Premier masters inconsistency

Brian Jones
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It is fun to follow the outlandish irrationality that poses as reasoned debate on the blogosphere.

A story on The Globe and Mail’s website this week caught my attention: is it better to buy a new or used vehicle?

There are valid financial arguments on both sides of the question. Some of it comes down to personal preference. In the commentary section under the story, debate was seriously skewed by many people’s lack of understanding of “depreciation.”

For example, if you buy a new car because you want to have a reliable vehicle for the next 10 years, then “depreciation” is irrelevant. If, on the other hand, you plan to trade it in after four years, then “depreciation” is central to the transaction.

A fan favourite in the readers’ comments section was a guy — obviously from Toronto, not that he should be prejudged for that — who boastfully proclaimed he has given up cars in favour of a bicycle, which gets him everywhere he needs to go, costs far less and doesn’t damage the environment.

Talk about being unable to see beyond your own interests. Say, fella: how would that work for commuters in February in St. John’s or Calgary? Twenty miles by bike in the snow? Great. If a blizzard blows in, it will be even better.

Up, down, all around

The blogosphere isn’t the only place where poorly thought-out arguments prevail. Unfortunately, public discourse about important social and political issues has become tainted with the same malaise. Too many politicians now seem to think their arguments are unassailable because, well, they’re in charge.

Premier Kathy Dunderdale is one of the worst offenders. She is apparently so satisfied with her authority that she doesn’t recognize when her statements are contradictory, illogical or preposterous, or all three.

Any Newfoundlander (or Labradorian) who follows public events is aware one of the provincial government’s prime arguments for blowing $4.1 billion of the public’s money on the Muskrat Falls development is that oil prices are projected to go up and up and then up some more.

Rather than keep paying higher prices for oil, consumers will benefit from the hydroelectric megaproject. Well, that has been the government line, and they’ve stuck to it for years.

Oil prices have been dropping for a few months. The per-barrel price of oil has declined about $20 since April.

Most rational observers, i.e., taxpayers, would interpret this as yet more evidence that the provincial government’s determination to spend billions on Muskrat Falls is, to put it politely, hasty and misguided.

Inside out

Not Dunderdale. To her, volatile oil prices merely reinforce the need to develop Muskrat Falls. She said so this week.

To recap: according to the Dunderdale government, high and rising oil prices are the basis for spending billions of public dollars on Muskrat Falls; also according to the Dunderdale government, falling oil prices reinforce the need to spend public money on Muskrat Falls.

The premier is apparently incapable of seeing the contradiction.

The need for Muskrat Falls was predicated on the assumption oil prices were headed for the $200-per-barrel mark, due largely to ever-rising demand in China and India. Consequently, selling hydroelectricity to New England consumers would be easy and profitable.

Neither of those conditions is true anymore.

Uncertain oil prices should lead to uncertainty about the Muskrat Falls project, even among its supporters.

But in today’s politics, authority trumps arithmetic. If the premier declares dropping oil prices prove the need for Muskrat Falls, then voters should set aside their critical faculties and forget about all the previous arguments that Muskrat Falls is needed because of rising oil prices.

Brian Jones is a desk editor at The Telegram. He can be reached at

Organizations: Globe and Mail, The Telegram

Geographic location: Muskrat Falls, Toronto, Calgary China India New England

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Recent comments

  • Winston Adams
    July 27, 2012 - 15:28

    Hot today, for near the sea. It's 83F at Bishop's Cove. So I turned on the air conditioning for the first time this year. Two other days in July, I used the dehumidification mode, which gives a little cooling, but it was insufficient in that mode today. I'm using a non ducted heatpump. I installed it for heating as it cut my heating bill by 70 percent. In the summer it comes in handy to cool. I just cool the central part of the house, about 800 sq ft. Presently it shows a current flow of 2.45 amps which is 564 watts. That's much less than an electric kettle. My kettle takes 1200 watts , my toaster 900 watts. When cooling in the dehumidification mode, the unit takes just 345 watts. A nice benefit this time of year. Adds a little summer load to our electric system when we have plenty of elecrticity without Holyrood running. Efficient heating and cooling- why doesn't our government and Nalcor and Nfld Power promote it. If most people were using these we would have no need for Muskrat Falls for 20 years. And electricity prices would'nt rise as planned.

  • Winston Adams
    July 27, 2012 - 12:57

    John and Maurice: Neither of you or anyone else dispute my figures that 600 MW of our peak demand is due to our inefficient heating. And it's very cost effective to correct that. John says Nalcor has looked at everything. A Nalcor official said to me that they're not sure this approach comes under their mandate. And this is probably the case. Their mandate is to supply new expensive power instead of using our existing power efficiently. Address this waste is the wisest choise since it gives least cost to the consumer and stabillity for about 2 decades, reduces oil for Holyrood and keeps our energy price essentially steady at todays price, without a 40 percent or more increase. Where is Nalcors assessment of what effiicient heating can do for us? 600 MW is more than the average output of MF. Seems hard to beleive we can be wasting this ? Come on guys, you both have views on everything. Say something on this. If you have no expertise on this , do a little research, then comment. There are 3 aspects to this. 1. Is this 600MW of waste for real. 2.Is it very economic to save, and therefore keep our electricity prices stable at the present level. 3. What is the mechanism to proceed to achieve this( assuming Nalcor 's mandate don't allow for this.

  • Cold Future
    July 27, 2012 - 12:02

    Muskrat is a money losing giveaway white elephant. It cannot be justified by economic means. It cannot be justified as an energy plan for the future which noone can predict. You cannot develop a project to sell its product at 20 % of its cost and make money. To expect the taxpayer to pay out to subsidize product sold to mainland interests is plain outright daft and that says it all about anyone who would promote it. The oil prices will stabilize over the long term, Western Canadian oil and gas will flow east because the much "ABCed" federal conservatives will ensure it happens to the benefit of Western Canada. It is bad enough for outsiders to put NL in the poor house but it is quite another to do it to ourselves auspices of an inept out of touch government's decisions.

  • Little Man Dan
    July 27, 2012 - 08:55

    here Johnny, Johnny...come sit on my lap and be a good puppy; it's time to change focus; down boy, down...your adoration is sickening, even to me.

  • Maurice E. Adams
    July 27, 2012 - 08:41

    JOHN, you say "When Hibernia was first costed oil was at18 dollars a barrel, last year it was 150 dollars a barrel, if the world goes into Syria it will be 200 dollars a barrel. It is unpredictable. The idea is to get us away from the unpredictability of oil"...... But John, Nalcor's claim that Muskrat is "least-cost" is based on Nalcor's 50 year (no less) 'prediction' that oil prices will go high, very high. You can't have it both ways. Either oil prices is predictable (as Nalcor claims), or it is not. I happen to agree that it not only unwise, it is virtually meaningless to predict oil prices 50 years into the future ---- and downright irresponsible to put billions of taxpayers dollars at risk based on airy fairy 50 year oil forecasts. As of July 2012 the price of oil was $85.00 / bbl, only $1.50 above its 6 year average price of $83.50 / bbl --- an annual rate of increase that is more than 6 times LESS THAN Nalcor's guaranteed minimum annual (compound) increase of 2% EVERY YEAR. Also, over the last 9 years Holyrood has operated at capacity FOR A TOTAL OF 50 days (5.5 days a year) , ZERO in 20122 ----- and we need to spend BILLIONS to change that?

    • John Smith
      July 27, 2012 - 09:06

      Yes we do.

  • John Smith
    July 27, 2012 - 08:01

    Nalcor is tasked with making sure we have enough electricity to meet coming demand peaks. They looked at all the options, they came back and said their investigation showed that the best long term answer was a dam on the lower churchill. I would like to know where you got the 200 a barrel figure, because I have never seen it. When Hibernia was first costed oil was at18 dollars a barrel, last year it was 150 dollars a barrel, if the world goes into Syria it will be 200 dollars a barrel. It is unpredictable. The idea is to get us away from the unpredictability of oil, and get us on a more stable platform. One that we own completely, one that we will own lock stock and barrel. What the Premier was alluding to is that evntually our oil resources will dwindle, and if we have other routes for hydro, includeing Gull Island, we wil make some money from it. That has nothing to do with our coming need for power. Does it make sense to invest a billion dollars or more into Duff's in Holyrood, only to remain tied to the unpredictability of oil for the next 50 years?Or should we build a dam, which will provide all the clean green energy we will need, provide us with stability for the next 50 years, provide us with a link to the mainland allowing us to persue wind and other alternatives, allowing us to sell the excess on the spot market for 200-400 million a year untill we need it, allowing us to stop the smoke from duff's raining down on our kids for the next 50 years, allowing us to stop paying hundreds of millions a year to the middle east for dirty bunker crude, allowing us to pay ourselves for our own project. This is a very good answer that those who work at Nalcor have provided us with.They have no agenda, they are just doing their job, that's all. They are not evil doers out to get us. They are just people from NL like you and me.

  • Ron Tizzard
    July 27, 2012 - 07:46

    Sometimes, we're just stunned. Last week, a few friends and I were discussing the political landscape in this province. While we dithered here and there in the psychological dust-up, in the final analysis we agreed that Dunderdale should step aside come the next election, or the electorate should fire her. Friend # 1 - insisted that she just had no vision, her governance is 'by the each ' day. Friend # 2 - argued that she's tremendous, a hugger of a 'mom and grand-mom, a master at 'finding a solution' on the home front. Friend # 3...felt that the Premier would have made a perfect explorer 'back in the day' , discovering 'new lands'...making decisions in the earliest of times when critical decisions were made simply about getting into tomorrow, 'again', by the each'. Personally, through my decades of living in this Province, I would just like to to see, at the very least, a blue-print of a meaningful governance perspective for this province through time. I truly believe that NLers are considered 'jokers-extrordinaires' by many people(s) because of our masterful skill-sets of ''a levity approach' through troublesome times''ll be alright-b'y...the sun will rise be sure'. Believe the Dunderdale solution is on the way...hold tight, and be part of the solution come Newfoundland and Labrador's next election. We, belly-achers, can be part of the solution, or part of the problem....again! In the meanwhile, let's just stop complaining...let's try!

    • Eli
      July 27, 2012 - 13:27

      By the time the next election comes it'll be too late. The irreparable damage to our finances will be cast in stone. But her rewards for her skewered life in politics will be so generous she won't give a cat's ass what it will cost her financially or in conscience. Tart!

  • Winston Adams
    July 27, 2012 - 07:17

    Wonder what the new directors think of the effect , the risk of lower oil prices on the MF project. Do they take their cue from the premier or have some original thoughts. It's their job to assess risk isn't it?