Hormetic Influence of Glucocorticoids on Human Memory

Sonia J. Lupien et al.
the UK PubMed Central (UKPMC)
January 1, 2005

Abstract

In this paper, we discuss the effects of glucocorticoids on human learning and memory using the recent model of hormesis proposed by Calabrese and collaborators. Although acute increases in glucocorticoids have been shown to impair memory function in humans, other studies report no such impairments or, in contrast, beneficial effects of acute glucocorticoid increases on human memory function. We summarize these studies and assess whether the wealth of data obtained in humans with regard to the effects of acute increase of glucocorticoids on human cognition are in line with a hormetic function. We then discuss several factors that will have to be taken into account in order to confirm the presence of a hormetic function between glucocorticoids and human cognitive performance.

Read full article here

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Hormetic influence of glucocorticoids on human memory

(Jan. 1, 2005) Discussion of the effects of glucocorticoids on human learning and memory using the recent model of hormesis proposed by Calabrese and collaborators. Continue reading

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Security lax for nuclear materials

Peter Gorrie
Toronto Star
December 11, 2004

Imagine the panic if someone spread radioactive material around downtown Toronto.

It would be an ideal tactic for terrorists aiming to paralyze the city.

And it’s a remote but real possibility, radiation safety experts say.

The threat exists because the materials are used in thousands of workplaces throughout Ontario, many of them surprising.

Despite strict regulations on how nuclear materials are handled – measures strengthened since the terrorist attacks of Sept. 11, 2001 – many aren’t kept secure, says Fergal Nolan, head of the Toronto-based Radiation safety Institute, which promotes education and training in the issue.

Repeated warnings have been issued about poorly secured stockpiles of nuclear materials, especially in the former Soviet Union, that could be used to make atomic weapons or, more likely, “dirty bombs” – conventional explosives that could scatter radioactive substances over a wide area.

The main concern here, however, is that dangerous stuff could simply be placed on subway seats, in malls or other places where large numbers of people might be exposed.

Warnings predate the 9/11 attacks. “It should be noted that there is an abundance of radioactive isotopes (sources) in the industrial, medical and educational communities that have little or no security surrounding them,” states a discussion paper published by the federal solicitor-general’s department in April 2001.

“The use of radioactive contamination to cause mass casualties is … more difficult to achieve than commonly believed, requiring large quantities of material . . . Nevertheless, given the widespread public anxiety about nuclear material in any form, the mere threat of such use of radioactive materials could be a potent terrorist tool.”

Nolan agrees. In most cases, he says, the dose contained in workplace sources isn’t powerful enough to actually harm people. But fear of the material could lead to devastating psychological and economic disruption.

“While there is no reason to panic, there is equally no good reason to be complacent. Much has been left unattended in workplace radiation safety and security,” Nolan says, “to the potential detriment of our collective security as a nation.”

While it would be hard to obtain large amounts, “you could drop a little here and there.”

The best-known radiation sources are in hospitals, where radiation is used to treat cancers and other diseases, and university research labs.

But they’re also widespread in construction, steel mills, mining and many manufacturing plants, where they perform tasks such as measuring the density of concrete or the thickness of materials, or ensuring that wine and pop bottles are filled accurately, or that a precise amount of tobacco goes into each cigarette.

Regulations enforced by the Canadian Nuclear Safety Commission require that all sources be kept under lock and key, accessible only to trained and authorized users. Licences can be pulled simply for improper paperwork, even if all the material is accounted for.

“It’s not as simple as someone could walk in off the street and grab something,” says Greg Evans, a professor of chemical engineering at the University of Toronto and an expert on radioactivity in the environment.

“If it was that easy, it would have been done,” says commission spokesperson James Leveque.

The U of T, which has radioactive materials at about 700 locations, strictly follows commission rules, says Ray Ilson, manager of the university’s radiation protection services. Radioactive sources are frequently stored in refrigerators or freezers, removed only for use, and then returned. Storage equipment is locked or within a locked facility. Higher-level radioactive materials have additional precautions.

Users must renew their authorization every three years and undergo security checks.

The university’s radioactive waste storage features restricted access, reinforced and locked doors, motion detectors and access alarms.

The university and commission regularly inspect and audit the entire system. Officials say it would take sophisticated and very determined thieves to nab radioactive materials.

On the other hand, an employee with a terrorist bent or an axe to grind could, in theory, carry out a bottle of low-level isotopes.

“A person with criminal intentions, authorized and trained, would be difficult to detect,” Ilson says.

“Since the inventory records for each package are continuously updated, any missing material should be noted quickly.”

Even so, by then it might be too late.

To date, though, there’s no evidence of any thefts. In fact, reports of any missing radioactive materials are rare, and almost always involve careless handling of low-level sources, usually sealed inside measuring gauges for construction and heavy industry, Leveque says.

In recent years, a couple of gauges have bounced off trucks on rough roads. One was eventually spotted deep in a prairie ditch; the other hasn’t been recovered. Another, stolen from a truck, was found within a few hours. A source being used in test drilling at a mine site got stuck in the drill hole and had to remain there.

The stories are similar in the United States, where, Nolan says, on average one source goes missing every day. In the most recent reported case, late last month, according to the U.S. Nuclear Regulatory Commission, a gauge was stolen from a Virginia company: An employee had left it in his truck while he shopped at a Wal-Mart en route to a job site.

Anyone breaking into this type of gauge would receive an unacceptable but not life-threatening exposure to radiation, says Scott Burnell, a spokesperson for the commission, which licences and regulates U.S. users.

“It’s very unusual to have reports of significant amounts of material go missing.”

But what these officials describe as evidence that the materials are well controlled, critics interpret as symptoms of a serious problem.

“We’ve seen where materials have been forgotten for years,” Nolan says. “Nobody has paid any attention.”

“When things turn up missing, I think that’s one of the better indications of how much care there is,” says Norm Rubin of Toronto-based Energy Probe, which opposes nuclear power. “I don’t accept the argument that it’s easy to drop one of these things down a well, but it’s hard to steal them.

“If someone wanted to do malice . . . the stuff is there.”

Anything containing a radiation source should no longer be treated as a conventional tool, he says. “It’s another area that’s a clear trade-off between security and convenience.”

Rubin is skeptical about the Canadian commission’s reassurances.

“I’ve been told reassuring things by people whose previous reassurances have turned out not to be true.”

The situation is far worse in developing countries, many of which use radioactive materials but have no security expertise, Nolan says.

He acknowledges that the Canadian and other regulators have strengthened their rules since 9/11. “Whether such actions are sufficient remains to be seen.”

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Pickering reactor upgrade $100M over budget

April Lindgren
National Post
November 16, 2004

Toronto: Ontario Power Generation’s habitual cost overruns on nuclear power plant refurbishment projects are continuing under the Liberals, OPG confirmed yesterday in third-quarter financial results that show efforts to upgrade a second unit at the Pickering A station are as much as $100-million over budget.

Energy Minister Dwight Duncan allowed that he is “concerned” by the projected overrun, which will see the price tag for retrofitting Pickering A’s Unit 1 reactor increase by between $75-million and $100-million.

Mr. Duncan, however, rejected suggestions the Liberals are headed down the same road as their Conservative predecessors, who were unwilling or unable to halt a 400% cost overrun on OPG’s refurbishment of Pickering A’s Unit 4 reactor.

“This is high-risk,” he acknowledged. “[But] we have the best management team available on it. We’ve outside auditors watching it. We’ve appointed new board members including board members that have nuclear experience.

“I believe that we’re managing the situation as best we can. I remind you that we did not put the province in the position of having to rely on nuclear power and generators that were 30-some years old when we came to office.”

He refused to speculate on whether there would be even further cost overruns on the 500-megawatt reactor that he says Ontario needs to avoid electricity shortages in the near term.

“I won’t say anything definitely one way or the other,” said the minister, who back in June boasted that “rigorous public scrutiny will ensure that the project stays on track and on budget.”

OPG’s quarterly report, however, warned that futher cost overruns are not inconceivable.

“Performance over the next three months in terms of schedule adherence and productivity of the major contractors and OPG resources will have a significant impact on the estimated cost and schedule to complete the project,” the company said in its report.

“Estimated costs could also be impacted by any additional repairs or refurbishment work related to the material condition of the station that may be identified during the course of the construction and commissioning phases of the project.”

In a conference call with reporters, OPG’s acting president, Richard Dicerni, blamed the cost overrun on “overly aggressive” assumptions about the company’s ability to recruit the skilled labour required for the project during the summer months, when the construction industry was booming.

“The cost increase flows from the fact that we incurred some slippage in terms of construction progress during the summer that we need to make up,” he said, noting that the project schedule has been extended and overtime bills are higher.

The reactor, now 56% complete, according to company data, was originally scheduled to go into full service in September, 2005, but that has now been delayed until later in the fall.

“The only person in Ontario that could possibly be surprised by these results is Dwight Duncan,” said Tom Adams, executive director of the energy watchdog group Energy Probe. “Everybody was expecting this.

“I’ve been arguing from the beginning that OPG should not be allowed to spend another dollar on new capital expenditures,” said Mr. Adams, who questioned how long the government-owned utility would be able to continue borrowing to finance the project without a major cash injection from the government.

NDP leader Howard Hampton noted that the cost of refurbishing the Unit 1 reactor was actually $825-million when former deputy prime minister John Manley delivered a full review of the Pickering upgrade project earlier this year.

“They should stop throwing money down a hole,” said Mr. Hampton, who insisted the resources could be better used to promote energy efficiency and conservation.

Posted in Nuclear Economics | Tagged | Leave a comment

Ontario warned nuclear repair bill could top $1B

Canadian Press
CTV News
November 15, 2004

Toronto: The perils of Pickering returned to haunt the Ontario government Monday as Ontario Power Generation warned that its efforts to restore another of the problem-prone nuclear plant’s reactors could end up costing $1 billion.

When it was announced in July, the project to restart the mothballed Unit 1 reactor was supposed to cost $900 million, a budget that included a $65-million contingency fund that officials now say is already down to $20 million.

The cost of the restart now has the “potential” to climb by between $75 million to $100 million, and may not happen until next October, a month behind schedule, OPG chairman Jake Epp warned in a conference call Monday.

Difficulties getting the right tradespeople on the job site during the busy summer construction season helped delay the project and fueled increases in certain costs, such as overtime, Epp said.

As of the end of September, the provincially-owned power generator – already stung by the delays and massive cost overruns that plagued the botched refit of Unit 4 – had spent $526 million on the mothballed Unit 1.

Energy Minister Dwight Duncan – who pledged in July that Unit 1 would not repeat mistakes made on Unit 4 – said the latest problems are no reason to pull the plug on a complex project that’s more than half done.

“I continue to be concerned about it,” Duncan acknowledged in a news conference Monday.

“We’ll continue to report milestones, both in terms of the timelines and in terms of the costs and continue to keep on top of it as best we can.”

Duncan later told the legislature that the Unit 1 refit was a “high-risk” project that was necessary to ensure the stability of the province’s electricity supply.

In July, when the province gave OPG the go-ahead, Duncan promised to be “vigilant” and to ensure “rigorous public scrutiny” would ensure the project stayed on schedule and on budget.

On Monday, however, Duncan would not provide any assurance that costs wouldn’t continue to increase.

The Ontario government is “throwing money down a hole,” said New Democrat Leader Howard Hampton, who cited studies that show refits often only squeeze an extra 10 to 12 years out of an aging reactor.

“When you look at it from that perspective, these are incredibly costly refurbishments,” Hampton said. “This is just pouring more good money after bad.”

Duncan said he wasn’t about to walk away from the money the province has invested so far to say nothing of the additional 500 megawatts of electricity Unit 1 will eventually be called upon to generate.

Late last year, the province fired OPG’s top three executives for botching the restoration of Unit 4, which in the end cost $1.25 billion to fix, almost three times the original $457-million projection.

Acting chief executive Richard Dicerni emphasized that the project is being managed well and watched closely – two things that were absent in the case of Unit 4.

“We know where the project is at, we know what caused the slippage in terms of schedule, we know where we have to make up the progress,” Dicerni said.

“There is fairly tight control over project management, and we believe that we have a good understanding as to where the overall schedule for completion of the project is.”

Tom Adams, executive director of Energy Probe, an Ontario power watchdog, called Monday’s warning “deja vu all over again” and urged the government to phase out Ontario’s chronically troubled reactors.

“We should have pulled the plug on this a long time ago,” Adams said. “The sooner we pull the plug, the more of a headache we’re going to avoid.”

Ontario’s Candu reactors are old, complex, difficult to fix and prone to new and unforeseen problems that lead to soaring refurbishment costs.

Progress over the next three months will “have a significant impact” on the project’s overall costs and schedule, the company said – a statement Adams seized upon as a sign that costs are likely to continue to climb.

Dicerni said there are 1,600 workers on the site now, compared with 1,000 a few months ago.

Word of the project’s financial woes emerged as Ontario Power Generation reported a loss of $15 million, or six cents a share, for the quarter ended Sept. 30, compared with a year-earlier profit of $34 million, or 13 cents a share.

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Proposed power plant may kill plan to fix Lepreau

Chris Morris
Canadian Press
October 29, 2004

A decision on whether to dump or fix up New Brunswick’s aging nuclear power plant could be swayed by a private firm’s plans to build a giant gas-fired generator, says the province’s energy minister.

Irving Oil, one of New Brunswick’s largest industries, announced this week that it plans to build a mega power plant in Saint John, N.B., using gas from a liquefied natural gas terminal.

The New Brunswick government, facing a looming energy crunch within 10 years, must soon decide whether it will spend at least $1.4 billion to upgrade the aging Candu reactor at Point Lepreau, in southern New Brunswick.

“It is an independent decision from that (the Irving) announcement,” Fitch said of the decision on Lepreau.

“But we’ll have to put it on the scales as we make the decision.”

NB Power, the provincial Crown utility, is preparing a recommendation to the Tory government on the future of Lepreau.

Following that step, the Tories are expected to announce the fate of the Lepreau generating station, which has a maximum capacity of 600 megawatts, before Christmas.

Bob Scott of NB Power said Tuesday it’s too early to say much about the Irving Oil announcement, which proposes a 500 to 750 megawatt, gas-fired station to be built somewhere in the Saint John area.

“This idea that has been put forward by Irving Oil company still requires a great deal of work before it would even get to the proposal stage,” Scott said.

Tom Adams of Energy Probe, a national energy watchdog based in Toronto, said private generating stations are becoming common in North America.

“This is how most power plants get built, either by or directly on behalf of customers, rather than the old model where the utility built for itself and then customers were stuck with it.”

Adams is a strong critic of NB Power which he has faulted over the years for its poor decisions and large debts. The utility has a debt of over $3 billion.

In addition to complex problems relating to the Lepreau nuclear station, the utility recently launched a $1-billion lawsuit over a failed deal with Venezuela for the purchase of a special fuel called Orimulsion for the generating station at Coleson Cove, N.B.

Adams said one of the reasons Irving Oil may want its own generating station is its concern about NB Power.

“One of the factors that may be motivating this is a loss of confidence in NB Power,” he said.

Adams said that while the Irving plan may be bad news for NB Power, it should be good news for consumers in New Brunswick.

He said that a large, gas-fired power plant will help ensure a reliable supply of electricity in the future.

The Irving plant would be capable of providing as much as one-third of New Brunswick’s energy needs.

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Time to move energy-intensive industries offshore

Lawrence Solomon
Lawrence Solomon
October 16, 2004

To counter the high energy prices that consumers now face, governments in Canada and the U.S. have been subsidizing domestic energy production. This dirty government business lowers the bill a little for consumers but raises it a lot for taxpayers, making us worse off in the exchange.

Much better to offshore our unproductive industries, most of them energy guzzlers, to reduce energy demand. That would lower both our energy bills and our tax bills. Magnifying the benefits, such offshoring would also eliminate the subsidies our bad businesses receive.

The latest money sinkholes come in the form of Arctic pipelines. Earlier this week, the U.S. Senate provided an 1,800 mile Alaskan pipeline project with US$18-billion in loan guarantees – fully 90% of the cost of the project’s estimated costs – all to bring natural gas to southern markets a decade from now.

The generosity shown the pipeline’s backers – a consortium including BP, Exxon Mobil and ConocoPhillips – may be just the beginning of the immense subsidies this project will need. The companies, worried that energy prices may plummet after the Middle East conflagrations pass, have been lobbying for floor prices for their natural gas. Should the price of the project increase as expected – TransCanada’s competing and also uneconomic Arctic pipeline project has just seen its cost rise by one-third – the invisible corporate hand that guides much of the economy will again be outstretched, in demand for fresh subsidies.

Arctic pipelines are just the tip of the iceberg when it comes to subsidizing the continent’s energy systems. Since the 1960s, most major energy investments – whether in tar sands, nuclear plants, hydroelectric dams or ethanol – have had no economic justification. Rather, they have typically met two political needs – direct support for unviable energy industries and indirect support for unviable energy-intensive industries, often in resource sectors. Continent wide, perhaps one-quarter of all energy is consumed in uneconomic industries, with Canada the disproportionately bigger wastrel.

The Quebec government, one of the most aggressive subsidizers, has long attracted electricity intensive industries with offers of cash and deep-discounted power, provided courtesy of state-owned Hydro-Quebec. Two years ago, for example, the previous Parti Quebecois government convinced aluminum giant Alcoa to spend US$825-million expanding a smelter at Baie Comeau. The price? An US$128-million interest-free loan, a 10-year provincial tax holiday, and dirt-cheap power. The estimated cost to the provincial purse per job created? Some $100,000.

The deal came unstuck this year after a newly elected Liberal party reneged on the agreement and in its stead offered a mere US$100-million interest-free loan and 50 years of “low-cost electricity” with annual rate hikes no higher than inflation. The estimated cost per job? $60,000.

The prospect of electricity costs rising with inflation was too much for Alcoa to contemplate. “We could not reach an agreement on a formula that would have ensured long-term affordable energy for the Baie-Comeau modernization project,” Alcoa Canada Primary Metals president Jean-Pierre Gilardeau said in June, in announcing the breakdown of negotiations. “With energy representing more than 30% of our operating costs, we simply cannot invest $1-billion [Canadian] in a project with the risk that energy prices will rise considerably over the life of that project. Over 40 years, even with only moderate increases, energy would represent a $10-billion cost.”

The story will have a happy ending, but only if the negotiations aren’t revived and Alcoa builds its smelter elsewhere. In Quebec, taxpayers will be spared and electricity rate-payers, too – to pay for Alcoa’s cheap power, Hydro-Quebec has been raising electricity rates on its residential customers. The additional money in the pockets of Quebec citizens will be spent in more productive ways, creating more jobs than those lost at the smelter.

Alcoa would then move on, as it has already begun to do, to the many countries that can intelligently host energy-intensive industries. Often these are developing countries with vast natural gas reserves that don’t lend themselves to ready export. Alcoa this week announced that it would be building a 322 tonne aluminum smelter in Trinidad and Tobago, an island nation that can’t easily bring its vast natural gas reserves to market. The smelter industry will create jobs in Trinidad where it would cost jobs in Quebec, and it will help the island develop rationally, where it prevents Quebec from developing rationally.

For such reasons, Alcoa and other energy-intensive industries are slowly vacating the continent, their rate of departure slowed only by their access to below-market energy supplies, and to the public purse. Cut off their access and they’ll more quickly gravitate offshore, where they’re wanted and needed. Cut off their access and North America won’t need to subsidize energy megaprojects because we, too, will become awash in energy.

 

Posted in Energy Probe News, Reforming Ontario's Local Electrical Distribution Sector | Leave a comment

Hot and bothered over heating

(Oct. 9, 2004) Radcliffe Robinson isn’t looking forward to heating his home this winter.

Robinson, 38, and his wife Patricia, moved into a three-bedroom house in Whitby in January, just in time for one of the more dramatic oil-price upswings in recent history. When the Robinsons purchased their home, the price of light crude was around $33 (U.S.) a barrel; it closed yesterday at $53.31. That increase has paced a jump in heating oil from about 52 cents a litre at the end of last year to 64 cents today.

“This is just about the worst time for something like this to happen,” said Robinson. “You reach a point where you end up having to seriously juggle the bills.”

Even those who heat with natural gas face increases of up to 40 per cent this winter, according to some estimates.

Tom Adams of Energy Probe, a national consumer and environmental research organization, estimates that more than 3 million of Ontario’s 4.7 million households heat with gas.

It is overwhelmingly prevalent in urban areas, but rural residents are more likely to feel the pinch as oil prices rocket, Adams said.

Ted Garner, petroleum manager at The Sarjeant Co. Ltd., which serves more than 4,000 heating oil customers in Simcoe County, said he has been getting calls from concerned clients.

“They don’t want a big bill in the middle of the month, so we’ve been trying to spread it out for them,” he said. Although crude oil prices have gone up by more than 60 per cent since the beginning of the year, Garner says his company has tried to keep a lid on escalating prices.

“Our margins are a lot thinner, and we share the pain because I have to walk down the street and look these people in the eye every day,” Garner said.

The bill for an average 1,400-square-foot, three-bedroom house should be about $1,400 this year, around $200 more than last year, Garner said. Since he recently renovated and added insulation, Garner hopes that his own bill will be about $1,300 this year, up just $100.

Susan Watson, office manager at Air Plus Heating and Cooling in Scarborough, said that the company had four contracts to convert from oil to natural gas last week alone because customers were concerned about higher energy costs. The company’s service manager recently converted his own home from oil to natural gas in the summer, Watson said. “I think there is a real concern out there. We are extremely busy.”

Rita Marshall took possession of a home in south Etobicoke home in July. A condition of the sale was that the seller fill the oil tank, so Marshall has no idea of the cost of a refill.

“We’ve got this huge oil tank in the basement, and I’ve been kind of dreading calling the supplier to figure out how much it’s going to cost to fill it up once it’s finished,” she said. “We haven’t started it up yet, but we’re not looking forward to it.”

It’s not just the heating oil prices that pose a problem for consumers. Soaring crude prices mean double trouble for Robinson, who started a business importing salted cod from the East Coast this year for distribution in Toronto.

“It’s not just about heating your home. It’s also driving your car. After paying for gas, it really eats into any profits,” he said. “Something like this affects you on every level.”

Robinson said he filled his tank Thursday at 79 cents a litre. By Friday, prices had jumped to 83.5 cents at his local station.

According to Michael Ervin, petroleum analyst at a Calgary research firm, a rule of thumb in the industry is that every $1 rise in the cost of crude oil translates into another cent at the pump. Gasoline prices averaged 74.5 cents per litre last September in Toronto, compared with 83.9 cents this September, according to Ervin’s figures.

Robinson is hoping for a mild winter so he won’t have to turn up his thermostat. He already feels “lucky” that the summer was cooler than normal.

“I think I only used my air conditioner on two days, and one of those days was to test it to see if it was working,” he said.

Vincent Muia, the owner of Dominion Insulation Inc., has been in business for 32 years and says that while demand is steady, it does increase when there is an energy crisis.

Insulation is “the single most cost effective thing you can do to your house,” he said, noting that homeowners who invested $150 to $200 on insulation 25 years ago cut their fuel costs by 10 to 15 per cent a year, resulting in accrued savings of $20,000 to $30,000.

Tony Wong and Sharda Prashad,  Toronto Star, Oct. 9, 2004
Posted in Oil | Leave a comment

Winter’s coming: Time to lock in your gas rate?

John Heinzl
Globe and Mail
October 9, 2004

Like a lot of homeowners, Bill Harang cringes when he opens his natural gas bill.

“It just shocks me when I look at the bottom line,” says the Bowmanville, Ont., resident, who has watched his heating costs soar since he bought his three-bedroom townhouse in the late eighties.

So this year, he signed a contract with Canadian RiteRate Energy Corp., one of several natural gas marketers that allow consumers to lock in their price for three to five years.

To homeowners such as Mr. Harang, a 46-year-old customer support manager in the software industry, locking in seems like a no-brainer. With cold weather looming and analysts warning of tight supplies and growing demand for natural gas, consumers want the security of knowing their heating costs won’t go through the roof.

“I’m a person who’s really cautious with my money. I don’t take any risks,” he says.

But locking in may not be such a prudent move — especially now, some energy experts warn. After leaping about 50 per cent in the past two years, natural gas prices will probably stabilize or fall in the years ahead, making this precisely the wrong time to lock in, they say.

“I think there’s better than a 50-per-cent chance that prices over the next three to five years are going to be in the range or lower than the current utility price,” says Tom Adams, executive director of Energy Probe. He has two words for anyone thinking about signing a contract: “Skip it.”

While the conventional view is that demand will grow and supplies will remain tight, Mr. Adams sees the opposite scenario unfolding.

Some of the biggest consumers of natural gas, such as the fertilizer industry, have either moved offshore or retooled to reduce their exposure to gas prices, removing a key source of demand, he says. And households are consuming less gas, thanks to more energy-efficient appliances and better-insulated homes.

At the same time, the supply outlook is hardly dire. New sources such as coal-bed methane – which accounts for about 9 per cent of natural gas production in the United States but a much smaller amount in Canada – and gas from conventional reserves that have yet to be tapped should help prevent shortages, he says.

That may be cold comfort to consumers who have been watching natural gas prices surge in the futures market as the heating season approaches. But some energy analysts say the current price spike is an aberration.

Gas prices have been driven higher by a combination of factors, including hurricane damage to gas rigs in the Gulf of Mexico, an influx of speculators and – perhaps most important – record high oil prices. Oil and gas tend to trade in tandem, because businesses often switch to whichever fuel is cheaper, thereby driving up the price.

But natural gas storage levels are at historically high levels and fall weather has been mild, suggesting gas prices may be poised for a correction. And if the price of oil falls from its record levels, it will almost certainly drag gas down with it.

The upshot for homeowners? “It’s a bad time to do a knee-jerk” by signing a gas contract, says Wilf Gobert, vice-chairman of Calgary-based brokerage Peters & Co.

To be sure, there are times when locking in would have been wise.

A typical Ontario homeowner who signed a three-year contract in October, 1999 – when the utility price of natural gas was just 10.6 cents for a cubic metre – would have saved $685.71, compared with the cost of buying gas at the floating rate, according to Energyshop.com, an independent source of information on natural gas rates.

But homeowners who signed contracts in April, 2001 – after the utility price had more than tripled to 36.2 cents – are kicking themselves now that the price has settled back down to 28.57 cents. They spent $366.92 more than if they hadn’t locked in.

For those who are still convinced prices are heading higher, Energyshop.com simplifies the process of finding the best deal on a contract. The website lists current offers from gas marketers in Ontario, Manitoba and Alberta, and enables on-line registration with certain companies, avoiding the high-pressure sales pitches that have given the industry a bad name.

Ian MacLellan, co-owner of Energyshop.com, says locking in remains popular with consumers and businesses. “I’m certainly doing that myself,” he says.

So are plenty of others.

Across Ontario, roughly 40 per cent of households with natural gas furnaces buy their fuel through a marketer, according to Enbridge Gas Distribution Inc., a regulated utility. That’s down from a peak of about 50 per cent in 2002.

In a bid to woo more customers, gas marketers are offering a range of contract options. Direct Energy Marketing Ltd., for example, offers a five-year fixed rate of 32.4 cents a cubic metre, or a five-year contract that starts at 33.9 cents and declines by a penny each year.

Canadian RiteRate Energy, a newcomer in the gas marketing field, offers a five-year fixed contract at 28.4 cents. For consumers who aren’t sure whether they should lock in or not, it also offers a “blended rate” in which roughly half the cost floats with the utility price while the other half is fixed – the option Mr. Harang chose.

If you’re serious about cutting your fuel bill, however, Mr. Adams says there are better ways to use your time than shopping for gas contracts.

“For the ordinary household it’s much, much better to invest in a little better attic insulation,” he says.

 

Posted in Natural Gas Utility Regulation and Commodity Deregulation | Leave a comment

Soaring costs trim earnings

Rick Westhead
Toronto Star
October 9, 2004

Canadian businesses are beginning to experience the energy industry’s version of sticker price shock.

Driven by the highest demand in a quarter century, oil prices this year have climbed more than 60 per cent.

The run-up comes amid increases in electricity and an expected seasonal jump in natural gas prices, leaving many Canadian firms facing an uncertain future.

“A lot of companies are just at the break-even point right now,” said Allan Skjodt, a controller with Plastmo Ltd., which employs 60 people and makes vinyl rain gutters. “Some may decide it’s just not worth operating anymore.”

Skjodt, whose Brampton company pays about $35,000 a year for electricity and a further $16,000 a month in the winter for natural gas heating, said he foresees energy-related expenses spiking at least 20 per cent over the next six months.

Skjodt’s Plastmo isn’t alone in anticipating unwieldy oil, gas and electricity bills. From the floors of tool and die factories to automotive assembly lines to courier and transportation companies, businesses across Ontario are bracing for record-high energy bills this winter.

Ken McLennan, part-owner of Stemac Industrial Equipment in Scarborough, said he has increased his hourly service charge to $55 from $45 over the past six months to offset added gas expenses.

“I need my expenses covered,” said McLennan, whose company repairs and refurbishes tool and die machines.

Crude oil futures have hit record highs in recent days and yesterday closed at $53.31 (U.S.) in New York. The price of crude has surged 30 per cent in three months, a climb mirrored in other energy markets.

The price of electricity in Ontario has climbed as much as 30 per cent over the past two years and natural gas prices are expected to increase as much as 40 per cent this winter, said Gerry Fedchun, president of the Auto Parts Manufacturers Association, a trade group that represents about 400 Canadian auto-parts makers.

With oil, gas and electricity all on the rise, and a 50 per cent surge in the price of steel, “the question has become which one of the pebbles will sink the boat?” Fedchun said.

Oil production in the Gulf of Mexico has yet to recover fully from Hurricane Ivan, while Nigerian oil workers are poised to join a national strike. Nigeria produces 2.45 million barrels of oil a day and is the fifth-largest source of crude for the United States. Canada, by contrast, produces 3.13 million barrels.

With all that trouble around the world, some oil analysts have estimated crude prices could reach $60 a barrel this winter.

“I don’t see any relief coming,” said Lauri Gregg, director of energy management for Noranda Inc. and Falconbridge Ltd., two of the province’s biggest power users. “I think demand will continue to outpace supply.”

Gregg said Falconbridge spends as much as $25 million a year on natural gas for its Ontario operations. The mining company buy natural gas contracts three years in the future, a process known as hedging, to help soften any price spikes.

“That way, you’re not hit with sharp out-of-the pocket increases,” Gregg said.

Some businesses can take conservation measures – such as blowing insulation into the roof of older factories and warehouses – but many are left exposed to the market’s fluctuations.

“They are going to take their lumps,” said Tom Adams, executive director with Toronto research group Energy Probe. “There is going to be economic impact. We probably are going to see some high energy consumers shut down.”

Not everyone believes oil and natural gas prices will continue their climb.

Ted Mallett, chief economist with the Canadian Federation of Independent Business, said the trade group’s members may be concerned about the rise in energy prices, “but they don’t see it as catastrophic.”

And Andrew Pride, a vice-president with the Minto Group of Cos., which builds and manages homes and apartments, said he expects oil to drop back to the mid-$40 range within the next six months.

“I just don’t think $51 oil is sustainable, and my crystal ball is as good as anyone else’s,” Pride said.

 

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