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leadership

What It Takes to Be #1

 

Vince Lombardi turns 100 today.

“Winning is not a sometime thing; it’s an all the time thing. You don’t win once in a while; you don’t do things right once in a while; you do them right all of the time. Winning is a habit. Unfortunately, so is losing.

There is no room for second place. There is only one place in my game, and that’s first place. I have finished second twice in my time at Green Bay, and I don’t ever want to finish second again. There is a second place bowl game, but it is a game for losers played by losers. It is and always has been an American zeal to be first in anything we do, and to win, and to win, and to win.

Every time a football player goes to ply his trade he’s got to play from the ground up – from the soles of his feet right up to his head. Every inch of him has to play. Some guys play with their heads. That’s O.K. You’ve got to be smart to be number one in any business. But more importantly, you’ve got to play with your heart, with ever fiber of your body. If you’re lucky enough to find a guy with a lot of head and a lot of heart, he’s never going to come off the field second.

Running a football team is no different than running any other kind of organization – an army, a political party or a business. The principles are the same. The object is to win – to beat the other guy. Maybe that sounds hard or cruel. I don’t think it is.

It is a reality of life that men are competitive and the most competitive games draw the most competitive men. That’s why they are there – to compete. To know the rules and objectives when they get in the game. The object is to win fairly, squarely, by the rules – but to win.

And in truth, I’ve never known a man worth his salt who in the long run, deep down in his heart, didn’t appreciate the grind, the discipline. There is something in good men that really yearns for discipline and the harsh reality of head to head combat.

I don’t say these things because I believe in the ‘brute’ nature of men or that men must be brutalized to be combative. I believe in God, and I believe in human decency. But I firmly believe that any man’s finest hour, the greatest fulfillment of all that he holds dear, is that moment when he has worked his heart out in a good cause and lies exhausted on the field of battle – victorious.”

- Coach Vincent T. Lombardi

Why do employees stop caring? (and how to change that)

Gallop poll shows that more than half of American employees aren’t engaged in their work

Over the past year, Gallup researchers interviewed nearly 150,000 workers–people in all states and industries–and discovered that a stunning number are miserable in their jobs. More specifically, only 30% of the nation’s working population today admits to being fully engaged at work. While Gallup encouragingly notes that there’s been a slight improvement to engagement since the Great Recession, it’s hard to cheer when you realize 52% of Americans admit to being disengaged in their jobs, and another 18% to being actively disengaged.

To fully comprehend these grim stats, imagine a crew team out on the Potomac River where three people are rowing their hearts out, five are taking in the scenery, and two are trying to sink the boat. It’s hard to conceive how businesses can thrive when so few people are working to move it forward.

A decade or so ago, many in business dismissed the notion that there are clear links between employee engagement and an organization’s overall success. Fast-forward to today, however, and you’ll find few people who don’t strongly agree that engagement is the wonder drug for maximizing workplace performance.

Numerous studies have shown that engaged workers display greater initiative, approach work more passionately and creatively–essentially do all they can for their organizations. Gallup’s report specifically states that engagement drives greater productivity, lower turnover, and a better quality of work. For punctuation, it adds: “Organizations in the top decile of engagement outperform their peers by 147% in earnings per share, and have 90% better growth trend than their competition.”

The solution?

Get people in the right job: Harter is insistent that managers only put people into roles that fully leverage their talents and strengths. Too often, employees are assigned work to which they’re neither well-suited nor emotionally connected. “Make sure to get people the right job so they can be efficient, effective, and fulfilled.” This is accomplished through vigilance in the selection process, and by keeping the guidance of author Brian Tracy in mind every time you have a position to fill: “The single greatest mistake a manager can make is a bad hire.”

Set clear expectations: Gallup finds that only half of people surveyed have clarity on what’s expected of them–and this causes enormous frustration. “Unfortunately, a lot of organizations forget about that, or mess it up by not communicating effectively when changes happen–or the local manager is unsuccessful in translating to the front line people what the organization is trying to get done. It comes down to showing people how their work and contributions impact the success of the entire firm. Disengagement starts with having a confusing job.”

Give people what they need to do their job: When employees don’t have the equipment, support, or knowledge to do their jobs effectively, they quickly conclude their organization isn’t paying attention to them. Once people begin to feel their work isn’t important, or that they’re not personally valued, they head down a slippery slope of disengagement. Conversely, Harter notes that giving people greater autonomy and control over their workday has profoundly positive effects. It leads people to feel trusted, and influences them to do much more for the organization.

Be extremely generous with praise and recognition: One of a human being’s greatest needs is to feel appreciated and valued. According to Harter, many people in leadership roles underestimate how essential this is to employees–and how recognition lifts employee spirits. One key reason why so many workers are disengaged is that they feel their contributions and efforts are overlooked–or taken for granted. Harter advises managers to lean in the direction of over-appreciating people, and to devote greater attention to praising good outcomes. “People need recognition frequently,” he stresses. “We know there’s a physiological response when we get recognition. A boost of dopamine makes us feel good in the moment. This lasts a while; but if we do good work, we have a continued need to be lauded for it.”

Excellent Jim Trotter article on the problems of the Oakland Raiders

Mark Davis

As found in Sports Illustrated

Reggie McKenzie knew he faced a significant challenge when he was announced as general manager of the Raiders on Jan. 6, 2012. Over the previous nine years the team had gone through six head coaches, and it had lost at least 11 games in an NFL-record seven straight seasons. Oakland’s last winning campaign, in ’02, was a millennium ago by NFL calendars.

Still, the depths of the struggle might not have truly hit McKenzie until several months after his hiring, when he changed into his workout gear and headed to the back of the team’s Alameda training facility, where his long jog around the practice fields was spoiled by wildly uneven footing and goose droppings.

If the choppy grass fields were hazardous to a 49-year-old such as himself, he thought, imagine the dangers for players. In the previous two seasons alone, running backs Darren McFadden and Marcel Reece, wideouts Jacoby Ford and Denarius Moore, defensive tackles Richard Seymour and Tommy Kelly and linebacker Rolando McClain had been hobbled by or missed significant time because of lower-body injuries.

When McKenzie asked who was responsible for the upkeep of the fields, which were riddled with dirt patches, the answer stunned him. The Raiders did not employ a full-time, on-site groundskeeper. Instead, the work was outsourced to a local company—astounding considering that the difference between the playoffs and a pink slip could easily come down to a turned ankle, a jammed toe, a tweaked knee or a pulled hamstring.

The field conditions were just the first of many reminders that restoring greatness to a franchise whose mottos had included “Pride and Poise” and “A Commitment to Excellence” would be about much more than just hiring a new coach and ridding the roster of its bloated contracts and underachieving players. It would be about transforming an entire culture and overhauling an organizational model that had become stale and outdated after nearly five decades under Al Davis, the iconic and imperious owner who died of heart failure at age 82 in October 2011.

It wasn’t just the grass that needed fixing

McKenzie knows he must be spot-on in this year’s draft. Oakland has the No. 3 pick and the fourth pick of the third round, but its second-round selection belongs to Cincinnati as part of a 2011 swap for Carson Palmer. He’d love to trade down for more choices, because the Raiders are far more than one player from being relevant again. But if he’s unable to find a trade partner, then he has to find impact players with his high picks. Imagine the best draft ever. If McKenzie replicates that, his team is mediocre at best.

And so, much of the G.M.’s energy the last 15 months has been spent on upgrading Oakland’s scouting and personnel departments. When he went to view the club’s draft room last year, he discovered that none existed, so he had one built from scratch. When he requested the team’s scouting questionnaires for evaluating college prospects, he learned there weren’t any, so he created them.

Such resources are givens in most NFL organizations—but not with the Raiders and Davis, who had his own way of doing business. He was the only owner who didn’t use one of the national scouting services for college prospects, and the only one who didn’t subscribe to the psychological-testing program available to each team before the draft.

Davis was so behind the times that even toward the end he didn’t allow employees to use direct deposit, and he kept the budget for coaching and support staffs in his head rather than on paper. In his video department, the software was tragically outdated.

Sadly the Oakland Raiders (as in Mark Davis) fired Oakland’s PR person, Zak Gilbert after the story came out.

We read the Trotter story this morning, and there are certainly aspects of it that would make any organization cringe. The Raiders fell behind the competition in many ways in the last 10 years of Al Davis’ life.

General manager Reggie McKenzie was portrayed as a man who inherited a pigsty, forced to tend to matters both minor (hiring a head groundskeeper, constructing a draft room, upgrading video equipment) and major (completely rebooting the team’s scouting and personnel departments, treating burns incurred in salary-cap hell).

The Raiders reportedly dumped Gilbert because the SI piece — which surely now will attract more eyeballs — delved into not just the team’s struggles in recent years but why and how the downturn occurred. The guts of the story focused on positive strides made by McKenzie over the last year, but that apparently wasn’t enough to save Gilbert.

The Raiders shouldn’t run from the last decade. It’s a dark period that the organization can learn from. Firing the PR guy over a story anchored in facts makes it look like the team is trying to will the bad old days into the ether. That’s not happening.

Yahoo!’s Mike Silver saw this coming a year ago.

10 Reasons Your Top Talent Will Leave You

From Forbes

Have you ever noticed leaders spend a lot of time talking about talent, only to make the same mistakes over and over again? Few things in business are as costly and disruptive as unexpected talent departures. With all the emphasis on leadership development, I always find it interesting so many companies seem to struggle with being able to retain their top talent. 

  1. You Failed To Unleash Their Passions
  2. You Failed To Challenge Their Intellect
  3. You Failed To Engage Their Creativity
  4. You Failed To Develop Their Skills
  5. You Failed To Give Them A Voice
  6. You Failed To Care
  7. You Failed to Lead
  8. You Failed To Recognize Their Contributions
  9. You Failed To Increase Their Responsibility
  10. You Failed To Keep Your Commitments

My response to all of this is, yes.  When I moved on, all of them were a factor in myself wanting to leave.

Column: Heavy Prices Paid for Low Taxes

My column in today’s The StarPhoenix

If you happened to have watched the discussions during last week’s city council meeting about snow removal and business taxes in Saskatoon, you would have left with a clear impression: The city is having a hard time paying for basic services.

Lost in the rhetoric over how hard city crews work and how bad was the winter is a simple fact. Council voted against residential snow removal last fall, which created this mess in the first place. Even last week there were news stories about impassable streets.

The reason that councillors voted against residential snow removal was to keep property taxes as low as possible. As the city has proudly proclaimed for years, Saskatoon has the lowest property taxes in Canada among cities of a similar size.

That’s great if you hate taxes. But it’s bad news if you have to pay for things. With taxes this low, you will always have problems with paying for essential services.

If we are going to be the city of the lowest taxes, we will be the city of no snow removal, constant potholes and inferior public transit, because all of those services cost money. We have to cut costs somewhere, and we have cut them on snow removal and on road repair.

We underfund our road maintenance by more than $12 million a year, and that is just to keep our streets at their current levels. To actually repair and upgrade them would cost much more. Instead of paving roads, we patch them, which allows for moisture penetration. With the freeze-thaw cycle that faces Saskatoon regularly, our streets will continue to fail.

To its credit, council has increased spending on road repair, so by 2020 we will have almost reached the levels needed to keep our streets at 2012 levels. By that time the city will need even more money for road repairs, even if the streets are gravel.

Of course we can raise taxes. However, the problem is that once you go on and on about how low your taxes are, it’s really difficult to back away from that. We can talk all we want about wanting to be a world-class city, but you never judge a government by what it says so much as where it spends its money. In Saskatoon’s case, it’s not enough even to maintain our essential services.

There are two ways to deal with this.

One is to cut back more services and get out of a lot of what the city does, such as affordable housing, building parks and funding art galleries. The focus will be solely on roads, snow removal, emergency services and utilities such as garbage pickup.

This approach provides a great value for those that don’t need social services or amenities. They get lower taxes with no noticeable impact on their life in the city. It’s a blueprint that a lot of American cities have adopted. The problem is that no one wants to live or work in those cities once the boom is over.

The other option is to do what Edmonton’s city council just did. It adopted a report titled, The Way We Prosper, which made it clear that the old way using low taxes to attract business isn’t working.

Competitive taxes are important, but they are only a piece of the puzzle. Issues such as building a livable city and integrating Edmonton’s economic development agencies in a better way were listed as higher priorities.

Cities grow because of external market forces. More important than low taxes are the commodity prices that are driving our economy. If these prices bottom out, there is little that low tax rates will do to keep or attract businesses.

On the flip side, companies and people aren’t coming to Saskatoon because of low taxes on properties and businesses. They are coming because Saskatoon is a gateway to a whole lot of prosperity.

For all of Saskatoon’s aspirations of becoming a world-class city, we aren’t even raising enough money to maintain the city we have. Pat Hyde, manager of the city’s public works branch, announced last week that this will be the worst year ever for potholes.

When you don’t bring in enough money to maintain and clear streets, it’s going to be this bad for a lot of years.

There is a reason why our taxes are so low compared to other cities. Those cities know they can’t maintain their assets and provide services at the tax rates the city is charging.

This paper has called for an alternative to property taxes to fund civic services. Until that happens, we need to start charging more unless we want to see a further deterioration in the state of Saskatoon’s infrastructure. It’s a bill that needs to be paid sometime. As much as we hate it, it will require the payment of higher taxes.

© Copyright (c) The StarPhoenix

Derek Sivers: How to start a movement

The Holstee Manifesto

The Holstee Manifesto

How to Create a Passionate Work Culture

From Fast Company

How to Create a Passionate Work Culture1. Hire the right people

Hire for passion and commitment first, experience second, and credentials third. There is no shortage of impressive CVs out there, but you should try to find people who are interested in the same things you are. You don’t want to be simply a stepping stone on an employee’s journey toward his or her own (very different) passion. Asking the right questions is key: What do you love about your chosen career? What inspires you? What courses in school did you dread? You want to get a sense of what the potential employee believes.

2. Communicate

Once you have the right people, you need to sit down regularly with them and discuss what is going well and what isn’t. It’s critical to take note of your victories, but it’s just as important to analyze your losses. A fertile culture is one that recognizes when things don’t work and adjusts to rectify the problem. As well, people need to feel safe and trusted, to understand that they can speak freely without fear of repercussion.

The art of communication tends to put the stress on talking, but listening is equally important. Great cultures grow around people who listen, not just to each other or to their clients and stakeholders. It’s also important to listen to what’s happening outside your walls. What is the market saying? What is the zeitgeist? What developments, trends, and calamities are going on?

3. Tend to the weeds

A culture of passion capital can be compromised by the wrong people. One of the most destructive corporate weeds is the whiner. Whiners aren’t necessarily public with their complaints. They don’t stand up in meetings and articulate everything they think is wrong with the company. Instead, they move through the organization, speaking privately, sowing doubt, strangling passion. Sometimes this is simply the nature of the beast: they whined at their last job and will whine at the next. Sometimes these people simply aren’t a good fit. Your passion isn’t theirs. Constructive criticism is healthy, but relentless complaining is toxic. Identify these people and replace them.

5 things to know about team building

Hard lessons learned from the founder of YouSendIt

1. Titles are meaningless but expectation setting is crucial.

All of our YouSendIt business cards read "cofounder" until the fateful day a well-meaning angel investor asked “Who’s the CEO here?” We then did the title thing for fundraising optics, a mutually agreed upon, really bad idea.

What we should have agreed on were roles and expectations before the company was formed. Mehdi and I had that talk concerning PunchTab when we sat down for the very first time. Sort this out with everyone who is early at the company, otherwise you’ll waste a lot of time dancing around the issues.

Unlimited vacation time increases productivity?

This is really interesting.

Michael Mahoney, vice president of Consumer Marketing and seven-year veteran of GoHealthInsurance.com, says it actually was a deciding factor when he took the job. “I think it really helps instill in new employees the same values we had during the first years at our company," he says. Mahoney contends employees schedule vacation more strategically based on their workload. “When you consider when you can best take vacation as opposed to when you must, you end up able to take time off without affecting performance.”

Which often means people are actually on the clock more than ever. Shah admits that he works from home “a lot,” often putting in odd hours: “Until about 2 a.m. every night, and just about every weekend.” Fitton, founder of the Twitter app store Oneforty, which was acquired by Hubspot, was actually using a day off for emergency childcare during this interview–hardly a day at the beach.

Likewise, Mahoney says, “I’m working harder than ever, but I probably will take a few more days off this year,” though some of his colleagues have taken weeks off to go overseas. While Rosenblatt has taken “off” over a month, she says, “I always feel pressure to work even harder when I get back, even if there isn’t more work.”

Worker bees may be buzzing happily, but eventually everyone needs a real break. That’s why the 17-year-old Motley Fool, a multimedia financial-services company, established “The Fool’s Errand” five years ago. Spokesperson Alison Southwick says it’s a monthly ritual where, at a meeting of all 250 employees, one name is drawn from a hat. That person must take off two consecutive weeks sometime in the ensuing month. Southwick says it’s purpose is twofold. “First, it helps make sure that people ARE taking time off, clearing their heads, and recharging their batteries. Second, it helps us fight against single points of failure within the company. When you suddenly take two weeks off, you need to make sure that other people around you understand what you do so that the company doesn’t come to a screeching halt if you’re gone,” she explains.

But, mostly, it is fun. “Imagine being told you must take two weeks off right away. It’s two weeks to do whatever you want: tackle a life-long dream, learn something new, or just relax at home,” Southwick says.

The Motley Fool’s Head “People Fool” Lee Burbage asserts, “The idea of vacation days is a flawed concept from the start. Fools have the freedom to plan their lives how it works best. We trust them to understand the demands of their role and plan accordingly. If you have a big deadline or target date for a project, then you probably know that would be a good day to be at the office.”

Mahoney agrees. Unlimited vacation fosters productivity and loyalty because it favors results over input. “We don’t judge employees based on the number of lines of code they write, but instead on the impact their innovative ideas have on our users,” he says. “If we trust employees to make the right decisions with the time they spend at work in pursuit of our aggressive goals, we can trust them to make responsible decisions about when they choose to take time off of work.”

On leadership

I was reading Caterina Fake’s blog this morning and this quote jumped out at me by John Holt.

Leaders are not what many people think–people with huge crowds following them. Leaders are people who go their own way without caring, or even looking to see whether anyone is following them. “Leadership qualities” are not the qualities that enable people to attract followers, but those that enable them to do without them. The include, at the very least, courage, endurance, patience, humor, flexibility, resourcefulness, determination, a keen sense of reality, and the ability to keep a cool and clear head even when things are going badly. This is the opposite of the “charisma” that we hear so much about.

Who has the best resume?

Timothy Egan points out that the best looking resume doesn’t always make the best leader.

Harry S. Truman was ridiculed as a haberdasher — a wonderful old word that fell out of use as men’s clothiers gave way to big-box retailers. He was also the only 20th-century American president without a college degree.

Yet Truman finished the war against Nazi Germany and imperial Japan and oversaw plans that got Europe back on its feet. He racially integrated the armed forces by executive order. History has been kind to him. And, by the way, he was a failed haberdasher at that; his store went bankrupt.

Ronald Reagan, that B-list actor — what could he know about running the most powerful nation in the world? Instinctively, he knew enough to make peace with a cold war adversary at the right moment rather than push him into a nuclear corner.

The bumpy road to the future goes through Saskatoon

Barack Obama is said to be thinking about tapping the United States Strategic Petroleum Reserve.  For those of you who have have never heard of the Strategic Petroleum Reserve, here is Wikipedia

Strategic Petroleum ReserveThe US SPR is the largest emergency supply in the world with the current capacity to hold up to 727 million barrels (115,600,000 m3). The second largest emergency supply of oil is Japan’s with a 2010 reported capacity of 583 million barrels (92,700,000 m3). Also, China has begun construction and planning for an expansion of a SPR that will place their SPR at 685,000,000 barrels (108,900,000 m3) by 2020, surpassing Japan.

The United States started the petroleum reserve in 1975 after oil supplies were cut off during the 1973-74 oil embargo, to mitigate future temporary supply disruptions. According to the World Factbook, the United States imports a net 12 million barrels (1,900,000 m3) of oil a day (MMbd), so the SPR holds about a 58-day supply. However, the maximum total withdrawal capability from the SPR is only 4.4 million barrels (700,000 m3) per day, making it a 160 + day supply.

Back to Obama

Administration officials have sent mixed signals in the last several days about the possibility of opening the reserve, which is a rare step. Energy Secretary Stephen Chu said on Friday that the administration was monitoring prices, but he seemed reluctant. “We don’t want to be totally reactive so that when the price goes up everybody panics and when it goes back down everybody goes back to sleep,” he said. A few days earlier, Mr. Chu said that the administration was watching closely, but expected oil production that had been lost in Libya because of unrest there would be made up by production elsewhere.

Not question Energy Secretary Chu but who is going to pick up the slack?  OPEC is planning on raising their output by one million barrels a day but that has as much to do with Saudi oilfields coming back online after maintenance than it does about an ability to raise production.  According to Wikileaks and other sources, Saudi Arabia can’t and neither can anyone else.  As Jeff Rubin blogs, only a recession is going to stand in the way of $200/barrel oil and as we found out last time, when oil gets to be higher than $100/barrel, the price is more than global markets can afford and oil dependent economies enter into a recession.  Previous record high prices of $147 per barrel prices brought global economic growth to a halt.  According to Rubin, gas is about to hit six pounds a gallon (£1.32 pounds/liter) and the British government is already considering rationing systems which could be needed by 2020.

This isn’t about rising prices rising because of Libya or Egypt.  If it was that simple, releasing oil from the Strategic Petroleum Reserve would make sense, just as it did after Hurricane Katrina.  The problem is that oil prices were higher than $100 per barrel before the protests started in Egypt.  Global demand was already in excess of a record 87 million barrels per day. It was yet not about potential supply problems from Libya or anywhere else in the Middle East, it is just that the world is running low on oil and we haven’t been able to find the oil stocks to meet demand.

If the President of the United States admitting that the world is running low on oil in a press conference, this would cause a lot of damage to consumer confidence, create even higher price spikes and inspire Tea Party supporters to chant “Drill, Baby Drill” at Sarah Palin campaign stops, and perhaps start the painful transition to the future.  Or you can just pretend it’s a temporary problem and tap the Strategic Petroleum Reserve.  Leadership and getting re-elected are often two qualities that are often in tension with each other.

Closer to home energy independence isn’t an issue, Canada is an oil exporter but we do sell our oil on the open market which means as oil goes to $200/barrel on the open market, we pay $200/barrel oil.  A couple of years ago when we bought the cabin, it was almost $70 to fill the tank on the Honda Accord which had an impact on how we shopped, vacationed, and lived.  It was part of the reason why I drive a 1993 Ford Festiva today.   At one time you have a mini-van or a SUV for long trips, the time might be coming that we have smart car’s for the same reason.

As a province, $200/barrel does wonders for the balance sheet of the Saskatchewan budget.  It makes any finance minister look like a genius.  Look at what Alberta oil revenues did for Stockwell Day (before he put on a wet suit).  It also will generate higher food prices as more and more of the continent’s arable land is converted from wheat and corn we eat and is earmarked for ethanol production.  That’s great if you are an oilman or if you are a grain farmer.  Well actually since 99% of Alberta’s oil reserves are in the oil sands, it’s only great if you are a huge multinational oilman in Fort McMurray.

It’s not so great if you are a consumer, someone in England looking at $2.09/litre for gas or someone that is looking at another summer of skyrocketing food prices here in Canada.  With elections on the horizon in Ontario, Saskatchewan and perhaps across the country, you don’t hear a lot about energy and food prices or creative policy solutions that are going to provide any relief to us in the future with oil or natural gas prices long term.

In fact, Canada doesn’t really have an energy policy at all, unless you consider pump it out as fast as we can as an energy policy and that’s not a sustainable policy.  To break down the problem, I’ll look at it by sector.  Let’s take a look at natural gas first.

According to the BP Statistical Review of World Energy, Canada is the third largest producer of natural gas but ranks only 21st in the amount of proved reserves.  In Alberta, which produces 80% of Canadian gas, the average initial productivity of a gas well has declined by 72% since 1995, meaning we have to drill nearly four wells today to equal one average well in 1995.

As Stats Canada points out, Canada’s between December 2006 and December 2007, gas production is declined 8.7% with the Alberta Energy and Resources Conservation Board feels that we will see a further overall decline in Alberta natural gas production of 35% from 2009 levels by 2019.

Even the industry magazine, Oil Week says Alberta has “squandered” a lot of their natural gas.

It is not commonly known that 80 to 90 per cent of Alberta has had declining natural gas production for a number of years. In the extreme case, northeastern Alberta has seen production drop to 35 per cent of its peak 10 years ago. Even the Alberta Deep Basin, where production grew by over one billion cubic feet (bcf) per day between 2003 and 2007, has struggled to maintain production levels in the last couple of years.

Unfortunately, even the most optimistic predictions of unconventional gas drilling and production cannot mask the terminal decline that is afflicting the Alberta gas industry as a whole.

AJM Petroleum Consultants geologists estimate that raw gas production in Alberta has already dropped from peak by nearly 3 bcf per day, but at 11 bcf per day of sales gas, Alberta is still currently in third place behind Russia and the United States in worldwide daily gas production.
Alberta will not run out of gas anytime soon. But the fact is we have squandered our easily produced, low-cost natural gas resources and have very little to show for it. Without the government ensuring that Alberta is the most attractive place in the world to explore and develop natural gas, the significance of Alberta´s gas industry to the Albertan and North American economy will wane quite rapidly.

Of the major gas producers in the world, only Canada has a lower reserve to production ratio than the US.  In Saskatchewan, SaskEnergy practices a policy of hedging and has done a pretty good job of protecting Saskatchewan consumers from price spikes.  Despite as supplies dwindle the price will keep getting higher and higher.  Because SaskPower uses natural gas for it’s peaking stations, this not only affects us keeping our houses warm in the winter but also just keeping our air conditioning and energy efficient lights on in the summer.

While I enjoy taking a drive out to the Gardiner Dam on a lazy summer afternoon every year, it only generates less than half of what the Queen Elizabeth II peaking station does, which relies on natural gas.  Saskatchewan just opened the Lily Wind Farm near Moosomin which contributes 26.4 MW of energy to our grid and is only one of three wind farms in Saskatchewan (generating about 200 mw) that generates 5% of SaskPower’s needsAccording to SaskPower, they have gotten almost everything they can get from wind general as it can only generate 8% of our province’s electricity needs.  This is a problem because as the province grows, the need keeps increasing and according to SaskPower, they are generating as much power as they can.  Saskatchewan currently consumes 3,600 megawatts on average.  We are going to need to generate another 1,200 to 1,750 megawatts by 2020 because of mixture of growth and the fact that some of our coal fire plants are being decommissioned.

An even more severe problem is our oil supply.  As Ralph Klein loved to point out, Alberta has the second largest supply of oil in the world, right behind Saudi Arabia (or even more than them as you never really can trust their stated oil reserves) with 174 billion barrels of recoverable oil in the oil sands.  Now that part we agree with but comparing it to Saudi light crude oil isn’t a fair comparison.  Oil sands recover is very energy, capital, and time-intensive to produce compared to easier conventional light oil.  As Jeff Rubin wrote in his book, Your World is About to Get Smaller, the fact that we have to go after that hard to get oil proves we are running out of oil.  While the Alberta economy has benefitted from the massive investment of capital and resources to extract oil from the oil sands, there is still not a lot of oil being produced.  Estimates of five million barrels per day by 2025 have been toned down to three and a third, which is still nearly triple current production.  This would take Canada’s total production of oil to 4.1 million barrels of oil a day which would allow us to remain energy sufficient but since oil in Canada is sold at market prices, still pay the same amount as the rest of the world in terms of price and believe me, we will need to purchase a lot of it.

Globally, finding the numbers of how much oil is left is hard to determine.

According to the Oil and Gas Journal (2009), proven reserves of oil worldwide at the end of 2009 amounted to 1,354 billion barrels — a marginally higher volume than estimated a year earlier and the highest level ever attained. Reserves have more than doubled since 1980 and have increased by one-third over the last decade. Half of the increase since 2000 is due to Canadian oil sands reserves; most of the remainder is due to revisions in OPEC countries, particularly in Iran, Venezuela and Qatar. There are continuing question-marks over the estimates for some OPEC countries and their comparability with the figures for other countries. Notwithstanding these uncertainties, OPEC countries account for about 70 per cent of the world total reserves, with Saudi Arabia holding the largest volume.”

At 2009 rates of oil demand (84 mb/d), 1,354 billion barrels is enough for a little over 44 years.

Future World Oil Production

Which means that we will see rising prices from now until the oil runs out… or gets to expensive to go after.  This is what will make it a rough transition for Canadians.

Canadian lifestyle isn’t the most energy efficient.  Canadians are among the highest per capita consumers of energy in the world, exceeding even Americans and most nations that don’t have subsidized energy policies.  We consume about five times the world average and more than 80% of this consumption is fossil fuels.   Why so much?  Part of it is geography based.  It’s cold up here which means that we spend a lot heating our homes in the winter and a lot of energy cooling them down in the summers.  The other geographical feature is we are spread out.  In the last two weeks I did four trips of 827 kms from Saskatoon to Winnipeg and there isn’t a lot between them (no offense to Regina or Brandon).  We have electoral districts the size of some countries that are so vast that candidates need to fly around them to campaign effectively.  With much of our economic power in relatively few cities, we rely on cheap ground or air transportation to move goods throughout the country.  Agriculturally many of our inputs are petroleum based and of course high fuel costs mean higher costs for farmers and producers in terms of machinery and transportation.  With the elimination of the Crow Rate in the 1995, much of Saskatchewan’s train and grain handling infrastructure was eliminated or changed making it even more expensive and fuel intensive to get grain to market and then to bring that grain back to us.  I can give you a hundred other examples but however you look at it, Canada is dependent on cheap energy and we love to exploit it for our own use and to drive our economic growth.

So what happens when oil hits $200/barrel?  While we like to blame the banks for the current economic chaos and they have a lot of explaining to do, it was oil that hit $140/barrel that pushed the world into recession and oil prices are headed on up again.  Even at today’s $118/barrel, that is enough to push us back into a global recession, even if it is not as severe as the previous one.  These recessions may be a way of life.  Oil prices go up, we head into recession which drives demand and oil prices back down.  The cycle continues itself when there is an economic recovery as demand goes up and so does oil prices starting the cycle all over again.

Yet no government at any level seems to have any idea about what to do about this.  Stephane Dion might have been correct with his Green Shift in the long haul but a carbon tax was a hard sell as any tax that encourages changed behaviour is going to be attacked.  We saw this with Jack Layton wanting taxes lifted on home heating fuel.  While we should be encouraging people to shift away from expensive and carbon emitting heating sources, there is a tax on home heating fuel which means that someone is going to rail against it.   Every time gas taxes, opposition parties across the country call for gas taxes to be cut, as if repealing taxes will solve the problem of diminishing oil reserves.

What are the solutions?

For some there is always the assumption that technology will bail us out.  Years ago we heard about Ballard Fuel Cells and how they were going to change anything.  Then they gave up because you can’t make it work at a price point that makes sense.  Then it was electric cars.  In Saskatchewan’s winter, a Chevrolet Volt will only drive about 25 miles before it has to switch to the motor.  There is ethanol which has made a big difference in Brazil with their flex fuels but in North America, the same crops we use for food are being switched to ethanol production.  This lead to some of the large increases in food prices we saw over the last couple of years.  To meet his 2030 targets of 60 billion gallons of ethanol being produced, almost 400% more corn will need to be used which means even more price increases.  For those of you who think that someone should challenge these goals, let me remind that the state of Iowa grows a lot of corn and has this thing called the Iowa caucuses.  Iowa voters love high corn prices and high paying refinery jobs.  My point is that the best technology or common sense doesn’t always win out.

The good news is that north of the border in Saskatchewan, SaskPower seems to be taking some of the steps needed.  Revitalizing and expanding our electrical grids, diversifying into wind, and even offering incentives for people to produce their own power and sell the electricity back to them (an idea that doesn’t make a lot of sense right now because of the time it would take to recover your investment but it’s a step in the right direction).  Saskatoon has made some noise about using the weir to generate a limited about of hydro power as well as building a test wind turbine at the landfill site.  Some municipalities are taking advantage of solar power to keep the lights on in schools and places like Harry Bailey Aquatic Centre.    These make a difference but in the end don’t generate/save enough megawatts to make up for the loss of coal burning plants and increased electrical needs of the province.  While the decision to bring nuclear power to Saskatchewan was controversial and rejected, I can’t help but wonder if 20 years from now when Saskatchewan and much of North America is struggling with an overwhelmed grid, we will regret not forging ahead with clean energy.

With natural gas, SaskEnergy tries to make it as inexpensive as possible to upgrade to a super high efficient furnace.  At the same time I can’t help but get a sick feeling in my stomach every time I hear that an energy company has been acquired whose specialty is extracting hard to get to natural gas deposits.  The viability of these technologies means that we can look forward to more and more price increases in the days ahead.

What do we do about an increase of oil prices.  This is going to impact Saskatchewan in many ways.  Since the elimination of the Crow Rate, Saskatchewan’s rail infrastructure is diminished which is going to cause us grief in the transition into a world of scarcity.  In case you forgot, Warren Buffett just bought Burlington Northern Santa Fe Railway for $34 billion because he sees the importance of rail travel in moving freight to market at a fraction of cost of ground transportation.  There does seem to be some understanding of this on a federal level.  In Saskatoon we are familiar with the Asia-Pacific Gateway and Corridor Initiative as it contributed $20 million to complete Circle Drive  The federal rationale is that these projects will improve access to the Canadian National Railway’s rail yards south of Montgomery in Saskatoon.  The other big project in Saskatchewan is $27 million to the new CPR intermodal facility west
of Regina and upgrading the road connecting highways 1 and 11.  It’s a start in making it easier and cheaper for freight, fuel, and food to move to us and to our export markets.

Locally, it changes the way that tourism happens.  When we go out to the lake, we tend to go out for two three day weekends a month in the summer.  It costs us $30 if I take the Festiva, $70 if we take the van an of course $100 if we are taking about both vehicles.  While we are out there, Wendy will run out of something or make a menu change and Mark and I will drive into Strasbourg for what we need.  Other times we head down to Regina for a Rider game or because I ran out of things to read and we need to visit Chapters.  It often costs us another tank of gas by the time things are all said and done.  That’s fine at $30/tank or $50/tank for the Accord.  It’s not fine when it is $100 tank.  That will change our consumption patterns dramatically.  Instead of 10 quick trips out, we may instead move to three extended trips.  There won’t be any gravel road photography or quick trips into town.

Getting out to enjoy Saskatchewan or see friends may not be as easier or inexpensive as we have grown accustomed to it being.  STC has been an institution in Saskatchewan for decades, even if it isn’t your preferred way to travel.  I’ll be honest, bus travel is not my favourite.  Body odour, drunk passengers, and stopping at every small down between hear and Edmonton has added hours to what should be a pretty quick trip.  Will STC or Greyhound offer a first class bus  between Saskatoon and Regina or between Saskatoon and Calgary that features free wifi, movies, and a steward?  As the economics of travel change, there is going to be new opportunities.  The dream is always going to be high speed rail but as the Acela’s average speed of 120/kph is only slightly higher than that would be of a bus (or my Festiva for that manner) between Saskatoon and Regina.

Oil isn’t just connected to transportation, it’s connected to the food we eat and rising costs of oil lead to higher fuel costs.  Higher costs of fuel mean that input and transportation costs are higher, both from the producer to the mill and from the mill to the store.  Since fuel costs are higher, we have more acreage being dedicated to ethanol production, making food crops even scarcer.  Also you have China buying up vast tracts of land around the world so that their farm workers have jobs and their people have food.  Food grown in Africa and is shipped to China only adds to the world food price pressures and drives up global prices.

Much of what we purchase is not local but is shipped across the country.  The watermelon on the shelf at Safeway or Superstore today was not grown locally, it may not have even been grown on this continent yet at the same we don’t have the infrastructure to eat locally.  While the Saskatoon Farmer’s Market is a great venue and a fun place to spend a Saturday morning, it doesn’t provide the volume, variety or the frequency to make it easy or cost effective to eat local.  Oddly enough Wal-Mart is leading the charge in this area as they foresee a future where fuel costs are going to alter the way we eat.  Who know if Safeway, Supertore, and Sobeys will follow Walmart’s lead or be forced to drastically alter how they get food to our tables.

The Canadian Wheat Board is an export agency but it is going to need to change to allow for more locally grown and produced wheat products or it’s going to have to create a local infrastructure to allow for cheaper food production in local markets.  Years ago some Manitoba farmers wanted to set up a pasta plant and sell it their own wheat.  This is against the law in Canada (which still boggles my mind) as you can only only sell to the Canadian Wheat Board at a price they set so the plant idea died.  In some ways it means that as consumers we are caught in the same cycle with food as we are with eat.  Food shortages in China drive up international prices and we pay more in Saskatchewan for crops that we produce here.

While I don’t think we are going to run out of food, it is going to cost us more and will pay much more for the variety that we want.  This is going to alter the landscape for Saskatoon’s lower class.  The Bridge on 20th does almost 70,000 meals a year, the Salvation Army does 100,000 meals a year, the Saskatoon Food Bank has 15,000 visitors a month or 180,000 a year and while I can’t speak for The Bridge and the Food Bank, the Salvation Army’s increase is partially linked to rising fuel costs.  These are going to be people who are least likely to have a Chevy Volt or a Toyota Prius and don’t have easy access to a neighbourhood grocery store.

The interesting thing is that it may cause a reordering of our civic lives.  High fuel and food prices have hit cities before.  Jeff Rubin looks at Sarajevo during the U.N. sanctions and fighting drove fuel to $6/litre.  To go back even further, England spend years with fuel and food rationing from the start of WWII until 1954.   Even today in some islands in the Caribbean, food and fuel prices are extremely expensive.

What happens?  Cars get parked, bicycles come out an life becomes local again.  Local grocery stores, corner stores, and coffee shops start to become the centre of culture rather than the malls and the big box stores.  Food becomes seasonal again.  We may even start to grow gardens.  The city of Saskatoon is redesigning and rebuilding Mayfair Pool.  Since I moved to Mayfair has been irrelevant because I can go to any pool I want in the city.  Why do I need to go to my local pool when I can drive to Lawson Heights Civic Centre and enjoy the wave pool?  Gas prices or as in England, gas rationing will make us think twice.  In the future local spaces like Mayfair Pool will become important again, as will my local church, my local pub, and my neighbourhood coffee shop, even if it doesn’t sell Starbucks.  The world will get smaller but I don’t know if it is going to be worse.  It’s just going to be different.

The losers in all of this are bedroom communities or exurbs that don’t have a sustainable local economy.  A friend told me that she spends $500/month in gasoline to commute into the city for work.   What happens when that doubles?  You either find work in your community or you do what thousands of others do, you move a lot closer to work.  Some will discover that local economy but other towns will slowly go away.

We are left with two choices as a city.  As Rubin puts it, fundamentally change how we live or get caught in a cycle of recession after recession.  Neither choice is going to be solved by a little more oil being put on the markets by the Strategic Petroleum Reserve, Saudi Arabia, or the Alberta Oil Sands.  It’s too big of a problem.

Tomorrow I’ll spend some more time looking at Saskatoon’s future in terms of peak oil.

U.S. Army deploys psychological operations against U.S. Senators

From Rolling Stone

Congressional delegations – known in military jargon as CODELs – are no strangers to spin. U.S. lawmakers routinely take trips to the frontlines in Iraq and Afghanistan, where they receive carefully orchestrated briefings and visit local markets before posing for souvenir photos in helmets and flak jackets. Informally, the trips are a way for generals to lobby congressmen and provide first-hand updates on the war. But what Caldwell was looking for was more than the usual background briefings on senators. According to Holmes, the general wanted the IO team to provide a "deeper analysis of pressure points we could use to leverage the delegation for more funds." The general’s chief of staff also asked Holmes how Caldwell could secretly manipulate the U.S. lawmakers without their knowledge. "How do we get these guys to give us more people?" he demanded. "What do I have to plant inside their heads?"

According to experts on intelligence policy, asking a psy-ops team to direct its expertise against visiting dignitaries would be like the president asking the CIA to put together background dossiers on congressional opponents. Holmes was even expected to sit in on Caldwell’s meetings with the senators and take notes, without divulging his background. "Putting your propaganda people in a room with senators doesn’t look good," says John Pike, a leading military analyst. "It doesn’t pass the smell test. Any decent propaganda operator would tell you that."

At a minimum, the use of the IO team against U.S. senators was a misuse of vital resources designed to combat the enemy; it cost American taxpayers roughly $6 million to deploy Holmes and his team in Afghanistan for a year. But Caldwell seemed more eager to advance his own career than to defeat the Taliban. "We called it Operation Fourth Star," says Holmes. "Caldwell seemed far more focused on the Americans and the funding stream than he was on the Afghans. We were there to teach and train the Afghans. But for the first four months it was all about the U.S. Later he even started talking about targeting the NATO populations." At one point, according to Holmes, Caldwell wanted to break up the IO team and give each general on his staff their own personal spokesperson with psy-ops training.

I may have an overly elevated view of the intelligence of U.S. Senators but I personally believe that polling numbers at home were far more influential the psy-ops were in the field.  That being said, every general in every battle in every war has wanted more resources, money, and for many, glory so I am not sure this is as much as a story that Rolling Stone is making it up to be.

Talent is Overrated

How do you turn around a team in the hurry?

Washington Redskins' coach Mike ShanahanIf you want to turn a locker room around in a hurry, fill it with a bunch of guys who really need the jobs. Pack it with players who are just happy to have contracts, who don’t think certain work is too menial for them, who have a sense of sweaty desperation. That’s the secret to how the Washington Redskins have been playing. A team that a year ago was overpaid and too precious for its own good is now leading the league in hard-fought victories.

Run your eye down the Redskins’ roster, and notice how many players have recently won starting jobs by doing the dirty work of special teams, running down punts and kickoffs. Anthony Armstrong. Lorenzo Alexander. Chris Wilson. Consider the number of guys who have worked their way up from the practice squad to the active roster. Ryan Torain. Brandon Banks. Keiland Williams. Count the undrafted free agents who have become regular contributors on the field: Seven of them.

See what’s happening?

Each week, the shape of the team the Redskins are building becomes more apparent. Coach Mike Shanahan doesn’t give much away about his philosophy or his methods, but a couple of things are plain. One is his sharp eye for overlooked and undervalued players, whom he seems to prefer over coddled draft choices. Another is his penchant for using special teams to school those players. He’s clearly sifting and grooming a new generation of starters through the utility squads, so if you want to see the Redskins’ stars of the future, watch them closely.

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