Ryan Watson's Weblog

Gail the Actuary has a spot on summary of the link between resource scarcity and the financial crisis.

Excerpt from An Overlooked Detail - Finite Resources Explain the Financial Crisis:

Now that we are reaching a point where the extraction of fossil fuels and minerals of all types are starting to reach limits, we find that if the economy starts to heat up, the price of many commodities starts to skyrocket. Part of this is competition for limited resources. Part of this is the high cost of extraction of these resources, now that we are increasingly reaching limits. Food prices are affected as well, partly because oil (for machinery) and natural gas (for nitrogen fertilizer) are used in food production, and partly because competition with corn production for ethanol drives land prices up.

Once food and fuel prices rise, people find it difficult to repay debt, and debt defaults rise. Now debt defaults are rippling through the economy. The poor financial condition of banks makes them unwilling to lend. This lack of credit is making it difficult for many direct and indirect buyers of commodities to buy products of many types (oil, natural gas, uranium, and copper, for example). Prices are plummeting for a wide range of products because prices are relatively inelastic. 

These lower prices have a feedback effect on new production of commodities. In a paper to be published in Journal of Energy Security shortly, I show that the credit crisis and the resulting lower commodity prices are leading to cut backs in planned production of energy products of all types (fossil fuels, renewables, and uranium). As a result, if the economy does start to heat back up again, we will have another round of commodity price increases. This, of course, will be followed by another round of debt defaults.

Nova Scotia is in an excellent position to thrive, even in a global recession or depression. Yet we are not moving decisively to capitalize on our natural advantages.

In this time of financial turmoil, we would be wise to focus our efforts on building our real, physical wealth. Our greatest asset will be a business community that is strongly rooted in the products and services that Nova Scotians need to survive and prosper: food, water, shelter, heat, transportation. Our service economy, tourist economy, and export economy all bring great benefit. But if our foundation is shaky, and we cannot provide for our basic needs, the whole structure is at risk.

With great resources of farmland, we can be food self-sufficient. With great potential for tidal energy, great wind resources, and significant possibilities for solar energy, we have wonderful potential to power our province with renewable energy. We have the skilled workforce and business savvy to transform these assets into real wealth, financial capital, and reliable prosperity. Let’s move quickly to take advantage of our strengths!

I’ve spent the last few hours re-organizing the presentation of my weblog to better compliment the new GPNS website that will be launched in the coming weeks.

And I now intend to post here with more regularity!

Welcome Katarina Rose Watson, born August 23, 2008!

The data in this graph referenced by Jerome a Paris at this Oil Drum post is very important to keep in mind.

If we’re looking at a 30% per year exponential growth in oil prices since 2002, we should not be too eager to celebrate this current lull.

From the Chronicle Herald:

Nova Scotia’s economic development minister says the best way to recoup the province’s investment in a failed Cape Breton wallboard plant is to get the facility back up and running.

Federal Gypsum filed for bankruptcy last Friday and owes around $32 million to more than 90 creditors, including an $8 million loan from the province.

Angus MacIsaac says while market problems that led to the closure of the Point Tupper plant still exist, the downturn in the U.S. housing market and the high Canadian dollar “are not permanent conditions.” (emphasis mine)

MacIsaac wasn’t specific, but says the province will do whatever it can to ensure the facility becomes operational again, something he says he’s confident can happen.

The US housing boom is over. Finished. The era of suburban developments that require cheap oil in order to be livable is also coming to an end.

We have to make investment decisions based on new realities, not failed business models. It worries me that our Deputy Premier, who is responsible for provincial economic development, is operating under the assumption that the global financial meltdown is just a temporary blip. Things are much more serious than that.

Our government should not gamble taxpayer dollars on a bet that the US housing market will recover.

West Texas is a North American leader in renewable (wind) energy. The growth of this sector is revitalizing their entire economy. The benefits of rapidly developing a renewable energy industry are clear. Here are some highlights from this article. Emphasis mine.

Of Nolan County’s estimated 14,878 residents, an estimated 1,124 have jobs directly related to wind energy, according to a study released earlier this week by the West Texas Wind Energy Consortium.

The wind industry boom has stimulated job growth across the entire local economy. Some 1,500 construction workers are engaged in Nolan County’s five major wind energy projects. Building permit values shot up 192 percent in 2007 over 2001 values. Sales tax revenues increased 40 percent between 2002 and 2007. The county’s total property tax base expanded from $500 million in 1999 to $2.4 billion this year.

The majority of U.S. wind projects are being established on privately owned farmland, which has yielded farmers annual compensations between $2,000 and $5,000 per megawatt of installed capacity, according to the American Wind Energy Association. In Nolan County, such royalties have amounted to an estimated $12.3 million into the pockets of private landowners, according to the consortium report.

In Sweetwater, Martin and seemingly every other business owner is benefiting from the wind energy boom. The population is growing. Unemployment is down. The tax base has swelled so much that Nolan County actually cut taxes last year.

Hello friends and members of the Green Party of Nova Scotia,

The three weeks since the leadership convention have been exciting, and very full. We’ve been working on all levels to build the strength of the party, and moving forward in multiple areas. I’m writing to ask for your input for the direction of our party on a critical issue.

Home Heating

For decades, environmentalists and Green Parties around the world have been warning us that that we must learn to live within the limits of the natural world. We are part of the natural world system, and damage to this system is damage to ourselves. And now, the results of unsustainable practices are beginning to come home to us and our families in drastic ways, right here in Nova Scotia.

Heating our homes with fossil fuel heating oil is an unsustainable practice. Yet this insecure energy source is crucial to many Nova Scotia families, and the situation is rapidly moving from a time of concern into one of emergency, and perhaps even crisis. On international markets last summer, heating oil price was in the range of $2 US per gallon. Since May of this year, it’s been in a trading range a little under $4 US per gallon. If this trend continues, many Nova Scotians could be paying twice as much to heat their homes as last winter. How many family budgets can handle that?

I suggest that the Green Party needs a two pronged approach to this issue.

1. We need to continue to emphasize the necessity of efficient, renewable energy powered homes. This is a clear imperative, and the only long term solution. But unfortunately, it will not do Nova Scotians much good for the next heating season, which may start in September, and will kick into high gear in December or January.
2. We need to prepare for the fact that if heating oil prices continue at their present level or trend higher, some families will be unable to heat their homes this winter. How can we help these families, should this occur?

This urgent issue demands our attention, and I will be focusing on an energy/heating strategy as the first plank in the GPNS platform. If you would like to suggest a policy or platform approach to this issue, please get in touch or leave a comment on this post.

All the best,
Ryan

I’m very happy with the way the convention unfolded over the weekend. We did a lot of good work to bring the party together after a rough year. And on Sunday afternoon I was elected the new Leader of the Green Party of Nova Scotia!

Gabrielle Donnelly is now the GPNS Deputy Leader, Rob Pierce was elected President, Kathryn Herbert is our new Treasurer, and Brad Toms joins the Executive as the Membership Secretary. Congratulations!

Thank you to everyone who helped with my campaign, and with the convention. I’ll be taking a day or two off after a hectic couple of months. And then full steam ahead!

I’m so happy to announce that Gabrielle Donnelly has stepped forward as my running mate, seeking the position of Deputy Leader of the Green Party of Nova Scotia.

Gabrielle has recently graduated from Dalhousie with a Masters in International Development, following a degree in Political Science and Religious Studies at the University of Alberta. She grew up in Alberta, and has lived in Halifax for two years. Gabe is a new member of the Green Party of Nova Scotia, and has great enthusiasm for the green movement that is working to build justice and sustainability at both local and international levels.

Dear Members of the Green Party of Nova Scotia,

I am delighted to be putting forward my name for the position of deputy leader during the GPNS elections this month. It seems as though we are encountering a ripe opportunity to begin building a “green” momentum that speaks to issues of sustainability beyond just the environment. This movement is one that spans not only Canada but is globally mounting, something I encounter in the field of international development where the pivotal issues of social, cultural, environmental, and political sustainability intersect. The space to cultivate real, genuine engagement of these issues locally with Nova Scotians is a possibility now more than ever and I am excited to potentially be a part of the process.

Also, I am very pleased to be supporting Ryan Watson in his run for leadership. Throughout the time I have known Ryan, it has been evident just how important engaging the political sphere through a lens of holistic sustainability is for him. His commitment, resiliency, strength, and gentle yet firm approach to leadership are all qualities that will ensure a bright and lengthy future for the GPNS if he is elected.

Once again, I would like to say that I am excited about the possibilities of Nova Scotians shifting the political climate as a “green agenda” continues to ascend in the public eye. We are in a time of possibility and I hope that we can harness the opportunities here on the east coast of Canada in order to benefit our local communities and the global communities we share our most precious “commodity” with, the planet.

Sincerely,
Gabrielle Donnelly

I’m incredibly excited to work with Gabe and the rest of the leadership team, as well as with all of our members and supporters, to bring the essential Green issues into the government of Nova Scotia.

See you at convention next weekend!