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August 5, 2008
Feedback - Oil and Our Urban Future
Thanks for referring me to this interesting piece. I share Mr. McShane's confidence in the ability of our market system to solve the effects of a higher oil price and to deliver an even more productive economy in the process -- if -- and it's a big if. Mr. McShane makes the point in his 2nd-last sentence. "That is what we are all so good at -- provided no 'wise elite' decides to make our decisions for us."
Of course that 'wise elite' -- the senior-government central planners -- decided on that course long ago. And, each day sees them implementing more of their agenda. Take the case of Ontario.
Most observers are aware that the province has applied 'smart-growth' regulations to the greater Toronto area. But, fewer know that those regulations now apply province-wide. You don't escape them by moving to the country -- unless 'the country' is in another jurisdiction. These latest regulations are relatively new but the agenda behind them has been with us at least since 1970 when I started practising as a land-use planner.
The 'vision' driving this agenda is a landscape of cities with the surrounding areas populated only by those individuals needed to oversee the rural resources found there. To give shape to this vision, the province has been eating the elephant 1 bite at a time. An early bite was the imposition of part-lot control. That regulation forbid the sale of any portion of a landholding without 1st obtaining the approval of a government agency. So, if you owned a 20-acre parcel and wanted to sell 5 acres to your neighbour, you had to obtain that approval from government.
Since most rural land sales involved part lots, rural municipalities protested loudly. The response was to delegate the approval authority to municipalities -- with strings attached. Among the strings were the requirements for municipalities to adopt planning and zoning regulations that had to be approved by the province. Of course, to receive provincial approval, rural zoning was expected to recognize only those lands which were already developed. All undeveloped lands were expected to be placed in a zone which permitted only a handful of resource-based activities. The regulations for rural areas were also expected to set minimum lot sizes which were much larger than a residential building lot.
When those pesky rural municipalities found ways around the rules, the province reacted by imposing a host of other regulations. There were prohibitions on virtually all non-farm development on lands which the province deemed to have the capability to support agriculture. There were ever-more onerous requirements to have any development approved if it would use individual private water-supply or sewage-disposal systems. Since most rural development uses private wells and septic tanks, you can imagine the impact.
Next came regulations to preserve wetlands, cold-water streams, flood plains, slopes, woodlands, and 'areas of natural, physical, cultural, or historic significance'. Imagine the shock to the tobacco farmer who had spent considerable time, effort, and money to drain his land only to find that the province had deemed his drains to be cold-water streams. Or, consider the plight of the tourist-resort operators whose expansion plans were put on hold by the discovery of an arrowhead on their beach. They were required to pay for a comprehensive archaeological survey of their property -- a survey whose outcome could well put an end to their project.
But, as Mr. McShane has noted, there is plenty of ingenuity out there. Using it, our rural residents and their municipalities managed to keep some rural development alive. However, that only served to provoke central planners at the province. They had had enough. After successful attempts in the early 1970s to impose regional government on most major urban regions in Ontario, the province axed more than 60% of our remaining municipalities through forced mergers. Most of the casualties were rural and suburban municipalities. The purpose was to create municipal governments which would be controlled by urban interests. By the end of the last century, those planners had reason to celebrate. Rural voices were almost silenced and suburban voices were more subdued. Not surprisingly, imposing smart growth met with only sporadic resistance.
With a lid on the urban exodus, the next priority of the central planners is to bring the outlying populations back into the cities. That means choking off commuting by car. They have been doing that by cancelling highway projects, cutting roads budgets, restricting traffic movements on existing roadways, eliminating parking, and raising various taxes on vehicle ownership and use. But, as those central planners used to lament, none of these actions made a real dent.
Then, the global-warming 'crisis' surfaced. It was made to order. By designating carbon-dioxide emissions as the villain, it gave the 'wise elite' a club to beat suburban drivers. Now, they could be charged with jeopardizing the survival of the planet. And, their 'sins' would serve as justification for a whole new regulatory regime and the taxes to support it. It's already happening in Europe. And, our own central planners are just waiting for the opportunity to follow suit.
Enter the high price of oil. During the last oil-price 'shock' in 1979, you may recall individuals in the Trudeau and Carter administrations cheering. They wanted a high oil price, believing that it would force commuters out of their cars and onto transit. And, that would mean a return migration from the suburbs and exurbs back to the cities. But, there was too much domestic (Canadian and U.S.) oil supply out there just waiting for the removal of price caps and other restrictions. After that setback, the 'wise elite' vowed not to be caught in that same position the next time around. And, since then, many domestic petroleum reserves have been placed off-limits; refinery construction has almost halted; and pipeline projects have been blocked. This time around, it will not be so easy to bring down the oil price by increasing domestic production and supply.
But, Mr. McShane maintains that this shouldn't matter much to North America. After all, he says, drivers in New Zealand and Europe are already paying the equivalent of $10 for a gallon of gasoline However, since the gasoline tax in many European countries is as much as 65% to 75% of the pump price, paying $10 per gallon in North America will mean a much higher world oil price. Would those European countries be able to stomach $20-a-gallon gas without suffering severe economic pain?
And, there's another factor which makes comparison of North America with New Zealand and Europe difficult. Mr. McShane notes that New Zealand -- and, presumably, many European -- cities tend to have higher densities than their North American counterparts. But, that's just the tip of the iceberg. Development across Canada and the U.S. is much more dispersed. It's not unusual to find someone on the west coast using a product made by a company in the east. Nor is it that unusual to find someone on the east coast using that same product made by a company in the west. And, with NAFTA, there is also a growing flow of goods moving north and south. Families, too, are likely to be more dispersed. Look at the mileage that we travel on a single Thanksgiving weekend. All this is possible because of inexpensive fuel. So, an on-going high oil price will cause more than a few minor adjustments here.
Still, I applaud Mr. McShane's faith in the ingenuity of people to overcome challenges such as our current high oil price. But, as he himself admits, all that depends on the benevolence of our senior governments. To ensure that his scenario plays out, we will have to remove the obstacles that those same governments have placed in our path. We can't afford to sit back and hope for the best.
David Barber is Director of the Cordillera Institute. The Institute publishes a weekly commentary on achieving excellence in local government which is read by municipal leaders on 4 continents. He may be contacted at: firstname.lastname@example.org.
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