These are stories Report on Business is following Thursday, Sept. 6, 2012.
Fracking caused B.C. quakes: report
The controversial drilling practice known as fracking has caused scores of low-level earthquakes in British Columbia's Horn River Basin, the region rich in shale gas, a new report finds.
These caused no damage or injuries, and only one was felt on the surface near pre-existing faults. Still, a recent probe into the quakes could well provide ammunition to those opposed to this method of drilling for natural gas.
Fracking, also known in the industry as fracing, is hydraulic fracturing, using water, sand and chemicals or gases to burst underground rock formations, pushing natural gas to the surface. The practice has been a boon to the energy sector.
It is highly controversial, and was linked to two minor earthquakes in Britain last year.
Now, a report released recently by the B.C. Oil and Gas Commission sheds light on the huge shale gas deposits in northeastern B.C. Quakes recorded by Natural Resources Canada ranged from 2.2 to 3.8 on the Richter scale, below the 4 mark and thus deemed minor.
"The investigation has concluded that the events observed within remote and isolated areas of the Horn River Basin between 2009 and 2011 were caused by fluid injection during hydraulic fracturing in proximity to pre-existing faults," the commission said in its report.
It began its probe after learning of several "low level seismic events" recorded by Natural Resources Canada near the development areas.
"In undertaking the investigation, the commission notes that more than 8,000 high-volume hydraulic fracturing completions have been performed in northeast British Columbia with no associated anomalous seismicity," it said. "None of the NRCan reported events caused any injury, property damage or posed any risk to public safety or the environment."
No such activity was recorded in the region before 2009, the report noted.
The commission makes several recommendations, among them reviewing data to identify pre-existing falls.
The Canadian Association of Petroleum Producers said in a statement that it supported the investigation and is working on new guidelines.
"Seismicity associated with industrial activities is of concern to the public," CAPP president Dave Collyer said.
"Natural gas companies played a key role in providing the OGC with data to complete this study, we fully support its conclusions and we are in the process of finalizing operator guidelines and increasing financial support for more seismic monitoring in the region," he said in a statement.
"Continuing our record of no harm to people or structures is paramount, as is supporting geoscience that can assure landowners and the public hydraulic fracturing can and will continue safely."
Europe to sink deeper
Europe's prospects are growing ever worse.
The European Central Bank today slashed its projections for the 17-member euro zone, forecasting that the economy will contract by between 0.2 per cent and 0.6 per cent this year. Next year appears highly uncertain, with projections that range between a contraction of 0.4 per cent and growth of 1.4 per cent.
At the same time, the central bank is calling for higher-than-expected inflation, of between 2.4 per cent and 2.6 per cent this year, and 1.3 per cent and 2.5 per cent next.
Still, the ECB held its benchmark rate steady at 0.75 per cent, though chief Mario Draghi did unveil plans to held ease the crisis via bond purchases, which it calls Outright Monetary Transactions or OMTs, with conditions attached.
The idea is to ease borrowing costs by helping to push down bond yields of troubled countries like Spain and Italy.
"As we said a month ago, we need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area," Mr. Draghi told reporters in Frankfurt.
"We aim to preserve the singleness of our monetary policy and to ensure the proper transmission of our policy stance to the real economy throughout the area. OMTs will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," he said after announcing the rate decision.
"Hence, under appropriate conditions, we will have a fully effective backstop to avoid destructive scenarios with potentially severe challenges for price stability in the euro area. Let me repeat what I said last month: we act strictly within our mandate to maintain price stability over the medium term; we act independently in determining monetary policy; and the euro is irreversible."
Mr. Draghi said there was "one dissenting view" in the vote, from Germany's Bundesbank. The purchases will be of government bonds with maturities of between one and three years.
"Clearly it’s going to be a struggle for the euro area to get back to even 1 per cent growth given the austerity measures that are going to weigh over the next few years," said Benjamin Reitzes of BMO Nesbitt Burns. "Indeed, risks to the outlook are on the downside even after the negative revisions."
- Follow our Market Blog
- ECB moves to ease euro zone crisis
- Bank of England leaves policy on hold
- Swedish central bank cuts key interest rate to 1.25%
Toronto housing market slips
The Toronto Real Estate Board says the federal government's new mortgage rules likely helped drive down housing sales in the city last month.
Sales fell almost 12.5 per cent to 6,418 in August from a year earlier, the group said today, while new listings slipped 5.5 per cent.
Average prices still climbed almost 6.5 per cent, The Globe and Mail's Tara Perkins reports.
"Stricter mortgage lending guidelines, which came into effect in July, arguably played a role," said the group's president, Ann Hannah.
"In the City of Toronto, the additional impact of relatively higher home prices coupled with the upfront cost associated with the city’s land transfer tax led to a stronger annual decline in sales compared to the rest of the [Greater Toronto Area]."
There have been particular concerns about the housing markets in Toronto and Vancouver, where sales have also slowed.
Separately today, a report by Toronto-Dominion Bank projects that the mortgage insurance rule changes that took effect July 9 will shave three percentage points off home prices and five percentage points off sales.
- Toronto existing home sales fall 12.5% in August
- Prices remain high as Vancouver home sales slow
- Tighter mortgage rules will cool housing market: TD
- 'Housing bubble is not yet under control,' SocGen warns Canada
A new survey highlights the struggle to retire comfortably in the post-crisis era.
Almost three-quarters of the people surveyed in the Canadian Payroll Association study say they have so far socked away less than 25 per cent of their retirement savings target. And half of the 2,070 employees polled are saving only up to 5 per cent of their net take-home pay, well below what the organization is the 10 per cent needed.
"This is particularly troubling when you realize that 71 per cent of the respondents are over the age of 35, with the bulk in their main savings years between 35 and 54," said CPA chair Dianne Winsor.
The survey points to just how much trouble Canadians face in saving for a decent retirement, at the same time as they are trying to cut their debt burdens after a tremendous run-up.
And one need only look at the tensions between the Canadian Auto Workers union and the Detroit Three auto makers in the current round of bargaining for a sense of how companies are holding the line in an uncertain economy.
Sixty per cent of those surveyed by the CPA say they're trying to do better in terms of saving, but more than half of those have failed. And 40 per cent aren't even trying.
There's an East-West divide here, too, the organization noted, as employees in the western and prairie provinces do better.
About two-thirds of those polled believe they will need more than $750,000 to retire comfortably.
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- Almost one in four Greeks without work