The Livable Blog

Graph: Petrobas Projection Showing the predicted gap between supply and demand - the end of the age of cheap oil.

Photo: This is what expensive oil looks like.

Charlie Smith at the Georgia Straight has scooped up this little tar ball off the beach; BC's Minister of Energy Blair Lekstrom is aware that oil production may have peaked or plateaued.

"There are people that think we have plateaued or peaked, and there are others that don't," he said, according to Hansard. "So it's an ongoing debate."

And Lekstrom is willing to share his power point presentation on the situation. Great, progress of a sort.

During the same debate, NDP energy critic John Horgan asked Lekstrom if the Oil and Gas Commission had done any work in connection with peak oil.

Peak oil is the point when global oil production will start going down because of diminishing global supplies.

Lekstrom replied that staff are following the peak oil debate.

"There are people that think we have plateaued or peaked, and there are others that don't," he said, according to Hansard. "So it's an ongoing debate, and our staff do follow that."

It's the first time the B.C. government has publicly acknowledged the possibility of global oil production peaking.

Horgan then asked Lekstrom if he's prepared to table any documents or briefing materials produced by his ministry on peak oil for the public to review.

"I will point out that we do have a PowerPoint that we will ensure that we get to the member," Lekstrom said. "As well, I would offer, if the member would want, a briefing to the member on the issue of peak oil, through our ministry."
http://www.straight.com/article-325467/vancouver/energy-minister-blair-lekstrom-acknowledges-peak-oil-and-downplays-offshore-drilling

The problem is that reports such as the US Government's Hirsh Report say we need about 20 years of all-out effort to prepare for peak oil. So, lets get this straight, our government is aware that the event that will require changing everything may have already happened. But their response it to continue their freeway building binge?

A bit of context may be helpful here. At one point the US was the world's largest oil exporter. That was the short-lived era of cheap oil, they didn't know what to do with it all and they certainly didn't have to drill in water over a Km deep to get it. After World War II it seemed to make sense to stimulate demand for oil and other consumer products, so the US government spent huge sums and built freeways right into their urban areas to stimulate automobile dependent sprawl and make gasoline into a necessity. The automobile and oil companies colluded to destroy public transit. These two actions together, along with supporting actions to foster sprawl, created a guaranteed market for oil.

This plan to stimulate demand for oil and other consumer products was so successful that in 1970 the extraction of oil peaked in the US. The easy oil is now mostly gone globally, and the peak of oil extraction is either past or just over the horizon.

Even if peak oil was 20 years away and global warming was not an issue, it would be insane to build urban freeways. We don’t have twenty years, we need to slam the brakes on freeway expansion now and use all our ingenuity to find quick ways to kick our oil dependency and stop global warming from spiraling out of control.

It is obvious that the governing Liberals have their heads in the oil-soaked sand. But what about John Horgan and the NDP? Are they prepared to discuss the needed changes? (Or is their plan to let the Liberals out-flank them on peak oil just like they did with global warming?)

What about our larger environmental and social justice groups, are they prepared to educate their supporters and push politicians on these crucial issues?

Something to discuss in person at the Garden Party, Monday at 1pm

We Are Not Amused!
Victoria Day Garden Party and Paint-In

When: Victoria Day – Monday May 24, 1-3 pm
(followed by ales fit for royalty at Tidewaters Pub, 3-5 pm)

Where: 10300 block River Road, Delta; near River Road & Centre Street. (Take the 640 bus: 10 minutes from Scott Road Skytrain or 15 from Ladner Exchange).

What: Historic homes are being demolished on the Fraser River bank, to make room for the proposed South Fraser Perimeter Road (SFPR) freeway project. Join us for a Victoria Day garden party and refreshments while you paint your displeasure with the SFPR on large banners!

Who: The Sunbury Neighbourhood Association and friends

Why: To express our royal displeasure with Gordon Campbell’s petulant scheme to pave over this historic landscape instead of preserving it as a Historic Waterfront Park or other suitable use.

Bring: Friends, family, painting clothes, freeway-busting ideas, slogans, cartoons, or whatever you fancy! Painting supplies and banners provided or bring your own plus a re-useable cup for this earth friendly event. Groups opposed to the SFPR are welcome to bring a display table.

Optional: Cucumber sandwiches, croquet and fine bone china.

You can also bring your ideas to the next planning meeting! 7:30 pm, Monday May 17 at Bridgeview Hall, 11475 126A Street, Surrey. 10 minutes walk from Scott Road Skytrain, see http://tiny.cc/bridgeviewmap

Homes Not Highways! Parks Not Freeways! People Not Pavement!

For more information contact: info@sunburyneighbourhood.ca / 604 585 1142

www.sunburyneighbourhood.ca

Photo: Possible future waterfront park as seen from Alex Fraser Bridge

Photo: Heritage house threatened with demolition for South Fraser Freeway, 10300 block River Road.

In case you thought that freeway projects always get completed once work starts, here is another example of a BC freeway project stalled due to financial and legal problems.

Photo - Bear Mountain Employees Attack Environmental Protest in 2008

Langford Interchange payment "postponed" indefinitely

A crucial piece of information regarding the Langford interchange funding controversy came to light Friday afternoon. Langford city staff confirmed Friday, September 4th that Len Barrie's company, LGB9, has failed to repay $4.79 million, his share of the $9.8 million that the city borrowed on behalf of developers to build the Spencer Road interchange (formerly the Bear Mountain Interchange.)

In related news, Bear Mountain investors last week were questioning Barrie, the resort's majority owner, about diverting up to $25.8 million from the resort to the Tampa Bay Lightning hockey team and to his own companies. Barrie denies the allegations but may face an investigation.

A Langford staff report dated August 18, 2008, set out the terms of the interchange loan. It called for Barrie's company to hand over the $4.79 million repayment on March 2, 2009, "or such other date as may be mutually agreed to by LGB9 and the City." The city has received nothing from Barrie, and no new repayment date has been set, according to city engineer John Manson, who spoke to Zoe Blunt of the Vancouver Island Community Forest Action Network on Friday.

Coincidentally, March 2 is the day that Rob Buchan suddenly left his long-time position as Langford's clerk-administrator, for reasons that are still unclear.

Ten days later, on March 12, Langford called a special meeting of council and voted unanimously to apply for Building Canada infrastructure funds for the interchange. The mayor and council gave no explanation for the application and no public participation was allowed. The applications may include up to $32 million in federal grants to complete what Langford calls "phase two" of the Spencer Interchange and the road connecting the highway to Bear Mountain Resort.

At the end of June, work ceased at the interchange site, which remains half-finished and empty. Manson said the city has spent over $14 million on the project in total, with funds coming from development cost charges and other sources, including the city's line of credit with TD Bank.

Several rather unconvincing explanations for the stoppage have been offered by staff, but so far, no one has mentioned Len Barrie's missed payment. Langford's mayor, Stew Young, and its councillors have been conspicuously silent on the interchange issue.

Conflict over the interchange funding dates back to December 2007, when Langford Council voted at a special meeting to authorize up to $25 million in loans that developers, including Barrie, agreed to pay back.

Local residents immediately mounted a counter-petition to bring the issue to a referendum. Even though they gathered more than 2200 signatures, the referendum was rejected on the basis that the project would be "100% funded by developers," according to Stew Young.

Shortly after, the Municipal Finance Authority declined to provide favourable terms for the loan, citing its "non-traditional" nature. The city then pursued funding from TD Bank.

Now, concerned residents are looking for ways to compel full disclosure from Langford on the financing of the interchange. Questions about the city's 2009 budget are causing unease as well. Included is $50 million – over 60% of the total budget – in grants that may not be awarded.

Contact us for more info: forestaction@gmail.com

I picked up on some comments online yesterday and today from the same person on the Vancouver Sun's polls. They are self explanatory.

Todays comments:

There is another poll in the Vancouver Sun.  The description says "Do infrastructure projects built through public-private partnerships provide taxpayers a better deal than public-sector procurement?" the title says
"Details needed, please, before BC commits tax dollars to finance ..".

At this point yes is 33 and no is 77.

I voted at this point and managed to manipulate the poll to 13% yes and 87% no in the space of 5 minutes.  

Yesterdays comments:

For the January 29, 2009 poll something bizarre seems to have happened.

"Do you support British Columbia's decision to provide one third of the financing needed for the twinning of the Port Mann Bridge and expansion of Highway 1?"

 I notice the results from this poll have disappeared.   I think this poll was compromised some how, with electronic voting.  I watched it pretty closely all day.   From 10:00 am to about 4:30 pm it went from 39% no to 75% no at a very steady pace.  Then from 4:30 to about 6:30 it went to 75% yes, very rapidly.   Around 7:30 I watched for awhile and the no side would drop as much as  2 percentage points in a matter of a few seconds.  I did vote at that time and noticed that my vote changed the percentage about 0.05 approximately, so a 2 percent change in seconds would have been a lot. 

Would be interesting to know what happened.  If you are curious too, contact the Vancouver Sun.

If you are wondering why investors are reluctant to throw down $2.3 billion to finance the Port Mann / Highway 1 portion of Gateway, check out what the Australian business media has to say about a 2008 Macquarie offering:

"The yet-to-be-built Brisbane toll road project was possibly the most disastrous sharemarket listing since the Romans decided to build a road network more than 2000 years ago."

"Brisconnections, the yet-to-be-built Brisbane toll road, has become the butt of jokes in the finance sector given the security price of its first instalment has fallen from $1 to 0.1c."

OK, I want to invest $500 million in the next one!:)

Like Enron and the US investment banks before, Macquarie's business model seems to be unraveling. And the public purse is where the corporations go for handouts when their Ponzi schemes unravel.

My understanding of the Macquarie model is that they arranged P3s and then inflated the value of the projects, before repackaging them into complex investment packages so investors would buy without an independent assessment of the asset value. This is basically the same problem as with sub-prime mortgages in the US.

Despite a government bailout in the form of loan guarantees, Macquarie is unloading assets to it's own funds, or funds run by close associates, in a seemingly desperate juggling act.

"QIC has a close relationship with Macquarie. Its chairman, Trevor Rowe, also chairs the Macquarie-listed Brisconnections, of which QIC is the largest institutional shareholder.

The purchase price is well above the value implied by Transurban and MIG's buy-out of contractor Leighton's 5 per cent stake in the road last August. Each paid $38 million for a 2.5 per cent stake in the road, implying a $760 million valuation on MIG's stake.

This was before the meltdown in financial markets. In late 2005, during the infrastructure boom, MIG increased its stake in the road by 5 per cent for $47.4 million, implying a $474 million valuation for a half-stake."

Maybe my analysis is simplistic, but this does not inspire a lot of confidence.

The bright side is that Macquarie's meltdown may go a long way to prevent the meltdown of Greenland's ice sheet (Which would submerge much of the route of the proposed Gateway Freeways), if it helps stop the global freeway building binge.

The biggest losers (and a few winners, too)
January 3, 2009 - 9:11AM

In the pantheon of financial performances, 2008 was an absolute stand-out for all the wrong reasons. Scott Rochfort looks at those companies which had a year to forget and may be forgotten as a result.

[snip]

BRISCONNECTIONS The yet-to-be-built Brisbane toll road project was possibly the most disastrous sharemarket listing since the Romans decided to build a road network more than 2000 years ago.

Listed by Macquarie Group at $1 each - in the first of three tranches - securities in the toll-road (dubbed Brisbane's Missing Link by its spruikers) slumped to 0.1 cents by year's end.

The slump at least provided a Melbourne housewife, Fang He, the chance to make a mark in the corporate world. She snapped up 8.26 per cent of Brisconnections, or 32.3 million shares, for a cool $32,300. It was unclear if she was aware her investment obliged her to fork out a further $65 million for the next two $1 instalments in the company.

"I am only a housewife. My husband is running this business in my name," Mrs He explained to the Herald in November. But it seems she wasn't too keen on forking out the extra $65 million, given she sold her stake weeks later.

In December, the Brisconnections chairman, Trevor Rowe, made the understatement of the year. "Your directors acknowledge that, in the current adverse global financial environment, the price performance of our stapled units has been disappointing," he said in a letter to Brisconnections victims (aka securityholders).
[snip]

Full text http://www.brisbanetimes.com.au/news/business/the-biggest-losers-and-a-few-winners-too/2009/01/03/1230681789600.html

Keep the balls in the air Macquarie!

Price 'too high' for half stake in M7
Scott Rochfort
January 14, 2009

TRANSURBAN has called Macquarie Infrastructure Group's bluff by declining to buy a 50 per cent equity stake in Sydney's Westlink M7 motorway, leaving MIG with a deal to sell the stake back into one of its own investment vehicles.

Last month MIG announced plans to sell its stake to the Western Sydney Road Group (WSRG) for $805 million, placing a 30-day deadline on Transurban to decide whether it would exercise its pre-emptive right to buy-out its M7 co-owner.

But yesterday Transurban's chief executive, Chris Lynch, said the price tag was too high.

"Any acquisition of additional equity in the Westlink M7 at the price created by the formation of WSRG would not have been value creative for Transurban security holders given the funding options in the current market," he said in a statement.

Transurban was rewarded for deciding not to buy the stake - its shares rose 22c to $5.17. MIG shares rose 0.5c to $1.72.

The deal comes as MIG's manager, Macquarie Group, is undertaking a major cost-cutting and asset sale program to strengthen its balance sheet.

MIG will now proceed with the sale to WSRG, a vehicle jointly owned by itself and a fund managed by Queensland Investment Corporation's Infrastructure investment arm.

This will result in QIC paying $402.5 million to MIG for a half-stake in WSRG. It will leave MIG with about $950 million of cash on its balance sheet after it pays its half-year 10c per security distribution on February 13.

It is expected MIG will also use the cash to buy back shares. It has bought back about 89 million or 4 per cent. Some observers suspect the buyback could be the first step in Macquarie trying to reprivatise the fund.

MIG also said it planned to "continue discussions with third parties" over the sale of its stake in WSRG.

QIC said it was "delighted" to acquire a 25 per cent indirect stake in the M7. "The purchase price is at a 5 per cent discount to MIG directors' valuation at 30 June, 2008, for an equivalent direct investment," said a QIC partner, Matina Papathanasiou.

QIC has a close relationship with Macquarie. Its chairman, Trevor Rowe, also chairs the Macquarie-listed Brisconnections, of which QIC is the largest institutional shareholder.

The purchase price is well above the value implied by Transurban and MIG's buy-out of contractor Leighton's 5 per cent stake in the road last August. Each paid $38 million for a 2.5 per cent stake in the road, implying a $760 million valuation on MIG's stake.

This was before the meltdown in financial markets. In late 2005, during the infrastructure boom, MIG increased its stake in the road by 5 per cent for $47.4 million, implying a $474 million valuation for a half-stake.

Brisconnections, the yet-to-be-built Brisbane toll road, has become the butt of jokes in the finance sector given the security price of its first instalment has fallen from $1 to 0.1c.

The fall in Brisconnections has fuelled concerns the toll road will struggle to raise the further $816 million due from its next two security instalments. Macquarie and Deutsche Bank will underwrite the next two instalments if Brisconnections cannot get its security holders to trump up the extra cash.
http://business.smh.com.au/business/price-too-high-for-half-stake-in-m7-20090113-7g2p.html