On Numerology and Public Transit

The number 12 has played a key role in human culture, showing up in places as diverse as the hours of the day, the tribes of Israel, the disciples of Christ, the jury of your peers, the major gods of Olympus, the inches in a foot, the Chinese Zodiac, the Latin Zodiac, or the egg-carton.

One reason for this is that 12 is divisible in three different ways: by 12 and 1, by 6 and 2, and by 4 and 3. Not until 18 (another significant number, in both Hinduism and Judaism) is a number again divisible in three ways. This is also the root of 13’s bad luck: it’s a prime number, divisible only by itself and one. 13 throws off 12’s groove.

Numerology and Public Transit? 

As in the case of the clock, calendar, and egg-carton, 12’s divisibility could perhaps be put to practical use in public transit.

Imagine for a moment that a road were to have three different bus lanes in each direction. In one of the directions, busses on one of the lanes would make stops every 200 metres, on another lane every 400 metres, and on the third lane every 1200 metres.  In the other direction, busses on one lane would make stops every 300 metres, on the second lane every 600 metres, and on the third lane every 2400.

The result of this would be that busses on all six bus lanes would arrive at the same place every 2400 metres. In addition, busses on the 200 metre and 400 metre lanes would arrive at the same place every 400 metres, and busses on the 200,300, and 600 metre lanes would all arrive at the same place every 600 metres. Five of the six lanes — the 200, 300, 400, 600, and 1200 — would all arrive at the same place every 1200 metres. Lots of opportunities for passengers to transfer easily from one lane to another might therefore be created by such a transit system.  Ideally, this would make the system both efficient and useful.

Of course, you’ve probably already spotted the problem with this plan: roads aren’t wide enough for six transit lanes!

In order to have a transit-by-the-dozen plan like this, you would need either narrower vehicles or wider roads.

In the case of wider roads, the solution is obvious: use highways. The challenge then, however, would be how to get the passengers to and from those highways. This may not be viable today — or at least, not politically viable — but it could perhaps become so with the advent of autonomous or semi-autonomous cars.  Autonomous vehicles could take passengers to and from transit stops located in or adjacent to the highways.

The same might be said of narrower vehicles. Narrow, one-seater autonomous or semi-autonomous cars might allow main streets to create six narrow lanes — three in each direction — to be used for a transit system. Not only would the vehicles themselves be narrow, but they may also require less space between lanes.

But, if anywhere, it is probably on highways, not ordinary roads, where such a plan might actually have potential. Highways are so wide that, rather than have six transit lanes in total, it could be possible to have twelve: a 200, 300, 400, 600, 1200, and 2400 in each direction.  You could  even name the lanes after the Zodiac.  You could then give a tourist directions like “take the Taurus for three stops, then swich to the Gemini.”

Alternatively, you could use only one lane in each direction, but still have different busses using the lanes stop 200,300, 400, 600, 1200, or 2400 metres apart. This would make the system possible on normal roads, with normal sized vehicles, rather than only on wide highways or with narrow autonomous cars.

This is all enormously speculative of course. I don’t expect to see it happen, and am not sure it would even be desirable.

I guess we’ll have to consult an astrologer to find out.

Geopolitics in Canada: Politics, Economics, and Future Technologies

Canada is often considered to be a haven from geopolitics, a country relatively free from economic want or political cant. But if by geopolitics we refer simply to the influence of geography upon politics, Canada may in fact be a prime place to study it, if only because the country posseses so much of the former when in comparison to the latter.

The basic fact of Canadian geopolitics is this: more Canadians live in the city of Toronto than live in the 2500 kilometer-wide expanse of land separating Toronto from Alberta. (Or, to put it in the most Canadian way possible, there are a heckuva lot more people who would like to see Auston Matthews win the Calder Trophy than Patrick Laine). Canada is in this way divided in two: between Alberta and BC on the one hand, in which around 25 percent of Canadians live and 30 percent of Canada’s GDP is generated, and Ontario and Quebec on the other, which account for roughly 60 percent of Canada’s population and GDP.

Source: Future Economics

These two halves, in turn, can also be divided into two parts. Alberta is separated from BC by the Rockies; Ontario from Quebec by the Anglo-French divide. (The debate is still open as to which of these two barriers is the more venerable). However, while the BC-Alberta split is pretty well balanced — Alberta’s GDP is a bit larger than BC’s, but BC’s population is a bit larger than Alberta’s — the Ontario-Quebec divide is tilted strongly in support of Ontario. By itself, Ontario accounts for an estimated 38.6 percent of Canada’s population and 38.4 percent of Canada’s GDP.

These are large figures not just in Canadian terms, but also in global ones. Few provinces or states within major countries represent such a bulk of their respective nations. Ontario’s provincial government has a budget that in recent years was larger than those of Quebec and Alberta combined, and also close to half that of Canada’s federal government (the capital of which, Ottawa, happens to be located in Ontario). The Ontario provincial budget is higher than those of any states in the US apart from California or New York. It is higher than the budgets of 15 EU nations.

Among other things, this makes the provincial election of Ontario that is scheduled to occur by 2018 a matter of some significance. According to current polls (yes, I know, polling cannot be trusted…), the Ontario Liberals likely will be thrown out of office for the first time since 2003, to be replaced with the Progressive Conservative party. This would be noteworthy given that, at present, only Manitoba is led by a Conservative government. The rest are governed by Liberal parties with majorities in provincial parliaments, or else by the New Democratic Party (in Alberta) or Saskatchewan Party (in Sasketchewan, of course), both of which enjoy majority governments too.

In Canada, due to the country’s vast size and diffuse population, provinces possess a high measure of capital and clout. The combined budgets of the ten provincial governments, for example, is larger than the federal budget. (In the US, by comparison, the 50 state budgets amount to less than half the US federal budget. And in Britain, the central government is far more prominent still). So, if provincial Liberals lose upcoming elections in provinces of considerable size—Quebec may have an election in 2018 too, and BC will likely have one this year— it might unsettle provincial relations with Justin Trudeau’s federal Liberal majority; a federal majority likely to remain until at least 2020.

It is not however only Ontario’s size which tends to make it the fulcrum in Canadian politics. Ontario is also centrally positioned, both economically and politically, within the country. Economically, the four provinces west of Ontario have around one-third of Canada’s GDP, while the five provinces east of Ontario have around one-quarter of Canada’s GDP. The median line of longitude of the Canadian economy — the place where the GDP to the east equals the GDP to the west; the Prime Median, as it were — runs directly through the city of Toronto, Ontario’s capital.

Ontario trades nearly seven times more with Quebec than does any other province, and trades three times more with Alberta than does Quebec. Ontario also trades more with Canada’s four Atlantic Maritime provinces than Quebec does. Politically, moreover, Ontario shares a long border with French-speaking Quebec — a border Ottawa abuts and Montreal is just 60 km from — yet shares a language with most of the rest of Canada.

We’ve left out any mention of Canada’s three Territories, Yukon, the Northwest, and Nunavut, for the sake of simplicity. Combined, they have a population of 113,000; smaller than the smallest province, PEI, and just 0.32 percent of the overall Canadian population. (By comparison, Alaska accounts for 0.23 percent of the population of the United States)

This is where we get to the real bacon of Canadian geopolitics: the somewhat uncanny reflection of geographical realities within Canada’s electoral outcomes; specifically, in the ability of Ontario to “swing” between either Quebec or western Canada during federal elections, or to vote for a party that is supported neither in Quebec nor in western Canada and yet still manage to have that party win the election (or at least, manage to avoid having any rival party acheive a majority government).

The four most recent elections, which saw Trudeau emerge with a majority government in 2015, Stephen Harper win his first-ever majority in 2011, and Harper gain only minority governments in 2008 and 2006, are ideal examples of this:

The three major candidates in the 2015 election, Justin Trudeau, Stephen Harper, and Thomas Mulcair

In 2011, Harper’s Conservatives won a majority by uniting Ontario and western Canada — including receiving 27 out of 28 seats in Alberta — even as they won only 5 out of 75 seats in Quebec. In that election Ontario and every province west of Ontario gave a large majority of their seats to Harper’s Conservatives, while, with the exception of New Brunswick (the westernmost Atlantic province), none of the provinces east of Ontario came even close to giving a majority to the Conservatives.

Quebec, in contrast, gave 59 seats to the NDP, allowing that party to become one of the two largest in Parliament for the first time in its history. 2011 was a good example of Ontario swinging to the west. (Harper, not incidentally, was born in Toronto, attended university in Edmonton, and represented a Calgary riding in Parliament).

In 2015, on the other hand, Trudeau’s Liberals won an even larger federal majority by winning most of the seats in both Ontario and Quebec, even as they were crushed in both Saskatchewan and Alberta. The Liberals won a large majority of seats in Ontario and in every province east of Ontario—except Quebec, where they won only a narrow majority—and also won exactly half the seats in Manitoba, the easternmost Prairie province. But the Liberals did not come even close to winning a majority in any other province west of Ontario.

The large victory of Trudeau (who, by the way, was born in Ottawa, went to university in Montreal, and represents a Montreal electoral district in Parliament) is a good example of Ontario swinging east. While BC did give a plurality of its votes to the Liberals in 2015 too, it only amounted to 17 out of the 42 seats in that province; in contrast, in the Atlantic Maritimes the Liberals swept all 32 seats in the four provinces of the region, and in Ontario the Liberals won 80 out of 121 seats.

In 2008 and in 2006, Ontario did not give a majority of its seats to any party. Moreover, in neither of those elections did Ontario and Quebec give a plurality or majority of their seats to the same party. This resulted in both cases in federal minority governments.

In 2008, Ontario gave a plurality of seats to Harper’s Conservatives, who won big majorities in every province west of Ontario but who lost in every province east of Ontario except New Brunswick. Quebec meanwhile gave a large majority to the Bloc Quebecois that year. In 2006, when Harper’s minority victory was much narrower than in 2008, Quebec also gave a large majority to the Bloc Quebecois, but Ontario gave a plurality to the Liberals rather than to Harper.

In 2006 the Alberta-BC divide was also larger than in 2008 or 2011: the Conservatives swept Alberta but won only a plurality in BC. (New Brunswick however did fall in line with its fellow Maritimers in 2006: all four gave a majority of seats to Liberals). In both the 2006 and 2008 elections, every province west of Ontario gave majorities or pluralities to the Conservatives, while none to Ontario’s east (except, again, New Brunswick in 2008) did so.

While geopolitical patterns such as these vary over time and so are not certain to endure, still it is clear they run deep. Quebec’s political leanings in particular may deserve special attention in this regard, given that province’s size and unique identity. For over ninety years, from 1891 to 1984, Quebec gave a plurality of its parliamentary seats to the Liberals in 25 out of 26 elections. This long era ended only when Pierre Elliot Trudeau resigned in 1984, leading later that year to the victory of Brian Mulroney, the only Quebec-born Prime Minister ever to have led a Conservative Party.

Mulroney not only triumphed over Trudeau’s successor John Turner, but did so by winning 211 seats in Parliament, the most in Canadian history. In all eight elections since then — until the most recent election in which the new, younger Trudeau emerged and secured 51 percent of Quebec’s parliamentary seats — the Liberals were unable to recapture the province. Before Justin, they fell behind the Bloc Quebecois there during six out of seven elections, and fell behind the NDP in the seventh.

This feat alone displays the unique mantle that Trudeau now wears. Quebec will probably remain very much on his mind in the years ahead, especially if the Conservatives or the NDP nominate a leader from the province, like Maxime Bernier or Guy Caron, to take over their parties this year and face down Trudeau in the 2019 election. Indeed, in spite of of all the noise I’ve made here about Ontario being a decisive force in Canadian politics, Quebec has been nearly as successful in getting its preferred candidates elected PM. It has done so in 28 out of 42 Canadian elections; Ontario in 30.

In Part 2 of this 3-Part essay, we will attempt to analyze the modern Canadian economy, and in Part 3 we will discuss how technological changes may impact the country. 

Cable-Cars: The Third Way

So imagine it’s the wonderful future, and everyone has the option of being ferried everywhere by autonomous cars.

The places that were once parking lots have been converted into parks, shops, or homes; the places that were once useless archipelagos of land trapped within highway cloverleafs have been converted into vertical parking lots for autonomous cars, which are capable of holding far more cars within a given space than any traditional parking lot ever could.

Getting Around

Upon entering a car at the front door of one’s home, and perhaps after deciding whether or not to drive the car or let the car drive itself instead, passengers will be confronted with a choice of three basic transportation options:

The most expensive, but also simplest and most private, option is to travel directly by car to one’s destination.

The second most expensive, but generally fastest, option will be to travel by car to a train station, then travel by train to another train station and, if necessary, travel by another car from the station to a destination.  In this future, the middle lanes of many urban highways will be converted into surface rail lines, making trains more widely available. (Also, subway systems will likely continue to expand over time). After dropping off passengers at these highway train stations, cars will be able to drive on to the nearby vertical parking lots.

Finally, the cheapest but slowest option will be to travel by car to a cable-car station. Cable-car stations will often be located within highway vertical parking lots, and also directly above highway train stations. After travelling by car to the nearest one, passengers will ride a cable-car to the train station.

In some places, cable-cars will also diverge from the highway, in order to link the highway to nearby areas that would otherwise be hard to reach as a result of barriers like rivers, escarpments, or valleys.

These cable-cars will not be eyesores — as are some current urban cable-cars, such as London’s Thames River cable-car; and as a monorail would be — as they will travel low to the ground in the middle of wide highways, rising higher only on occasion, mainly to pass over bridges that cross over highways.

Cable-cars will be the third option, for those not in a rush who are looking for a cheap way to travel. Their main purpose will be to link highway parking lots with highway train stations. This will be useful given that highway train stations will be spaced quite far apart from one another (since building train platforms in the middle of wide highways will be relatively expensive), and given that many parking lots will be located within the otherwise difficult-to-reach archipelagos of highway cloverleaf intersections.

As a bonus, cable-cars will increase the overall transportation capacity of a highway by roughly 2-4 thousand people per direction per hour, as well as overcome any topographic barriers adjacent to the highway. They will be particularly useful for highways that run along the floors of valleys, as many urban highways do.

What About Without Autonomous Cars?

This future arrangement does not even necessarily require fully autonomous cars. Semi-autonomous cars would be sufficient:

So long as cars could function autonomously from, say, 4am-5am, and so long as cars could function autonomously within vertical parking lots (which, unlike traditional parking lots, would be able to fill almost every last cubic metre of their volume with cars), the system could work. Passengers could order a car,  and it would be delivered directly to their home overnight.

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).

can-us 50 land:water
Source: Ontario, the Borderland Economy
average snow in canada
Source: Fasten Your Snowbelts

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

Should Hockey Fans Be Keynesians?

One of the most common things NHL players tell the media during the playoffs is that, when on the road, they want to play well during the first period in order to “take the fans out of the game early”.

If we assume that the players are correct in thinking that the fans can have strong influence over the game (even though home-team advantage has been quite a bit less significant in the NHL than in the NBA, and arguably has more to do with biases in officiating than anything else) it begs the question of whether some teams’ fans are better at cheering than others.

Usually most of the focus here gets put on sheer loudness: the louder the fans, the better, is the general assumption.  In this year’s playoffs, for example, sportscasters have been talking a lot about how the Rangers’ struggles at home may be due in part to renovations that have made Madison Square Gardens a quieter arena to play in than it used to be.

But what might, perhaps, be lacking in these discussions is a focus on the timing of fans’ cheering. In the NHL, most cheering tends to occur when the home team is already playing well. When a team is doing poorly, however, it is more likely to hear only a brief, classless “Refs You Suck” chant, rather than the more sustained, energizing, and joyous “Go Leafs Go!”

It is not, or at least it does not  appear to be, the fans as a whole who tend to shift the momentum in the game. Rather it seems more often to be individual achievements that do so: a timely goal to get the home team back in the game, a big hit being landed or power play started, or a super-determined (and probably drunk) fan who just wont give up cheering until everybody sitting around him — and then, ultimately, the entire arena — joins in too.

The way fans cheer may be the worst nightmare of the honest, god-fearing Keynesian. Rather than provide stimulus during teams’ recessions, and restraint during their boom times, fans cheer when teams are already playing well, and are often quiet when things look grim.

This raises questions that are usually more associated with economics and politics than hockey. Can stimulus lead to mistakes borne of overconfidence? Is stimulus always equally good, or does it succumb to diminishing returns — and if so, how soon after it begins? And how much better are some governments (or fans) than others at doling out stimulus at the ideal time?

Obviously, these are contested, and more or less unsolved, or even insoluble, questions in economics. In sports, though, we cannot even begin to approach the question, since nobody (as far as I know) has gathered the data that would be necessary to make a start of it. If we want to know more — and yes,  I admit it: this is obviously not really an issue of burning importance — we’re going to need a hockey-loving economist who possesses the skill and resources to do so.

Malcolm Gladwell, if you’re out there somewhere, get to work.

The Father, the Son, and the Holy Mackinaw-what-a-comeback-for-the-Liberals!

trudeau

Let’s talk, very quickly, about Pierre Elliott Trudeau, Justin Trudeau, and the resurrection  the Liberal Party in Canada underwent during the country’s most recent election, 20 months ago.

Before Justin Trudeau became Prime Minister at the end of 2015, the Liberals controlled only 34 of the 308 seats in Parliament. They had become the third party for the first time in their history. They had not won a majority of seats in Quebec for nine consecutive elections–not since Pierre Elliott Trudeau won big in Quebec in 1980.

Today, on the other hand, the Liberals have the largest majority in parliament that any party has won since the election of 1984 (the same year that Pierre left office), and they control a majority of Quebec’s seats to boot.

If you look at the electoral map from Justin Trudeau’s first victory in 2015, and the map of Pierre Elliott Trudeau’s final victory in 1980, you will see that the similarities between the two elections may or may not stand out more than their differences.

Canada_2015_

canada 1980 election

In both elections there was a clear East-West divide. The Liberals fared far better to the east of the Ontario-Manitoba border than they did to its west, regardless of which Trudeau was on the ticket. Both won flat-out majorities in Ontario, Quebec, New Brunswick, and Newfoundland, and both won a significant majority of seats throughout the country as a whole.

Justin Trudeau, however, fared far better than his father in the Maritime provinces (he swept all 32 ridings, whereas his father lost in Nova Scotia), worse in Quebec (he won 51 percent of Quebec’s seats; Pierre won 99 percent), and better in Ontario (66% vs 55%), Manitoba (50% vs 14%), Saskatchewan (8% vs 0), Alberta (12% vs 0), and British Columbia (40% vs 0). Further north, Justin swept the Territories’ three ridings; his father lost all three.

Two other important differences between 2015 and 1980 were the price of fossil fuels and the strength of the North American economy. In 1980 the price of oil was over 100$ per barrel when adjusted for inflation; during Justin Trudeau’s victory in 2015 oil was only at 40$ a barrel, having dropped by 60$ in the fifteen months leading up to election day. And while the economy of the United States was in relatively decent health in 2015, in 1980 it was still in the midst of “stagflation“, with negative GDP growth and an unemployment rate around 6-7%.

Canada oil and gas production

Source: RBC, predictions from March 2015
With decent US economic growth decent and oil prices falling substantially, Ontario and British Columbia appear to have grown the most among provincial economies in 2015; Alberta’s and Newfoundland’s may barely have grown at all.
can-us 50 land:water
For more about the graph above, see Ontario: the Borderland Economy

 

 

 

 

 

I’ll close here by showing a graph I made which I think is interesting, but which probably (definitely) should be taken with a very large grain of salt. The graph shows a relationship between four variables: the price of crude oil (in West Texas Intermediate prices, adjusted for inflation); the employment rate in the United States (which we are using as a proxy for American economic health in general); the success of Conservative parties* and the NDP in Canadian federal elections; and the success of the Liberals and Bloc Quebecois in elections. The basic idea is that because western Canada benefits from expensive oil whereas eastern Canada depends more on a strong American economy, and because Conservatives and the NDP are generally more associated with western Canada whereas the Liberals and Bloc are associated with the eastern half of Canada, there should, maybebe some links between these variables:

Canada Politics Graph
Conservative parties include the Progressive Conservative, Canadian Alliance, Reform, or, since 2003, the Conservative Party. The Bloc Quebecois, meanwhile, was founded in 1991

This graph covers the same time period, from Pierre Trudeau’s final election in 1980 to Justin Trudeau’s first election in 2015. It shows that in the elections immediately following Pierre’s departure and immediately preceding Justin’s arrival – namely, in the elections of 1984 and 2011 – the Conservatives and/or NDP did extremely well relative to the Liberals and/or Bloc Quebecois. In 2011 Harper won his only majority government and the NDP become the official opposition for the first time ever, while in 1984 Pierre Trudeau resigned prior to the election and Mulroney’s Progressive Conservatives won by the largest margin in Canadian history.

Every year shown on the graph above corresponds with a Canadian federal election, with the exception of 1998. 1998, however, was the year in which oil prices fell to their lowest point in nearly a century, even as the American economy was not in a recession, as it usually is when oil prices fall. With US employment high and oil prices low, the blue line on the graph above is far higher than in any other year. In the subsequent election, in 2000, Jean Chretien would go on to win a large majority for the Liberals, and the BQ a majority of ridings in Quebec. 2000 was the last time that any party won a majority government until 2011, and the last time the Liberals won a majority until 2015.

For more on this subject, check out Trudeau Walks A Tightrope, published on MacroGeo earlier this week.

Canada Needs A Red-Green Party

redgreen2

Watching the candidates for leader of the Conservative Party debate in Halifax last week was interesting. Thirteen out of the fourteen leaders in the debate argued against the implementation of any cap-and-trade systems or carbon taxes, on the basis that the Conservative Party should remain against tax increases in general.

Quebec MP Steven Blaney said: “they say you can put the lipstick on a pig and it’s still a pig, well you can add Green to tax and it’s still a tax. So no, there is no need to have such a tax in Canada…we’re all conservative after all.”

Brad Trost said: “taxes must go down. Taxes do not need to go up on anything, particularly not on heating and driving and lighting our homes”.

Andrew Saxton said his first act as Prime Minister would be to “axe the tax”. He did also say that he would try to work with Trump toward a “harmonized” North American solution to climate change. Of course, that may be trickier than he suggests, given that Trump often claims to be a climate change denier and is not known for pursuing harmonies of any kind.

When Michael Chong, the sole dissenter on the issue, pointed out that it might be more desirable to adopt a revenue-neutral carbon tax model similar to the one that exists in British Columbia, calling carbon taxes “the most conservative way, the cheapest way, to reduce greenhouse gas emissions”, he was challenged by several of his fellow candidates.

Rick Peterson, for example, told Chong that the BC carbon tax is not truly revenue-neutral, because it disproportionately hurts residents in towns like Dawson Creek, who lack the alternative means of transport like “SkyTrains and bike lanes” that Vancouverites have access to. Yet this was an unsatisfying rebuttle even if one does accept Peterson’s premise that small towns should drive Canada’s tax policies, since other types of taxes could still be reduced in order to fully compensate small towns for any new carbon taxes they have to pay.

Kevin O’Leary, meanwhile, argued that carbon taxes are not needed because Canada’s forests mean that it is already a net carbon sink for the world. In other words, that because we as Canadians are blessed with forests that we did not build, we have the right to emit lots of greenhouse gasses from power plants and cars we did build.

O’Leary also argued that we should not have carbon taxation because Canada only contributes a small portion to global emissions. This same argument was also mentioned by a number of the other Conservative candidates in the debate, none seeming to be aware of the existence of straws or of camels’ backs. Yet not a single candidate seemed to think it relevant enough to point out the fact that, on a per capita basis, Canada has the highest emissions of any significant economy in the world, apart from Saudi Arabia, the United States, or Australia. (Canada emits an estimated 1.5-2 times more carbon dioxide per person than is emitted in the European Union or Japan, 2.5 times more than China, and 9 times more than India).

The debate drove home a certain point about Canadian politics: there is no way of voting for a party or party leader who is Conservative on issues like government spending but at the same time Green on issues concerning the environment. While left-wing voters are given at least one, and arguably three, Green parties to vote for —most obviously the Green Party, but also arguably the Liberals or the NDP, and certainly the Leap Manifesto faction within the NDP — right-wing voters are presented with no such option.

A Red-Green voter — a voter who loves the outdoors as much as he or she hates tax increases or having to debate young social activists; the type of voter that a character like Red Green would himself probably approve of — has nobody to vote for in today’s system.

(This assumes that Red is the colour of the Right as in America, rather than the Left as in Europe. I know, I know, Canada tends to use the European colour code, but I’m willing to look past that for a moment because I really want this reference to the Red Green show to hold up…)

This is a real shame, and not only because left-wing parties may not win enough MPs to enact Green policies on their own. It is also a shame because it might, at least in certain circumstances, be the case that right-wing policies would actually serve the cause of environmentalism more usefully than left-wing ones do.

Most economists, for example, would be in support of a conservative proposal to use carbon taxes to reduce other taxes such as sales taxes, capital gains taxes, or corporate taxes, rather than use carbon taxes to grow the overall size of government budgets as some left-wing leaders might be more inclined to do.

Trudeau’s plan, in contrast, which is to allow cap-and-trade rather than carbon taxes in provinces like Ontario and Quebec, and also to allow the provinces to decide on their own whether or not their systems will be revenue-neutral, most economists are less thrilled about.

Ontario’s cap-and-trade plan, for example, will not be revenue neutral, for a number of reasons including that Ontario is going to spend some of the revenues on projects like wind farms rather than give the money back to the population of Ontario in the form of tax rebates.

An even more pressing environmental issue than carbon taxes is animal welfare. It is, sadly, the case that the food industry in Canada tortures or mistreats tens of millions of mammals and birds each year, and that poor treatment of animals can be dangerous to humans as well because of the overuse of antibiotics and risk of poor farm conditions allowing dieases like Avian bird flu to spread. The environmentalist Left, however, which cares about this issue dearly, is not large enough to have yet made animal welfare a government priority. And some of the solutions that many on the Left champion, namely vegetarianism, veganism, local farms, and small-scale farms, may not be the most practical courses of action, even if they are the most laudable ones.

A more conservative approach, such as mandating that large-scale industrial farms adopt humane methods — the “large pastoral” approach championed by Canadian writer Sonia Faruqi in her excellent and hilarious book, Project Animal Farm — may prove to be more successful in providing a more effective model for animal welfare than would the promotion of small or local farms. Yet among the modern Conservative Party, the issue of animal welfare is generally not even viewed as urgent or worthy of discussion. If only there was some sort of barbaric cultural practices hotline we could call to report the Conservative Party for such a cruel negligence…

An environmental issue that the Left has been particularly negligent on, meanwhile, but which the absence of a Red-Green movement means that the Right has not at all stepped in to fix the Left’s mistake, is the marijuana industry. Because the Left has long seen smoking weed as being cool and weed prohibition as a bad policy — and, by the way, they are correct on both those points — it has for the most part turned a blind eye to the vast environmental destruction that marijuana production often causes. This destruction is actually needless in most cases: it stems from the desire among consumers for weed that is both cheap and blemish-free, rather than for coarser “shwag”, even though the former is of only slightly higher quality. (Read Stanford professor Martin Lewis’s article on the topic to get a fuller picture of this key issue).

With legalization impending, this issue should be addressed in government. But instead what we have mainly gotten from leaders like Trudeau is tough talk on the need to keep THC away from the developing brains of young adults. The truth, though, is that it would be far easier to prevent needless environmental destruction than it would be to stop students from taking drugs.

There is, finally, the issue of local pollution and quality of life. It seems odd that the party that claims to best represent salt-of-the-earth Canadians puts relatively little priority on maintaining landscapes that these same Canadians might otherwise be able to enjoy themselves. It would, again, seem only sensible that Conservatives should prefer taxing things like air pollution, noise pollution, and visual pollution, rather than taxing sales or middle-class income. That way at least Canada’s GDP can grow, even if its oil sands or suburban sprawl grows too.

The argument you frequently hear Conservatives imply, that the economy and environment are at odds with one another because eco-taxes would imperil economic growth, misses the point entirely. The status quo —the Harper majority government status quo — is one of medium-high taxes in general, which limits economic growth, and intensive resource extraction and suburban sprawl, which harm the environment. A Red-Green movement would ideally serve market-lovers as well as nature-lovers. Today’s Conservatives, in some respects, often do neither.

Who will lead this new movement? I hereby nominate Robert Herjavec, the self-made business mogul and surfer with Trudeauesque hair, who sits to O’Leary’s right in the Tank/Den. (If nothing else, a sharkfight between Herjavec and O’Leary could raise Canada’s profile south of the border). While a Red-Green Party might have little chance of electoral success at first, the creation of such a party by a prominent Canadian could help to chip the Conservative Party towards the Green. It’s time to step up and serve your country Robert!

The Blessings of St Catharines

If extremely high taxes on greenhouse gas emissions were to be enacted worldwide, which part of Ontario would be poised to lead in terms of population growth and economic development as a result?

My guess would be St Catharines-Niagara, which at the moment is Canada’s 12th most populous census metropolitan area (just ahead of Halifax-Dartmouth), home to approximately 400,000 people.

A low-emissions city should at least a few of the following five characteristics, all of which define Niagara. One, it should be easily accessible by barge, as water remains far and away the most fuel-efficient mode of transportation. Two, it should not have much suburban sprawl. Three, it should be located close to other major cities in order to create urban economies of scale. Four, it should have a mild climate: not too cold or snowy in the winter, not too hot in the summer. And five, it should have an abundant source of clean power — and ideally also the ability to store up its energy in order to assist clean but intermittent power sources like solar, wind, and run-of-river hydro.

1. Water Transport

St Catharines-Niagara is one of only two urban areas in Canada or the US to be situated on more than one Great Lake. (The other is Sault St Marie). It links Lake Ontario to Lake Erie via the Welland Canal, a canal 43 km long and, in most places, 100-150 metres wide. The canal has seven locks on its northern end and one lock on its southern end; it takes ships around 10 hours to cross in full. However it has a lock-free middle stretch that is close to 25 km long, next to the city of Welland (pop. 50,000). It runs perpendicular to the Erie Canal, the longest shipping canal in the United States, which links Niagara Falls and Buffalo to New York City and Lake Champlain via the navigable Hudson River, passing by Rochester, Syracuse, and Albany along the way.

LR Welland Canal Map

Canals, when they are not frozen in the winter, are in many ways the ideal form of water transportation. They lack the difficulties of rivers (bends, rapids, shallows, etc.) and seas (storms, tides, waves, etc.), and are not too wide to make building bridges or tunnels across them too expensive. According to the New York Times, “one gallon of diesel pulls one ton of cargo 59 miles by truck, 202 miles by train and 514 miles by [Erie] canal barge… A single barge can carry 3,000 tons, enough to replace 100 trucks”.

canal_map2
Erie Canal

As recently as the 1890s, prior to the modern age of highways, cars, and trucks, the Erie Canal allowed Buffalo to become the eighth most populous in the US and fourth most populous inland city in the US. And while Niagara never shared in Buffalo’s prominence (in part as it was too close to the US border for comfort; it was captured in the War of 1812, and became the refuge for William Lyon Mackenzie and his supporters during the Upper Canada Rebellion in 1837-38), the adjacent city of Hamilton did. Hamilton was Canada’s fourth most populous city during the 1890s, and was about half as populous as Toronto in 1870. Today, in comparison, Hamilton is only around 13 percent as populous as Toronto.

As land transport became dominant, however, Hamilton found itself blocked in by the Hamilton Harbour (which until then had been the main source of its success) as well as by the Niagara Escarpment. Toronto, in contrast, has been able to expand barrier-free, now reaching to Lake Simcoe in the north, Oshawa and Clarington in the east, and Hamilton’s suburbs in the west.

Hamilton and Toronto.png

Niagara_Escarpment_map.png
Niagara Escarpment

Admittedly, it is still quite expensive to build bridges across harbours or wide canals; they must be either high enough to let large ships pass below, or else be lift-bridges. The Welland Canal overall has two tunnels and ten bridges, all but one of which are lift-bridges. Given that the population of the region is split by the canal (St Catharines and Hamilton are to its west, Niagara Falls and Buffalo are to its east), these lift-bridges and tunnel crossings could lead to traffic bottlenecks if its population or economic activity were to experience growth.

St Catharins .png

This canal-crossing problem can be managed, however, by switching over from cars to public transit. Luckily for St Catharines-Niagara, such a switch which would be necessary anyway if greenhouse gas emissions were to be highly taxed.

Public transit, including new transit services like Car2Go, Uber, and UberPool, can allow canals to be crossed more easily via bridge or tunnel, by reducing traffic bottlenecks and by letting its passengers relax rather than drive when there are traffic bottlenecks. In addition, public transit can allow for easier canal crossings via boat, pedestrian bridge, cable car, or even ice-sled, by making transit available upon crossing. For the same reason, crossing canals will also become easier as parking apps like Rover and PocketParker become common (and if cars that come equipped with parallel parking sensors or can parallel park themselves become common), as people will be able to park a car easily on one side of the canal and then take public transit after crossing.

In the St Catharines-Niagara area, public transit will be similarly useful in helping to cross the Niagara River (which is one of the widest and, in places, the most treacherous rivers in southern Ontario), Hamilton Harbour (which has two bridges crossing it at present, and no tunnels), and perhaps even the 45 km Lake Ontario shortcut that separates St Catharines (and Buffalo) from Toronto.


2. Suburban Sprawl

St Catharines-Niagara, as well as the nearby urban areas of Hamilton and Kitchener-Waterloo, are among the cities with a relatively high population density in Canada. Kitchener-Waterloo and Hamilton have the highest population densities among urban areas in Canada apart from Toronto, Montreal, and Vancouver, according to the 2011 census, while St Catharines-Niagara has the seventh highest population density (though this does not take into account the 50,000 people living in Niagara Falls, NY).

Niagara may be particularly well-placed to benefit if suburban sprawl in general is reversed as a result of eco-taxes. This is because many of the big cities around Niagara have had their suburbs sprawl away from Niagara during their recent generations of suburbanization. As a result, a reversal of this sprawl would bring people back closer to Niagara.

Toronto has sprawled north and to a lesser extent east, away from Lake Ontario and Niagara. Northern Toronto suburbs like King city, Caledon, and Whitchurch-Stoufville  tend have population densities that are far lower than in suburbs closer to the lake, like Mississauga, Oakville, and Oshawa — nearly 30 times lower in the case of Caledon compared to Mississauga. Indeed some of Toronto’s lakeside suburbs, particularly to its west (towards Hamilton and Niagara), are themselves among the cities with the highest population densities in the country. Toronto’s easternmost suburbs, on the other hand, like Clarington and Scugog, have relatively low densities too.

Buffalo’s suburbs sprawl away from the border with Niagara, meanwhile, and Detroit’s sprawl away from Windsor (which is 315 km from St Catharines). Cleveland’s suburbs away from Lake Erie,  mainly to the south and west. If, then, suburban sprawl gives way to urban re-densification, it could lead to population growth along the coasts of both Lake Ontario and Lake Erie, which Niagara shares, as well as along the Buffalo and Detroit borders with Canada, which Niagara either shares or is at least not too far away from.

Another energy advantage of de-suburbanization is that it frees up land to be re-converted into farmland. This is important, as importing food is highly energy-intensive; food is much more bulky than most other goods, and also often requires refrigeration or freezing while it is being transported. This means that areas that are not suitable to agriculture — areas that include most of Ontario, as the Canadian Shield generally is not farmable in the economic sense — will not benefit as much from de-surbanization in an eco-tax world as areas that are best suited to be used for agriculture.  For Ontario, these areas are  Southwestern Ontario and adjacent lands of the United States.

3. Proximity to Major Cities

St Catharines is around 50km from Toronto by way of Lake Ontario and about 100 km from Toronto via land. To put that into perspective, Oshawa, Burlington, and Newmarket, all three of which are in the Greater Toronto Area, are around 45 km from downtown Toronto, and Barrie is around 85 km from downtown Toronto. St Catharines is also around 40 km from downtown Buffalo (and Niagara Falls is less than 30 km from downtown Buffalo), 65 km from downtown Hamilton, 120 km from Kitchener-Waterloo and from Rochester, 270 km from Cleveland, 300 km from Pittsburgh, and 320 km from Detroit, and 500 km from New York City and Washington, D.C.

Hamilton and Toronto

St Catharine’s proximity to the New York City-to-Washington “Megalopolis” is unique and, in an eco-tax world, could be economically significant. If you extend the Megalopolis all the way north to Boston, however, then St Catharines’ proximity is less unique, as Ottawa and Kingston are both closer to Boston than St Catharines is. That said, the population density of the area between New York and Boston is quite a bit less than between New York City and Washington, so it is not clear Boston really should be counted as part of the Megalopolis core. St Catharines is also around 40 km closer to New York City and 250 km closer to Washington than Ottawa is, whereas Ottawa is only around 160 km closer to Boston than St Catharines is. Only Kingston then, among notable Ontario cities, can be said to be closer in proximity to the Megalopolis than St Catharines is.

Boswash.png

pop dens
Population density, US

4. Climate

Niagara, because of its relatively southern location and the temperate effect of the Great Lakes that surround it, has a mild climate compared to most other cities in Ontario. It tends to be around a degree warmer than Toronto in the winter and a degree cooler than Toronto in the summer, and it is much milder than the weather in more northern cities like Ottawa or Thunder Bay. It is also located outside any of the Great Lakes Snowbelts, unlike, for example, Sudbury or Barrie.

average snow in canada

Niagara’s position next to the US border may also be significant, as eco-taxes could lead Americans to come north to where the climate is more mild, at least during the summer. The average annual daily temperature highs in Buffalo is 14 degrees celsius, compared, for example, to 29 degrees for Miami or 31 degrees for Phoenix. Cool climate zones may also end up using more eco-friendly energy for heating than hot climates do for cooling, because the weather gets coldest at night when there are typically surpluses of electricity available (including low-carbon sources, like wind, base-load nuclear, and run-of-river hydro), whereas it is hottest during the day when no such energy surpluses typically exist. Admittedly only seven percent or so of American households use electric heaters, but a high eco-tax could cause them to be adopted more widely. Plus, it is possible to stay warm using clothing and blankets rather cranking the heat.

The arid climate and diffuse population settlement in the US Southwest in particular leads to a high energy footprint. Any extended drought in the Southwest, for example, would necessitate water desalination, water treatment, or increased food imports, all three of which are extremely energy-intensive. The most extreme of these, Las Vegas, which is a gambling and tourism competitor of Niagara to a certain extent, relies on long-distance air travel, long-distance food imports, air conditioning during the day, and heating at night (the desert can get cold at night, after all).

Owning, renting, or Airbnb-ing a home or cottage in upstate New York or upstate Pennsylvania, in contrast, will help keep air conditioning costs down in summer. Moreover, because both are located in the Great Lake Snowbelts and Appalachia, these also be used recreationally during the winter. This may be an advantage too, given that eco-taxes will make it far more expensive to fly to the Rockies to ski, and given that aging Baby Boomers are going to be switching from downhill skiing to cross-country skiing. Similarly, eco-taxes could make Canadian vacationers who head south to escape the winter forgo flying to places like Arizona, California, and Mexico, and instead travel by train or bus to the US Southeast (and perhaps from there on by cruise or plane to islands in Cuba or the Bahamas). Such train and bus journeys will usually pass through Niagara.

greatlakes-lakeeffect-map
Great Lake Snowbelts
US Snow Map
US average annual snowfall map

5. Energy Production

In a world in which greenhouse gas emissions are highly taxed, it would no longer be viable for Ontario to import so many manufactured goods from Asia, since Asia is so far away and relies on burning coal to power its industrial activity. Ontario would instead have to manufacture more products locally, making up for its lack of low-wage labour by using machines, having foreign engineers and other skilled labour e-commute from afar, etc. Such industrialization, particularly as it will depend on machines to assist or replace human workers, will need a lot of low-carbon energy.

Niagara Falls hydro (not counting the American side of the border) accounts for around 5-6 percent of Ontario’s power generation capacity, but more than 7 percent of non-fossil fuel generation capacity and more than 20 percent if you also ignore nuclear power. Niagara accounts for about a quarter of all Ontario hydropower, and its dams also happen to be located far further south than the majority of other dams in the province or country, meaning that the energy and capital used to maintain Niagara’s dams (and to maintain the electricity grid infrastructure that is connected to them) tends to be less than it is for other hydroelectric facilities. Most of Ontario’s other dams are either located near to or north of Ottawa – far north, in many cases – while most of the hydropower in the country comes from central or northern Quebec.

In addition, the hydropower facility on the US side of Niagara Falls produces 25 percent more power than those on the Canadian side of the Falls; it produces more power than all but three other dams in the United States and accounts for nearly 60 percent of New York state’s hydropower (and New York ranks third in hydropower among US states). It also has a pumped storage capability that by itself is larger than the hydropower storage available in all of Ontario outside of Niagara, which is significant since hydro-storage remains the leading method of assisting intermittent energy sources like wind and solar. (Batteries are still not generally up to the job of storing energy in a cost-effective or eco-friendly manner, in spite of all the hoopla surrounding Tesla).

Niagara is, similarly, home to nearly all of Ontario’s pumped storage hydro capacity. Moreover, it is located relatively close to the pumped storage facilities across the United States (apart from the pumped storage in California,  but those have been under-utilized in recent years as a result of drought), not just those on the US side of Niagara Falls.

map.png

Niagara is also, along with the rest of Southwestern Ontario and the adjacent Bruce Peninsula, home to most of the province’s wind power production and solar power potential.

While 60 percent or so of Ontario’s electricity comes from nuclear, people do not want to live in urban areas that contain nuclear facilities. In addition, more than half of Ontario’s nuclear power capacity is located directly on the coast of Lake Ontario, 30-60 km east of downtown Toronto, which means that, when you combine their output with that of Niagara’s dams (not even counting the US Niagara dams), the coastlands of western Lake Ontario account for more than 40 percent of Ontario’s non-fossil fuel power capacity and nearly 40 percent of Ontario’s overall power capacity.

If, finally, you look at natural gas storage – both underground storage and LNG storage – Niagara is also well-placed. Natural gas could be useful in assisting intermittent sources like solar and wind, because like hydro, but unlike coal or nuclear, a gas-fired power plant can ramp up and down energy rapidly in response to the wind suddenly slowing or the sun suddenly being blocked by clouds. Most US underground storage is surrounding Niagara, in a broad sense.

Storage07

In Ontario, which in contrast to the US has very little gas storage capability, much of the gas storage is around Sarnia, with potential further development in Goderich, both of which are not too far away from Niagara. Most LNG storage and peakshaving capacity, meanwhile — which, while smaller in scale than underground storage, is better for delivering gas quickly in order to assist wind or solar intermittency — is located mostly on the Northeast coast, much of it within New York state.

storage

lngpeakshaving

The gas pipelines that bring US gas to Ontario also mainly run through or near to Niagara. Ontario used to get its gas from Western Canada, but with the shale boom in nearby US states, particularly in Pennsylvania which has led the shale gas boom, the province has begun to use US gas instead. The shale boom has revolutionized the gas industry, and should it continue it may be likely to put the border areas of Ontario in a strong position relative to non-border areas, in terms of their energy economics.

Night Moves: The Future of Charging Electric Cars in Ontario

The Ontario government recently announced a plan to subsidize electric cars by up to $14,000 per vehicle and pay for them to be charged at night, among other things. Night-time charging is a key factor in electric vehicle ownership, as in most cases it takes several hours to charge an electric car.

This begs the question: what will the price of overnight electricity in Ontario be in the years ahead?

Today overnight electricity is cheap because most nuclear power plants in Ontario and coal plants in nearby states like Michigan cannot easily be turned off at night, in contrast to gas plants or hydropower facilities which can more easily ramp up and down their output to match real-time electricity demand. An estimated 60 percent of Ontario’s power is generated from nuclear, compared to around 15 percent in Canada as a whole and 20 percent in the US. Around 50 percent of the power in Michigan, Pennsylvania, Ohio, Indiana, and Illinois (states that are close to Ontario) comes from coal, compared to 33 percent in the US as a whole and 10-15 percent in Canada. Ontario and the Midwest are also among the leaders in wind turbines, which do not turn off at night either, and Ontario, Illinois, and Pennsylvania are by far the top three North American producers of nuclear power.

Going forward, however, there are compelling reasons to think that this overnight surplus of electricity will no longer exist.

The first reason is fracking. In the past few years the US has seen an enormous boom in shale gas production, which has been leading much of the country to begin switching off their coal plants and replacing them with cheap natural gas. The stock prices of US coal companies have already dropped by over 90 percent since 2014, and by over 97 percent since 2011. As more gas and less coal is used to generate electricity, the price of overnight electricity is likely to spike relative to the price of daytime electricity, since gas plants tend to be far easier to shut off at night than coal plants.

This is relevant to Ontario because the biggest gas booms in the US since 2010 have been in nearby states like Pennsylvania, and because Ontario already has the extensive natural gas infrastructure required to import and distribute American gas (especially via Michigan, which has the largest gas storage capacity in the US). Indeed fracking has made gas so cheap in the region that even Ontario might look to it again as a source of energy production, instead of building new nuclear plants or wind farms.

The second reason overnight electricity prices are likely to rise is robots. Machines that combine mobility with computation are highly energy-intensive, but, unlike humans, they do not need to sleep at night or relax in the evening. Take, for example, Amazon’s robotic warehouses: they have caused the company’s night-time electricity use to rise substantially since they were introduced, given that before they came along Amazon’s warehouses were either inactive overnight or else employed human workers who ran on food (and overtime pay) instead of electricity. If and when this robotic economy finally goes mainstream, then, such demand for overnight power could be replicated at large. We should expect late-night electricity use to skyrocket: robots are no longer science-fiction.

The final reason is environmentalism. In order to keep greenhouse gas emissions down (which is, after all, the main point of subsidizing EVs), many voters are pushing for more solar panels and wind turbines to be built. Solar and wind are complementary to one another, not only because the sun often shines brightly at different times as the wind blows strongly, but also because wind farms and solar farms usually inspire non-overlapping types of NIMBY-driven political backlash. Ontario already gets 5-6 percent of its electricity from wind compared to less than one percent from solar, so it might be that going forward its solar power growth will outstrip its wind power growth. Of course, solar power will not help to bring down overnight electricity prices. Even the wind, however, tends to blow less strongly overnight than during the day – a fact that runs contrary to conventional wisdom, since the wind can usually be heard more clearly at night.

As solar, wind, and gas replace dirtier coal in the regional electricity network, there will also be environmentalist-led pressure to stop heating homes with fossil fuels and instead adopt electric-powered heaters like those used in Quebec and the Pacific Northwest. This too would be likely to cause overnight electricity prices to rise. Quebec, for example, uses electric-powered heating and so has its electricity demand peak during frigid winter nights, whereas Ontario primarily uses gas-powered heating and therefore has its electricity demand peak during hot summer days. Should Ontario or nearby US states switch over to electric heating in order to reduce carbon and methane emissions from natural gas, the region’s overnight electricity usage will rise.

The need to help support solar and wind power could lead as well to the building of more pumped-hydro facilities, which pump water uphill so that it can flow back downstream through a turbine when other power sources are in low supply, such as when solar panels are blocked by clouds or the wind is not blowing. There has been talk lately of building more pumped hydro in Ontario, in places like Niagara and Marmora, as pumped hydro is the most efficient form of electricity storage. Given that Ontario’s daytime power is not cheap (at least, not by Canadian or American standards), this water would be pumped at night. It is an energy-intensive process, however, requiring 20 percent or so more energy to pump uphill than is generated from releasing it back downhill. Thus it would lead overnight prices to rise.

In closing, any electric-vehicle policy approach that assumes that Ontario’s overnight electricity costs will remain cheap is probably a shortsighted one. Ontario’s overnight electricity costs are likely to rise substantially as a result of natural gas replacing coal, robots working slavishly every night, and the move towards cleaner sources of energy like wind power and, especially, solar power.

Without being certain of future electricity prices,  the EV subsidy plan is like a leap, or Leaf, in the dark.

Ontario: The Borderland Economy

Source: RBC, predictions from March 2015
Source: Royal Bank of Canada, predictions of provincial economic growth for 2015, published March 2015

With the economy of Western Canada hit hard by the fall in oil and other commodity prices that began last year, Canada’s most populous province, Ontario, has begun to account for quite a large share of the country’s economic growth. Many Canadian economists – most of whom live in Ontario, as I do – assume this economic resilience is the result of Ontario’s economic diversity and size. Ontario’s population is much larger than that of any other Canadian province (see graph below), and its economy is mixed between services (in Toronto),  government (Ottawa), industry (southwestern Ontario), and commodities (northern Ontario). Ontario’s economy is also more oriented toward the auto sector than other provinces are, and so may be benefiting more than others from the fall in oil prices.

the provincials
Ontario accounts for around 38 percent of Canada’s population, compared to 23 percent for Quebec and 13 percent for British Columbia. Most other countries do not have provinces/states that are as large as this. California, for example, is the largest state in the US but has just 12 percent of the US population; source: Future Economics

Still, this may be missing the point to a certain extent. What really sets Ontario aside from other Canadian provinces is the proximity of large population centres in Ontario to large population centres in the United States. This is unique among Canadian provinces (see graph below), particularly if you ignore Quebec (which is separated from US populations by a language barrier as well as a political one) and British Columbia (which, perhaps not incidentally, is the other major province that has decent economic growth right now, in spite of the fact that it is a significant commodity exporter and has close ties to oil-rich Alberta). Ontario is the only province to have a handful of cities which straddle the US-Canada border. These include Detroit-Windsor, Buffalo-Fort Erie, Niagara Falls, Sault St Marie, and Sarnia-Fort Huron.

US-Canada 15

on_e

Since the US economy has remained relatively strong in recent years, unlike those of Europe, East Asia, or much of the developing world, Ontario’s ties to the US may be what is driving Ontario’s economic growth. This should make Ontario concerned; the US economy has not had a recession for almost eight years now, so, in a certain sense at least, it is due for one soon.

Below, I have tried to show some of the ways in which Ontario’s proximity to the US is unique. I’ve gathered all the data myself using Google Earth and recent Canadian and American censuses, so if you think you’ve found any errors in the following graphs please let me know.

us-can 50.pngcan-us 50 land:water.pngus-can 100.pngus-can 200 .png

us-can neighboursus-can 1st and 2nd degreelength us-can

US-Can real gdp.png

us-can gdp growth
[New Brunswick had zero in this category because Maine’s economy has been neither growing nor shrinking in the past year or so. Alberta and BC are high in this category because of the growth of Washington state and Montana, respectively. Saskatchewan and Manitoba were doing great in this category before the oil crash caused their shared neighbour North Dakota to go from the fastest-growing US state into a serious recession. Ontario and Quebec are roughly equal in this category because of the huge size of New York state, which they both border. However if you were to ignore New York state, then Ontario’s border states, namely Michigan and Minnesota, are growing much faster than Quebec’s border states, namely Maine, Vermont, and New Hampshire. Minnesota’s growth, meanwhile, is also why Manitoba is relatively high in this category in spite of North Dakota’s recession — as Minnesota’s  GDP is nearly seven times higher than North Dakota’s]
Ontario’s ties to the US have also meant that it is less dependent on inter-provincial trade of goods than other parts of Canada are: in recent years Ontario has conducted 2.5 times more trade with other countries (led by the United States, of course) than it has with other provinces. This is compared to just 1-1.5 times more for Quebec, Alberta, and British Colombia.

Economists and financial journalists in Ontario need to be more careful than they have been in the recent past. During the 2007-2009 economic crises they ascribed the relative success of Canada’s financial system (which is centred in Toronto, Ontario) to the fact that Canadian bankers and regulators were more prudent and conscientious than their peers in other countries, rather than to the fact that Canada was flush with capital at the time as a result of the sky-high commodity prices that existed just before and just after the financial crisis, and as a result of the fact that Canadian Baby Boomers  were then in the prime of their financial lives (as Canada, unlike the younger US or older Japan, is dominated by the Baby Boomer generation).

But instead of acknowledge these facts, much of the Canadian media decided instead to help create a cult of personality around Canadian bankers and Bank of Canada leader Mark Carney — a cult of personality they have since exported to Britain, where Carney has become a figure of great importance (especially since Brexit and the resignation of Prime Minister David Cameron) and the first non-Briton to ever become the central banker over the British financial system, a system that is far larger, far more worldly, and far less dependent on  commodity sectors than the Canadian financial system is. Similarly, Ontario’s economic resilience is now being described (by some people) as if it was basically an inherent condition of the Ontario economy, rather than a result, at least in part, of Ontario’s unique ties to the growing US economy.

Don’t get me wrong: I am not saying that Ontario is not a resilient place or that bankers and regulators in Toronto and Ottawa are not prudent and wise. And certainly I would like Ontario’s economy to continue growing, since it is my home. However, believing either one of these stereotypes about Ontario too much could be a dangerous mistake for investors or governments to continue to make.