RE:RE:RE:RE:RE:RE:Here's a beautyHmmm.....so you're saying it's not the same as just any other large business taking on a private project and having to report to shareholders?
Of course it isn't.
Not only do they recoup the economic benefits you stated that the article didn't even mention for whatever reason, (It was designed to enrage?), but they simply did not care about the costs (or they did and were actually counting on them being higher).
Imagine the debate amongst the FEDS at the time KM were going to back out (there must have been notice and probably discusions with KM prior to them cancelling). Could it have gone something like this:
' Hey if we don't ease up on pipeline regulations KM say they are going to back out.'
' Well our base elected us to enforce regs, perhaps even increase them.'
'Yeah, if we go against our base we probably won't see a second term.'
'But we do need the pipleline out as the USA are killing us on the discounted price' .
'Yeah and there is going to be trouble with KM and China if we don't get something built west'.
'Okay what if we let KM walk and buy and build it ourselves?'
'We will have to comply with all the regulations or we are going to look like "hypocrites" .'
'Yeah okay, then we will follow all the regulations to a "T."
'Well that could cost an awful lot more and really increase the price.'
'Will it increase the price beyond viablility? Will the producers still use it? '
'Oh yeah we could quintuple the price and it would still be cheaper than the southern route.'
'Can we quintuple the fees? Is that allowed?"
'Yeah we know the guys that approve that stuff."
'Won't they just ship somwhere else?'.
'Like where? LOL."
'Yeah okay, good one.'
'Any other upsides?"
'We collect taxes and inject capital into the economy while we build it'
'We show the Energy East supporters how much it costs to build a pipe a quarter of the distance.'
'We keep an American company from owning an important piece of Canadian infrastructure.'
'We potentially appease the oil lobby while not completely isolating our base.'
'Won't our base be mad that we built a pipe?'
'Maybe we'll find a way to empower local natives by letting them have some ownership'
'And oh yeah, nobody will attempt another one for a really, really, really long time after this.'
'Sounds good let's do it.'
Might just be me but I think if they were looking at downside risks, costs were the least of them.
GLTA
Sclarda2 wrote: VeritasVern wrote: NonCred, the article didn't do what was intended. Why? Because I had figured things out many years before this insignificant article was published. Somehow your sensitivities were that an article speaking to the effects of inflation on a major development is taboo and deemed enraging?
You are right, I don't know much about you but you have put forth little besides - oh well inflation just happened, we will have to live with what we have been delt with, who knew? That is exactly the type of rationale by Canadians that doesn't demand accountability but continues to vote in the Governments that are creating the dangerous environment for our state of affairs.
As for your example of consumers demanding the extra's in life I think we are all aware of that, right? It's really quite simple NonCred - government policy could have curbed that demand and avoided some of the excesses that we live with - and they should have kown that, no excuses. Keeping interest rates artificially low while increasing the money supply - allowed the excess to flourish as they thought is was a productive way to stimulate the economy.
The problem is the money was distributed and distorted sectors. For example, banks had access to almost endless available cash that they were willing to lend out to anyone with modest credit ratings. The more money is available in the economy, the more is available to allow for prices to increase, it's the enabling factor as well as artificially low interest rates. As you probably know if you went to the bank for a line of credit for $10 k the bank would say it we give you $30 k we can get you a better rate. This is one of the ways that directly contributes to inflation..You tighten the money supply, the banks have less to lend and it stems how much and at what rate they lend out and housing for example doesn't escallate as fast. The money available was so large that it enabled housing to became a speculative commodity. The housing crisis/decline of 2008 in the US is a perfect example, but here's the key - overall housing declined only 20-25% which would be considered a market corrective decline to rebalance the market and flush out the excesses. But is was amost lethal as the leverage on top of leverage on top of leverage by lenders, banks, people was so big it almost ended our free market economy.
The problem is the Genie is out of the bottle and debt it is now the biggest threat. Cedit has been lent out at record levels to Canadians, Governments at all levels, that are so highly leveraged that tightening the money supply can be exceptionally harsh as it increases the debt load. As usual the lower and middle class will suffer the most.
But the Government has a plan and the brilliant minds at work came up with a novel, unproven policy, that is demonstating its failure at real-time, that says - lets add a carbon tax to fossil fuels because we will be a stronger and more resiliant economy. I'd rather not dissuss this in length because let's just say the world in 2024 will consume a record amount of oil, gas coal ect. But the point is we both can agree that the carbon tax is inflationary right?
And where exactly was the genisis of this carbon taxation born that compounds the burden to society at the worst time? In the leftist, unelected halls of the UN and WEF that dictates to nations what policies to pass. Lap-dod and runt-pup are all in, enjoy their policies because as the saying goes - you deserve the Governement you elect.
While some inflation and cost overruns are expected on large projects going from $7 billion to $30 billion is a little much. Even allowing 5% inflation per year for those 7 years that would equal aprox. $2.5 billion in extra costs bringing the price up to $9.5 to $10 billion. Just saying oh that $7 billion was just a number thrown out there is kind of hard to believe. You dont start a project this major and just sort of throw out a number. It should be quite easy to get a pretty good idea of the actual cost before you start.
All that being said the government has raked in a lot of money on the construction of the project in income taxes on the workers contractors services and materials and all the economic activity the $30 has generated so they will be getting a lot of it back off the top. Then there are all the royalties on the extra 600k barrels a day of oil passing through the pipeline plus all the taxes generated on workers, contractors suppliers etc. producing all that extra oil. Not to mention likely higher oil prices in western Canada as there is now a large alternative on where to sell your oil to world markets.
In the end governments even though they are sometimes very inefficient always seem to do okay in the end as they tax the heck out of everyone along the way.