North America

Go East, Young Canuck!

Atlantic Canada, where lives 30 percent of the Canadian population in five of the country’s ten provinces (Quebec*, Nova Scotia, New Brunswick, Newfoundland, and PEI), has had slower population and GDP growth than central or western Canada in recent times.

(*I’m including Quebec in “Atlantic Canada” here. This is for three reasons: first, Quebec is  geographically an Atlantic province; Quebec City is an Atlantic city. Second, Quebec has shared in the Atlantic trend of relatively low population and GDP growth. Third, the French-speaking area of Canada in a sense spills over into New Brunswick, where about a third of people speak French).

Population Growth .png

Canada province gdp per capita.png

Atlantic Canada’s slower growth has been the result, more or less, of four factors: climate (Quebec’s winters are cold, the Maritimes’ snowy), commodities (fossil fuels are mostly in western Canada); language (much of Atlantic Canada’s population does not speak English well), and location (Atlantic is relatively far from East Asia or the US).

Population and GDP Growth Ahead? 

I’m sorry, but I got real lazy here. So I’m just going to make pie-in-the-sky predictions, in point form:

  1. Migration and EnergyWith fossil fuel prices low today:

    — the Maritimes (apart from Newfoundland) benefit, as they tend to be the most dependent on fuel imports among Canadian provinces
    — Maritimers may move home from western Canada
    — Migrants from Romance-language developing economies and the Arab world, which depend heavily on energy and other commodity exports, may move to Quebec or to New Brunswick. This is particularly true given current politics in the US (where many do not want more immigration from Latin America), France (where many don’t want Muslim immigration), Veneuela (a country of 32 million people, in turmoil right now), Algeria, Libya, Angola, DRC, and Brazil
    — Migrants need affordable housing; Ontario and BC don’t have it, Atlantic Canada does
    — Migrants need employment; France, Spain, Italy, Portugal and Belgium don’t have it
    — Demographics: whereas today most of the world’s people of prime emigrating or studying-abroad age (20-40 years old) in the world are East or South Asian, over the next decade or two the biggest growth in this category by far will be in Sub-Saharan Africa. Much of this, in turn, will be in Atlantic countries (notably Nigeria), many of which speak English or French.
    — In the Americas, the biggest relative growth in 20-40 year olds will be in Haiti (pop. 11 million)
    — Even Romania, a Romance-language country with a population of 20 million, is an oil-exporting economy

2. Trade and Technology

— Brexit: England and/or Scotland and/or Ireland may look west to its ex-colonies in the Maritimes for new trade (or travel) relationships
— Trump: the Republicans have brought some uncertainty to NAFTA, and also seem poised to help keep energy prices low by allowing the US fossil fuel boom to continue. Atlantic Canada is less dependent on trade with the US than Ontario is, and less dependent on high fuel prices than western Canada is
— New Fur Trade: Europe is looking for commodities in order to wean itself off of Russia and the Arab world, and ports in Atlantic Canada may be able to provide it with the supplies to do so. In recent decades, most Canadian trade has been along north-south lines, a result of the significant barriers that are the Rockies (especially in winter), northern Appalachians (especially in winter), and the Canadian Shield’s lakes/rock formations/Great Lake Snow-belts. New technologies, however, notably autonomous trucks (or at least, “smarter” trucks) may help to overcome these barriers, allowing for more east-west trade
— Meanwhile, trade with Asia is unlikely to grow relatively quickly like it did in recent decades, given that Asian growth is shifting more from the northeast (Japan, South Korea, coastal China), which is relatively near western Canada, to the south and west (India, Southeast Asia, inland China) which is not so easily accessible from western Canada. Western India, in fact, is several thousand km closer to Halifax by sea than eastern India is to Vancouver
— Autonomous ships, aircraft: small autonomous ships, combined with climate change, might open up new North Atlantic sea lanes (Northwest Passage, Northeast Passage). Autonomous aircraft, similarly, might help open up the aerial Northwest Passage (by air, St. John’s-to-Beijing is only 20-25 percent further from than Victoria-to-Beijing). Autonomous cargo planes, when combined with modern precision airdrop technology, may also allow the Maritimes to benefit from being located along the aerial routes between North America and Europe — not entirely unlike how, in the pre-jet age, cities like Gander benefited from these routes
— If North America is to move in a direction away from fossil fuels, it will need abundant energy alternatives, as well as abundant energy storage to support intermittent sources like solar and wind. Quebec’s hydro industry is one of the world leaders in electricity production and storage
— If robots/autonomous vehicles become common, then the amount of energy that is in demand in the wee hours of the night will skyrocket, since robots don’t need sleep. This will benefit energy production that today cannot be turned off at night, such as nuclear and (in many cases) hydropower, in contrast to gas plants or, especially, solar. Outside of China and Russia, which produce prodigous amounts of nuclear and hydro but an even more enormous amount of fossil fuels, the leaders in hydro and nuclear are Atlantic economies: Brazil, France, Scandinavia, and the eastern half of Canada
— E-commerce: in a world of globalizing digital interaction, a region bilingual in both English and a Romance language might be in a good position
— Robotic factory workers: the Maritime provinces have excellent, abundant natural harbours to use as ports, but relatively small populations and, thus, small labour forces. Robots could, pehaps, change this equation, making ports (and energy) a more decisive asset

ocean-drainage-basins

Source: United States Geological Survey

Atlantic_Ocean_laea_relief_location_map

3. Climate and Tourism

— driving in snow or rain, both of which Atlantic Canada gets a lot of, may become much safer and more comfortable than in the past (good, among other things, for the 35 km drive between Halifax and the Airport)
— Atlantic Canada has an enormous amount of waterfront land. With people perhaps being able to spend more time in the countryside, as a result of automation (doing jobs for people), the Internet (e-commuting), and demographics (Baby Boomers cutting down their work hours), this waterfront land could help in tourism
— with more flexibility (because of technology), people from Canada, the US, and Latin America can become snowbirds: summering in Atlantic Canada and wintering down south
— cross-country skiing boom will continue over the next ten years, as Baby Boomers enter their 60’s and 70s
—Much of Atlantic Canada is islands and peninsulas. Airplane travel, particularly with small airplanes, may become cheaper if autonomous planes really do become a reality — or if it becomes easier to become a pilot because of high-tech modern flight simulators. Traveling by boat may become easier if people get more time on their hands, if technology increases safety, and if technology can address sea-sickness

Atlantic Canada.png

Canada_2015_

The Liberals swept the Maritimes; the Conservatives fared most poorly in the Maritimes and Quebec

Advertisements
Standard

6 thoughts on “Go East, Young Canuck!

  1. With respect, I can’t say I’m convinced by some of the reasoning! For instance: is the cost of airline travel really limited by the availability of pilots and the cost of flight simulators? I’d have thought that the main limit is the cost of oil, which in the long term will increase. [there is a huge supply of people who want to be pilots, including some with experience and training who struggle to find employment: there are, relatively speaking, very few jobs as pilots, and those who get the jobs tend to hold on to them for a very long time. I’m not convinced that if airlines suddenly had a higher percentage of their applicants with substantially more experience in flight simulators, they’d take that as a cue to build more aeroplanes and open up more routes…]

    More generally, I’m puzzled by focusing on the tiny hydrothermal industry in eastern canada rather than the world’s largest fossil fuel reserves in western canada – surely if energy is going to boost the economy of anywhere, it’ll be of the west? That’s not to say that there won’t, of course, be more jobs in developing renewable energy in the short and medium term, but there will also surely be a huge number of jobs – and a lot of money – in being the capital of the world energy supply? I don’t think “but hydro doesn’t turn off at night” is a good argument to overcome that. For one thing, you don’t have to turn off a fossil fuel power station at night either, if you don’t want to. [particularly since those robots who you want to power at night can also run the power stations.]

    Anyway, not trying to be critical, just… not following all the steps in the argument here?

    • No worries, those are all good points. I should probably not be so lazy in the future and instead actually try to back up any claims I make!

      On the pilots thing, you’re right of course that pilots are a pretty small share of the costs of air travel..the only possible exception to that is very very small airplanes, where the pilot costs can be significant. Atlantic Canada is full of islands and remote locations, so it’s not totally out of the question that it wouldn’t benefit from small planes becoming cheaper. But basically I think you’re right, what it really would benefit from is something more important to general air travel, like cheaper jet fuel.

      On the hydropower point, your premise is not entirely correct: the hydro industry in the eastern half of Canada, mostly in Quebec but also in Labrador, Ontario, and Manitoba, is gigantic. Canadian hydro accounts for something like two-thirds of electricity in the country, and a majority of the existing electricity storage capacity in the entire continent. It’s still pretty far behind oil and gas in terms of overall energy production, so if oil and gas prices rise again then it will be western Canada that will continue to profit. But at the moment, oil prices are half of what they were for most of the past decade.

      One of several reasons natural gas plants have become so popular lately is that they, unlike nuclear, coal, or in many cases hydro, can ramp up and down their supply at nighttime easily, when electricity has relatively little value. If machines cause the value of nighttime power to increase, then nuclear, hydro, and perhaps even coal may benefit relative to gas (and solar). This might be significant, given that Quebec is by far the biggest hydro producer in North America, and Ontario by far the biggest nuclear.

      • Yeah, but my point is that “provides two-thirds of the electricity of Canada” is basically the same thing as “tiny”. By comparison, Canada currently, at 2012 prices, has the third-largest oil reserves in the world, 10% of total world production, with reserves greater than the sum total of all oil used in history. When the prices go back up (and/or production costs continue to fall), Canada will have something between 25% and 50% of the world’s oil reserves (depending on whether the US is able to effectively recover oil from its shales), which will then continue to increase as conventional oil is used up. At that scale, hydro in quebec is like saying that the wealth of the gulf lies in its pearl-fishing areas. Sure, the pearls are nice, and this place or that may produce the majority of pearls in the gulf region. But the oil production is the bedrock of their economy, and of the global economy, and in Canada that’s in Alberta…

        [I suspect that if anything makes nuclear more attractive, people will just build more nuclear. [particularly if efficiency improvements can be made in future designs, since power plants are hard to upgrade while they’re still running]. After all, the biggest source of fuel, by far, is South Africa, so there’s no particular reason for anyone to rely on Ontario’s plants. If America wants nuclear, it’ll just build its own stations…

      • Well, we may be talking about two different time periods here. If we’re talking about the long(ish) term, then I agree with you that it might end up being Alberta that provides most of Canada’s growth, like it did in the past decade. But in the immediate future, if oil prices don’t shoot back up and Alberta is left dealing with the lingering consequences of the fact that Albertan oil was below 30$ last year (and a lot of Fort Mcmurray burned down), then it may be Atlantic Canada that has a chance to surprise people by no longer growing so much more slowly than western Canada or Ontario. Similarly, while in the long run a country like the US might build lots of state-of-the-art nuclear power plants, those take a good 10-20 years to build, so in the immediate term it may still be significant that most of North America’s nuclear power comes from either Ontario, Illinois, or Pennsylvania — all from the Great Lakes region.

        Also, I think you may be overestimating the size of Alberta’s oil reserves. I know these numbers tend to be contested, and maybe even somewhat unknowable, but all the numbers I’ve seen have Alberta pegged at more like 5% of global reserves than 50%. And then there is also the quality issue: most Alberta oil is not light or sweet.

        And then finally, I don’t share in the assumption that oil and gas will continue to dominate global energy markets. I certainly think it’s plausible that they will do so, but I don’t see it as a certainty.

      • I think it’s very likely that fossil fuels will have to continue to dominate for decades to come. As you say, nuclear stations will take a while to come on line, and solar doesn’t seem technologically ready to take over yet.

        Regarding Albertan oil: well, there’s reserves and then there’s resources. In terms of proven reserves in 2017, Canada has about 10% of the world’s total reserves (about 0.17 trillion barrels out of world reserves of 1.7 trillion in total). Most of those reserves can be produced economically in the near future – they apparently require prices between $30 and $40 to be profitable.

        However, those proven reserves only amount to around 10% of the total estimated known Canadian deposits (assuming nothing massive is discovered under a melting icecap somewhere or the like). These aren’t reserves because they’re not fully charted and they’re not viable to recover with present technologies and methods at anything near an economic price. When the oil price returns to a high level, however, and as the technology gradually improves, those resources, which currently equal the entire current proven resources of the world, will come on stream. They’re apparently not THAT difficult to get (relatively shallow deposits, relatively easy to extract the oil from the rocks – the biggest challenge is just the mining).
        In that scenario, Canada will have perhaps a third of the world’s oil (the other thirds being Venezuela and everywhere else). It may be as much as half (if Venezuela are overstating their resources, or if they have trouble extracting them – Venezuelan resources are much deeper than Canadian, plus they are less politically stable).
        Then you’ve got the US shales, and other shales in Brazil, Russia, etc. We don’t know how much exactly and these are much harder to exploit than the Canadian sands. It’s likely that there will be a period before these really come on stream to a massive extent. However, at current estimates I can’t see Canada having less than 20-25% of total world resources. But this is just wikipedia facts further backed up by out-of-date memories – if you have more specific numbers, I’d be glad to hear them.

        We may indeed be talking about different timescales. I think it’s very hard to meaningfully predict what happens in any small region in a time span as small as 10 years, or even 20. But the way you were talking about the rise of the robots, I assumed you were talking about a timescale a bit longer than that!

  2. Ya you’re right, I was inconsistent by trying to have it both ways and assume that oil prices may stay low (a short term outlook) and that robots may be significant (a mid-term or long-term outlook).

    I’ll respond to the rest of your comment later, but for now I’d just say to remember that when talking about Alberta oil prices, we’re mainly talking about “Western Canada Select” rather than West Texas Intermediate or Brent prices. Alberta’s oil tends to be less valuable, because it’s landlocked and not light or sweet. So for the 30-40$ profitability range you gave (and of course, future profitability price ranges are just as unknowable as future prices themselves are), Alberta’s oil is currently not above 40$, and for much of 2015 and 2016 was below 30$. Western Canada Select actually hit a low of 16$ last year.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s