Joel, partner since 2014 (Toronto, Ontario)
This week in charts
Consumer debt
Electric vehicles
Salaries
Construction
The Saudi-Russia oil alliance has the potential to cause all kinds of trouble for the US economy — and even for President Joe Biden’s re-election campaign. This month’s OPEC+ decision to cut crude output, for the second time since Biden flew to Saudi Arabia last summer seeking an increase, may be just the start.
In a world of shifting geopolitical alliances, Saudi Arabia is breaking away from Washington’s orbit. The Saudis set oil production levels in coordination with Russia. When they wanted to ease tensions with regional rival Iran, they turned to China to broker a deal — with the US left out of the loop. Western influence over the oil cartel, in other words, is at its lowest point in decades.
Meanwhile, the threat of competition from US shale fields, a deterrent to price hikes in the past, has receded. And while there’s a global effort to reduce fossil-fuel use — and higher prices will accelerate that effort — the dash to drill in the last year shows that the zero-carbon economy remains more long-term aspiration than short-term driver.
Add all of this up, and while some analysts say demand hurdles mean the recent bump in prices could prove fleeting, most anticipate prices above $80 a barrel over the coming years — well above the $58-a-barrel average price between 2015 and 2021.
For the global economy writ large, lower oil supply and higher prices is bad news. The major exporters are the big winners, of course. For importers, like most European countries, more expensive energy is a double blow — dragging on growth even as inflation rises.
The US falls somewhere in between. As a major producer, it benefits when prices rise. But those gains — unlike the pain of higher pump prices — aren’t widely shared.
Bloomberg Economics’ SHOK model predicts that for every $5 increase in oil prices, US inflation will rise by 0.2 percentage point — not a dramatic change, but at a time when the Federal Reserve is struggling to bring prices under control, not a welcome one either.
Bloomberg’s economic scenario modeling tool — SHOK — suggests that supply cuts pushing oil to about $120 per barrel in 2024 would keep US inflation at nearly 4% by the end of 2024 compared with a baseline forecast of 2.7%. And conventional wisdom says that high pump prices hurt incumbent politicians at the ballot box.
B.C. To Legalize All Secondary Suites, Introduce Flipping Tax, Hike Density On Single-Family Lots
B.C. will overhaul municipal zoning rules to allow so-called “missing middle” housing, such as townhomes and multiplex homes on single family lots, as well as introduce a flipping tax and legalize all secondary suites as part of Premier David Eby’s refreshed housing plan announced on Monday.
However, the plan lacked details on how the province plans to overrule B.C. municipalities to allow higher density on single family lots. Those details will come this fall when the NDP introduces legislation that will allow three to four units on a traditional single-family detached lot and even higher density permitted in areas close to transit hubs.
The debate over missing-middle housing has been divisive in many communities, with proponents calling for creative solutions that will make owning a home more attainable. Opponents, meanwhile, cite parking concerns or fears that higher density will strip the character from neighbourhoods.
The government will also legalize all secondary suites in B.C., taking the choice away from municipalities. In some B.C. communities, secondary suites are still illegal, a policy which Eby says chokes the supply of affordable rentals.
British Columbians who buy a home just to flip it for a profit will be hit with a flipping tax that will be introduced later this year. The plan did not include details about the tax but Eby’s housing platform, released before he became premier, called for a tax against those who hold a residential property for two years or less, with the tax rate edging higher the shorter the owner holds the property.
The government will also work with municipalities to strengthen enforcement of short-term rentals to ensure people aren’t operating them under the radar and without paying the required taxes.
Eby promised to build 6,000 more affordable homes through the Community Housing Fund. Some B.C. mayors have complained that shovel-ready affordable housing projects are languishing because of a lack of funding from B.C. Housing.
I drove from Toronto to Montreal in an EV and faced a mutiny halfway
“It’s pretty slow to travel this distance in this car, because you won’t charge above 80 per cent. I just don’t get it,” my wife said.
Before I could defend myself – getting a full charge is not good for battery health, slows things down even more at public fast-chargers, and demonstrates poor etiquette if anyone is waiting – my daughter piped in with a couple of pointed questions from the back seat.
“Can we go?” she said. “What are we waiting for?”
“We’re charging,” my wife told her.
Those few lines defined our 550-kilometre drive to Montreal, which took – I’m embarrassed to admit this – nearly eight hours. Yes, one way.
I’ve often driven distances of about 300 km in our Hyundai Ioniq 5, an all-electric vehicle I purchased a little over a year ago. But most of those trips were in the warm summer months, when batteries are more efficient and I can drive for a relatively long time before needing a quick recharge.
In the cold, and driving on winter tires at speeds of about 100 kilometres an hour, the range of our car was noticeably lower. Though our car can travel nearly 400 km on a single charge under ideal conditions, I faced a reduced range below 300 km.
Despite its disappointments, I hope Montreal was not our last road trip because it had a number of good points.
We saved at least $150 in gas charges during the round trip because charging was mostly free during a brief revamp by the Ivy Charging Network. We also prevented about 120 litres of fuel from billowing into the atmosphere.
Plenty of roadside charging stations in Montreal meant that we could charge – and park – for just $1 an hour while we visited neighbourhoods in the city.
This week’s fun finds
Now live on the Cymbria site, the 2022 annual report!
You can find insights on how Cymbria navigated the last year and updates on our largest holding, EdgePoint Wealth Management.
How Much Should You Tip In Each Country?
All mixed up – How the shuffle button came to define modern-day media consumption.
“Our art tells a story and our stories should be listened to as we intended,” Adele tweeted shortly after the release of her album 30, a release so massive that almost no one could escape its story even if they would like to. In 2020, Spotify began to automatically shuffle albums for all listeners instead of playing them in assigned order. But Adele’s wish proved to be Spotify’s command, and the company removed its auto-shuffle function, but for premium users only. What had once been a feature was now a bug, one you had to pay to override.
Shuffle or random playback, to use the more precise term that predates the contemporary “shuffle button,” has its roots in a core element of computing: automating randomness, a feat that is technically impossible. The only true randomness, where there’s “an equal chance of X or Y happening at the quantum level” as Andrew Lison, an assistant professor of media studies at the University at Buffalo, puts it, is found in things like atomic decay — natural phenomena that cannot (at this point, at least) be fully replicated by a computer. You would need to incorporate quantum physics for the shuffle button to be truly random.
The introduction of the idea that media consumption could be both personal and passive had massive ripple effects. In the wake of the Napster era and its promises of a massive, totally unique music library, Pandora effectively invented the idea of individualized radio, promising the ultimate “shuffle” experience with technology that has since been used to great effect by streaming services intent on keeping people listening. Spotify, Apple Music, and their ilk offer both the promise of that Napster-scale range with Pandora’s ease. You could find anything, they suggest, but why not click this button and we’ll find it for you?
As a result, increasingly precise and invasive algorithms have crept in under the comparatively innocuous umbrella of “randomness,” feeding us not just songs without context but information of every possible variety that is both novel and tells us what we’d like to hear — usually in service of getting us to buy something. Our social media timelines and YouTube feeds and video streaming services all employ the conceit, if not the science, of shuffle and randomness to keep us looking and listening, consuming without going through the work of figuring out what to consume.
“It’s fundamentally premised on the idea that there’s no end,” says Lison. “Even though obviously there is, there’s not an end that any of us will ever reach.” With all this choice, agency and, more importantly, having the time to choose in the first place is a luxury.
When it first integrated the play and shuffle button, Spotify was moving in concert with what its metrics undoubtedly showed — that 35 years or so after the introduction of the shuffle button, people had grown to prefer listening that way. For their purposes, playing an album on shuffle made the shift from the album itself to the algorithmically determined songs that Spotify plays immediately after it more seamless (and harder to notice). The true(ish) randomness and the algorithmically driven faux-randomness became one, further eliding the boundaries between the randomness you choose and the “randomness” you don’t.
Ozone is a molecule made up of three oxygen atoms. (The oxygen we breathe is made up of just two.) There’s not much ozone floating around in the layer of atmosphere that we breathe — a good thing, since it’s actually a lung irritant and linked with respiratory disease.
But there’s a lot of it in the stratosphere (comparatively speaking, at least; it’s still only a tiny fraction of the overall air). It’s that layer of ozone that absorbs ultraviolet (UV) radiation, especially the specific wavelengths called UV-B.
UV-B radiation is what causes sunburns, and in high concentrations it causes more problems than that. It can lead to many kinds of cancer by damaging our DNA; most plants and animals also suffer when growing in a high-UV-radiation environment.
In the 1970s, researchers noticed that the ozone layer had started thinning, especially around the poles. (With the ozone layer constituting only about three in a million atoms in the stratosphere in the first place, “hole” is technically a misnomer — the “ozone hole” was really just an area where ozone levels had dropped by more than 30 percent in a decade.)
By the time the thinning of the ozone layer was measured, researchers Mario Molina and Sherry Rowland had already established the probable cause: CFCs.
The problem was that CFCs break down in the upper atmosphere. And the chlorine in CFCs was actually reactive, binding with ozone to make oxygen and chlorine monoxide.
The Montreal Protocol on Substances that Deplete the Ozone Layer was agreed upon and opened for signature in 1987. It went into force in 1989. Countries gradually began phasing out CFCs. Andersen’s team, Nicholson says, “systematically identified hundreds of solutions for phasing out CFCs from hundreds of industry sectors,” making it possible to shift manufacturing processes worldwide to chemicals that weren’t ozone-depleting.
And keeping the ozone intact buys us time in the fight against climate change. Yes, HFCs are a potent greenhouse gas. But CFCs contributed to global warming as well: They were powerful greenhouse gases in their own right, and by destroying the ozone layer, they contributed to warming by allowing more energy to reach the planet’s surface. One study found that ozone-depleting chemicals drove half of Arctic warming in the 20th century.
With that said, HFCs are still a big climate problem. In recent years, governments have been working to extend the hugely successful Montreal Protocol to phase them out too. It’s fair to say that, in some ways, the global fight against the ozone crisis was a complicated story, one that continues to be written.
