up costs from oil spills, the higher insurance premiums will be, and this will mean higher pipeline tolls, which in turn implies lower profits, taxes, and royalties on the products shipped. Simply-put, there’s no free lunch.
Read more at Maclean’s Magazine.
By Andrew on February 3, 2014
Many of you have noticed that I suspended my Twitter account over the weekend. I expect that this will be a temporary decision, at least in some respects, although I am not sure what my re-engagement will look like. I’ve used Twitter for many years now, and I love the medium for news, learning, and interacting with people whom I’d have never had the chance to meet without it. I am not sure that I can balance all that I like about it with the feeling of always being in an argument. This decision has nothing to do with abuse, trolls, or the like – it’s exactly the opposite. Those who bring nothing to a discussion are easily blocked or ignored, but it does not make sense nor is it my wish to ignore those who challenge my ideas, push my thinking in different ways, and force me to defend my position against rational, reasoned arguments. Unfortunately, I’ve done a poor job of balancing my engagements with all of you on Twitter with the other things that matter in my personal and professional life. I’m going to try to fix that, and hopefully I’ll be back @andrew_leach sometime in the next 29 days.
Thanks for the kind words.
* My account is re-activated so you can use lists again if you had been doing so.
By Andrew on November 14, 2013
Yesterday, the Pembina Institute and Equiterre released a report entitled Booms, busts, and bitumen: The economic implications of Canadian oil sands development. The report opens with a foreword from University of Ottawa economics professor Serge Coulombe. His opening paragraph states that, “Environmentalists don’t accept gross domestic product (GDP) as a complete measure of well-being in the same way that economists do.” This statement is astounding for its ignorance of the discipline, not to mention the irony of it having been written by an economist. Worse, it validates a trend among the environmental movement in Canada, spearheaded by David Suzuki, to dismiss economists as the enemy of the environment. I don’t know of a single economist who thinks this way. We may disagree on the relative values of environmental amenities but I can’t think of anyone who would argue that they have zero impact on welfare or that GDP is the only relevant measure of well-being.
David Suzuki often talks about the Economics 101 course he took which ignored externalities. That certainly didn’t match with my recollection – the second half of my microeconomics 101 course was all about market failures due to monopoly, incomplete information, public goods, or environmental pollution.
If you look at Greg Mankiw’s Principles of Economics, likely the most widely used introductory text, you don’t even get to discussions of GDP until page 491 in the Sixth Edition. Externalities are covered over 200 pages earlier, on page 195. When you get to talking about GDP, there is a muti-page section which begins, “GDP is not, however, a perfect measure of wellbeing…” The section goes on to discuss things such as the value of leisure, the costs of pollution, the value of home production, etc.
On the environment, Mankiw writes that, “another thing that GDP excludes is the quality of the environment. Imagine that the government eliminated all environmental regulations. Firms could then produce goods and services without considering the pollution they create, and GDP might rise. Yet, well-being would most likely fall. The deterioration in the quality of air and water would more than offset the gains from greater production.”
Gee, that almost sounds like something David Suzuki would write himself. David Suzuki is also a strong proponent of evidence-based policy. If you agree, you might want to read this, from Fullerton and Stavins, on how economists really think about the environment.
Update: via Dan Gardner, this piece from the New Yorker is excellent. It quotes Kuznets, who formulated the tools to measure GDP in the US, as saying that, “the welfare of a nation can…scarcely be inferred from a measurement of national income.” I guess Kuznets must have been an environmentalist, not an economist.