The following are some of the key news stories from the latest week or so. They have been chosen because of their impact on the economy and construction activity levels specifically or because they are just plain interesting, informative or quirky.

1) The Ontario government has just firmed up its plans for adding nuclear power generating capacity in the province. Two new reactors will be added to the four existing plants at the province’s Darlington site east of Toronto. Construction is targeted to begin in 2012 with the first power to be generated by 2018. Three companies will have until October 1st of this year to bid on the project: Atomic Energy of Canada Ltd., Areva SA of France and Westinghouse Electric Co. (in a consortium led by Toshiba of Japan). The government’s intent is to replace coal-fired plants in the province with carbon-free nuclear capacity.

2) Bruce Nuclear of Ontario and the Saskatchewan government are about to embark on a feasibility study concerning the construction of two 1,000 megawatt nuclear plants in Saskatchewan. This makes sense from a number of angles. Saskatchewan currently gets most of its power from “carbon-intense” coal and natural gas. The province is the world’s top supplier of uranium. Cameco is the world’s largest producer of uranium and it has an equity position in Bruce nuclear.

My only concern is that I hope this doesn’t jeopardize the pilot clean-coal project that has been proposed for the province. This is the project that received some federal government money in the latest budget. One of the key aspects of this project will be to study the underground capture and storage of carbon emissions. This kind of experimentation will be necessary to take the next step in resolving pollution problems in such regions as Alberta’s Tar Sands.

3) Buried in the latest export numbers from Statistics Canada is a figure that is already having alarming implications. The dollar volume of Canada’s truck exports so far this year (January through April), versus the same period last year, is -56%. It is this kind of shift in the market, due mainly to high gasoline prices, which caused General Motors to announce a closing of its truck plant in Oshawa. Downscaling production is already starting to have an impact on part producers throughout the province.

The Detroit Three are most on the hook for the move away from less fuel-efficient vehicles. They have been specializing in the van, SUV and truck market. Canada is fortunate in one regard. Ontario is home to large-scale production from Japanese automakers, who have taken over the lower-priced, more fuel-efficient compact and mid-sized passenger car market.

4) Here are some short notes on energy markets. Due to high prices for oil and gas (nearly $140 per barrel and $13 per million British thermal units respectively), exploration and drilling plans by major energy firms are heating up. By the way, the energy equivalent price of gas is nearly $80 (a factor of about six) versus a barrel of oil. Because Alberta’s new royalty regime is set to begin on January 1, 2009, the hottest plays will be in other provinces, with two of the most prominent being Horn River gas in northeast B.C. and Bakken oil in southeastern Saskatchewan.

Also, beyond the next offshore oil field in Newfoundland at Hebron, there are now negotiations proceeding between the private sector partners and the provincial government to see development of Hibernia South. The Newfoundland and Labrador government wants a 10% equity stake in all future oil projects that fall under its jurisdiction.

5) I’ve talked on several occasions in my blog entries about the strength in fertilizer production as a result of greater worldwide demand for agricultural products. The stock prices of two of Canada’s largest companies involved in the production of fertilizers, Potash Corp. of Saskatchewan and Agrium Inc., have just set record highs.

6) I’m a big advocate of “rules of thumb”. These are numbers that are generally easy to remember and help to put things in context. In a story on the nation’s justice system, The Gobe & Mail newspaper reported yesterday that it costs approximately $80,000 per year to house a prisoner. This is a considerable sum of money and is well above average incomes. It also gives some indication of the added cost of cracking down on crime or adding to minimum sentences.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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