The Squeeze – How Energy Costs are hurting us

In 2004, we spent about $312 million on energy on PEI. This included Gas ($150 million), Diesel ($69 Million) Heating Oil (87 Million) and Electricity ($6.6 Million). The Tax estimate for the province for the 2004 year was $524 million.

Energy costs were 60% of the Island Tax base.

In 2008 – We will spend about $570 million on Energy. 109% of the Tax base in 2004 and an 83% increase in total costs for us Islanders. This is now about 91% of the 2008 estimated tax base.

In effect we spend as much now on energy as on income taxes. The estimate of the total amount of Federal Funding for PEI for 2008 is $556 Million. So we pay more in energy than we get from the Feds!

At least with our taxes, most of the money spent remains on PEI. But with our spending on energy most of this money leaves the province. We are being impoverished by this process.

This is why our first step has to be to reduce our individual spending on energy.

Here is the current breakdown of what we have to deal with:

What the figures show me is that the easiest area to work on right now and the best area to reduce the pain in all our pocket books is heating. Heating of our homes and heating of all public buildings. Working here also gives those who are the most vulnerable the most immediate relief.

The average home on PEI uses 3,500 litres of heating oil a year. That is $3,815 a house at current prices.

With work we can hope to reduce this systemically and permantly by abut 40% – That’s $1,526 back in your pocket.

If we could save 40% on all heating oil (include Schools, Manors etc) that would bring $72,000,000 back into circulation and keep this money on PEI. For remember, all but a fraction of our dollars that we spend on heating oil leaves PEI.

In this context then, the money that you and I spend on insulation etc is not like buying a TV. It is like buying a tax free Bond. It is like you buying an RRSP – it pays you back tax free.As oil prices rise, so does your return.

Of course the opposite is true. If we do nothing, we will soon be paying more in energy costs than in taxes. This money will leave the Island and we will be soon unable to pay for what we need to live.

At first many will have to choose between eating, heating and working. Then we will have to cut all spending – our schools are very vulnerable, healthcare, roads – all will have to be cut back.

As I looked at the numbers for even 2008, it is clear to me that even if oil prices stay the same, that we are on the slippery slope. With the reality of Peak Oil – we have to act now.

Heating first for both homes and government itself. Then we have to look at our driving habits.

I will post shortly on how others are making large reductions here.

Then we have to look at alternative sources that we can control on PEI


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