[jensonj]

<strong>Written By:</strong> jensonj
<strong>Date:</strong> 2005-09-19 12:12:36
<a href="/article/71236191-consumers-brace-for-expensive-winter">Article Link</a>

"The market for oil has prices high, we know that, but with the wages people make (it's too much)," he said, while pumping gas in Toronto at $1.03 a litre.

"People can't survive," he said. "It should be no more than 75 cents and less than that would be better. With insurance and gas prices, people can't survive it."

Canadians are often unprepared for sudden price increases or emergencies because they're saving less money and spending more, at a rate that rivals the consumption of the roaring 1920s, said Benjamin Tal, an analyst with CIBC World Markets.

In fact, the Canadian personal savings rate has now dipped into negative territory at minus 0.5 per cent, said Tal, meaning Canadians are spending more than they're earning.

And that extra spending is building interest and debt on credit cards as well as lines of credit.

"If you have debts, you need to get them under control, because that's what's going to be the crunch for a lot of folks," said Smith. "You were managing these debts (before) but now that these expenses are going up, you might not be able to do that."

Credit spending has become a bad habit for Canadians and it's easy to fall behind on payments and get into big trouble, said George Boelcke, author of It's Your Money.

"So many Canadians now think credit is part of their income, and that is an absolute deathtrap," Boelcke said. "It's basically surviving, not thriving."

He said many people have trouble grasping the true cost of interest, whether it's for balances on credit cards or loans.

He said most consider mortgage or line of credit increases of 0.25 per cent to be no big deal but few consider the impact of several incremental increases.

"When it goes up a quarter point at a time it's kind of like Chinese water torture," Boelcke said. "Every little increase doesn't seem to add up but the next four or five increases will show some huge differences."

He warns that those small increases could amount to hundreds of dollars a month once interest rates take flight.

It's a waiting game for many like 31-year-old Graydon Oldfield, who is engaged to be married. He said he's not worried about the direction of interest rates but is ready to lock in his mortgage if things change.

He said interest rates and heating costs are furthest from his mind since gas prices have hurt him worst.

"It's absolutely killed my budget because I drive a pickup truck and it's extremely hard on gas," Oldfield said. "I'm spending at least 40 to 50 per cent more. So I'm very cautious on how much I drive and where I drive," Oldfield said.

Another thing credit counsellors warn about is the cost of dealing with life's unexpected personal problems.

"It's not just that people are overspending," said Smith. "People who have been laid off from jobs, have had a death in their family, or have a relationship that might've broken up--there's a whole series of things that can happen in anyone's life that can change things dramatically."

The Canadian Association of Food Banks said most people are just two missed paycheques away from needing help to make ends meet.

According to a 2004 study by the CAFB, more than 840,000 people used food banks in a single month of last year. The number of people using food banks has more than doubled since 1989.

In winter for low income families, it often becomes a decision whether to eat or get heat, said Edward de Gale, executive director for Share the Warmth, an Ontario-based charity that has helped pay heating bills for more than 29,000 people since 2000.

"We found low income households often take resources away from what they'd spend on food to make sure they have adequate heat for winter," de Gale said.

To make matters worse, the price of groceries or eating out will likely get more expensive too.

The struggling food and tourism industry says it's feeling the pinch of increased costs and decreased sales, and higher prices will follow.

"Our members have been facing rising costs for the last number of years but there's been a spike recently that's certainly being felt by our members," said Jill Holroyd of the Canadian Restaurant and Foodservices Association.

"You could say the impact of rising energy prices is a double-edged sword because it increases the cost of doing business . . . but it also takes more money out of consumers' pockets," she said.

And while Canadians will have to pay their mortgages, expensive heating bills and the price for gasoline, they will spend less on non-essentials, Tal said.

"When it comes to energy prices, we don't have much flexibility, we still have to drive, we still have to take the kids to (hockey), we still have to heat the house," Tal said.

"So I will not be surprised to see consumption of other items going down, like people taking less vacations, spending less on furniture, or any other items that are non-essential."

Forty-five-year-old Tilman Tam, an engineer, said he feels lucky he and his wife can afford a comfortable lifestyle but added he's still been cutting corners.

"I've used my car less in the past weeks, it's affected my activities and plans," Tam said. "I use the Internet to talk to my friends more, instead of face to face in a restaurant or pub."

Spending less is the best thing Canadians can do this winter, Smith said, and when it comes to your credit card: "put it away, stop using it."

<a href="http://cnews.canoe.ca/CNEWS/Canada/2005/09/18/pf-1222535.html">http://cnews.canoe.ca/CNEWS/Canada/2005/09/18/pf-1222535.html</a>

[Editors Note: Natural Gas was trading this morning at +$12.00/GJ. Last year it was $5.85/GJ. DrC]





[Proofreader's note: this article was edited for spelling and typos on September 20, 2005]

[Perturbed]

Of course we are greasing the wallets of Rockefeller's Imperial Oil (Exxon) and other companies while allowing Americans to set our prices, give themselves obscene amounts of our resources for little while we pay more for less. Even lowly Mexico left oil out of NAFTA.

ALSO, we are allowing the use of PRECIOUS NATURAL GAS we rely on for heating to extract oil from the oil sands faster, so the Americans can continue to drive SUVs. Sick. we are a cold country run by wealthy incompetents.

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The midget, Bush, and that Rumsfield deserve only to be beaten with shoes by freedom loving people everywhere.

- Mohammed Saeed al-Sahhaf, The Iraqi Informat

[Guest]

Yeah them Americans are behind global warming, then they make our winters cold! Then they "take" our oil! Then they gave me a coldsore!

[mk]

"Yeah them Americans are behind global warming"<br />
<br />
Americans as an aggregate population are overwhelmingly responsible for climate change--though on a per-capita basis, Candians and Australians join the club too so we shouldn't be so smug.<br />
<br />
" then they make our winters cold"<br />
<br />
Yeah right.<br />
<br />
"Then they "take" our oil!"<br />
<br />
From an old Fraser Institute text discussing NAFTA, you decide. I would tend to suggest it is Canada who is willfully giving it. The proportionality clause is based on a 36-month rolling average of "share of supply". Meaning the more we undertake programs to conserve our use of oil resources domestically, the larger the share the U.S. will be entitied to under proportionality, unless at the same time we elect to rigorously enforce the prop. clause citing conservation, by actively restricting exports to that rolling 36 month average. <br />
<br />
<a href="http://oldfraser.lexi.net/publications/books/assess_nafta/energy.html">http://oldfraser.lexi.net/publications/books/assess_nafta/energy.html</a><br />
<br />
Quantitative Import and Export Restrictions<br />
<br />
As in the FTA, the GATT prohibition of restrictions on trade in energy and basic petrochemicals is affirmed in NAFTA. In the event that one of the three NAFTA countries imposes export or import restrictions on energy and basic petrochemical trade with other countries, the other two NAFTA countries cannot be used as a conduit to circumvent the restriction (Article 603(3)). And where a party to the Agreement imposes import restrictions on non-parties, consultation with other signatories is required to avoid distortive impacts (Article 603(4)).<br />
<br />
NAFTA allows parties to administer a system of import and export licensing for energy and basic petrochemicals if consistent with the Agreement. Allowance is also made for parties to designate monopolies or state enterprises, but such bodies are not to frustrate the intent of the Agreement nor to introduce anti-competitive practices in non-monopolized markets (Articles 1502 and 1503).<br />
<br />
NAFTA permits Mexico to issue import and export licences to reserve foreign trade in certain goods to PEMEX, in recognition of the latter's monopoly position. These goods include virtually all refined petroleum products plus bitumen, oil shale and tar sands, and LPGs (Annex 603.6). However such restrictive licences are still subject to trade rules under the Agreement, and under the GATT for that matter. <br />
<br />
The Agreement (Article 605) repeats the clause in the FTA (Article 904) that allows governments to impose export restrictions on other parties on the grounds of: i) conservation of exhaustible resources; ii) supply shortages; iii) price stabilization; and iv) national security. In turn, these provisos were fashioned on those in the GATT agreements, although the definition of what constitutes a national security criterion is more lax under the GATT. Moreover-and this is critical-the definition of "national security" differs as between Canada and the United States, and as between Mexico and the other two parties. These aspects are mentioned below.<br />
<br />
Article 605 in NAFTA also repeats the key energy caveat introduced in the FTA: if supplies were restricted to one of the parties under any of the first three reasons (conservation, supply shortages and price stabilization), the share of total supply available for export purchase may not fall below the average level in the previous 36 months. This was the contentious "proportionality" provision of the FTA-which put some flesh on the GATT skeleton-but did not constitute a supply obligation. [The relevant GATT provisions are a lot more vague, referring to general exceptions allowing the imposition of import and export controls in certain situations; see Articles XI:2(a) and XX(g), (i) and (j) of the GATT.] Until such time as the conditions that might invoke the proportionality clause become apparent, its significance will remain hazy.<br />
<br />
Note that the proportionality provision refers to government actions to restrict exports. There is nothing to stop markets constraining exports. Canadians could outbid Americans even for the proportional share of supply. Restrictions are not to disrupt "normal channels" of supply nor to involve imposition of higher prices on exports via licence fees, taxation and minimum prices.<br />
<br />
However, an Annex to the Agreement reveals that Article 605 is bilateral: it only applies to trade between Canada and the United States. It does not hold for Mexico, although presumably the vaguer GATT measures remain. In short, Mexico has been able to opt out of the more precise expression of the GATT limitations on energy export restrictions established under the FTA-although these provisions would be reaffirmed between the U.S. and Canada.<br />
<br />
National security is seen as possible grounds for import or export restrictions, but the actions to be taken are quite tightly specified, much more so than under GATT (Article 607). But again Mexico is exempt from these provisions and their narrow scope. Instead, broad provisions on national security (Article 2102)-which refer to the Agreement not precluding any party taking actions deemed necessary to protect its "essential security interests"-apply.<br />
<br />
One interpretation of the U.S.-Canada arrangements on supply restrictions is to view them as reciprocal trade-offs. Canada granted "proportionality" for the conservation, supply shortages and price stabilization criteria to assuage U.S. concerns emanating from Canada's export restrictions in the regulated era of 1970 to 1985. The U.S. granted a narrow interpretation of national security to meet Canadian concerns about any revival of U.S. import constraints imposed under the guise of national security in the 1950s and 1960s. Mexico did not agree to "proportionality" and so did not qualify for (and perhaps did not wish) a tight national security criterion. <br />

[Guest]

>>>I would tend to suggest it is Canada who is willfully giving it.<<<

How about “selling” it? At the worldwide market price?
Canada doesn’t “give” anything away for a nickel less then it could sell it elsewhere. Canada got $66US dollars a barrel for it today. So did Saudi Arabia, so did Mexico, so did the producers in the USA. Energy sales are the largest contributing factor to Canada’s prosperity.

There are some here who don’t realize though that you can’t eat your cake and have it too. You cant get the money from selling a barrel of oil and still have that barrel of oil.

[Guest]

But we get no royalties and few taxes as it is foreign owned--and no security of supply for the future.

[jensonj]

That is why we need to start processing our own resources and telling foreign own producers of our resources that they must process it here in Canada before shipping it out of country.

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Perception is two thirds of what we perceive reality to be.

Difficult decisions are a privilege of rank.

[Guest]

Recession/Depression anyone?