The most obvious is in the outsized importance of the Prairie province to Canada’s GDP and internal trade numbers during the boom years, and the gap it now leaves. But there are several ways the Alberta downturn could be transferred to other parts of the country. “If you’re coming from outside the country,” he says, “you’re likely to stay longer and spend more.” And when it comes to attracting Americans, the low price of gas helps. “I never thought everyone was going to move downtown,” he says. Reproduced with permission. “Drill, baby, drill!” the multitudes roared back. The S&P/TSX Index is actually down nearly seven per cent from where it was five years ago, while during that time the U.S. S&P 500 is … Yet cheap oil offers a huge upside for consumers, and there remain plenty of optimists who believe that low oil and the beaten-down loonie—which dipped below US70 cents for the first time since 2003 this week—will not only provide a buffer against events unfolding in Alberta, but lead Canada’s manufacturing and non-energy export sector to new heights. “First and foremost, we are focused on dealing with assuring people that we have our health system strong,” he said. Tighter credit would hamper an already weak job market across the country. The oil crash is taking a heavy toll on Alberta and the worst is yet to come . 2014 oil price crash to blame for Canada’s slow wage growth: Bank of Canada official Posted on 02/01/2019 A top Bank of Canada official says the lingering effects of the 2014 oil-price crash should take some of the blame for the country’s disappointing wage gains – … Saudi Arabia appears committed to pumping out crude as a way to recover market share lost to non-OPEC countries like Canada, the U.S. and Russia. “It just took longer to happen than you might have expected. Experts explain. Oil prices have fallen by half since late June. According to Doug Porter, chief economist at Bank of Montreal, roughly 20 per cent of Canada’s manufacturing sector is tied to oil and gas. Canada’s economy suffered even worse than previously reported from the massive decline in oil prices that began in 2014. Meanwhile Alberta’s opposition leader Rachel Notley has called on Kenney to withdraw his budget and submit a new one that recognizes the impact of free-falling oil prices on revenues. READ MORE: Plunging oil prices amid coronavirus fears slam Wall Street, TSX, Both Brent crude, the global oil-price benchmark, briefly dropped to around US$31 a barrel, while U.S. West Texas Intermediate (WTI) crude, the North American benchmark, went as low as $27 a barrel. Google+. March 11, 2020. True to Canadian form, the winners haven’t done a lot of crowing—afraid, no doubt, that the good times can’t last. This week analysts at Morgan Stanley made the case for US$20 oil based on the strengthening value of the U.S. dollar, which tends to push commodity prices lower. The price of a barrel of West Texas Intermediate crude, the benchmark measure for U.S. oil, fell more than 15 per cent last week, briefly dipping below US$30 on Tuesday, a 12-year low. “With supply ramping up at the same time as coronavirus-related demand losses reach their maximum, the short-term floor to oil prices is extremely weak,” Standard Chartered said. First, it was COVID-19. Furniture makers are shipping as much as they can south, with Winnipeg-based Palliser Furniture recently announcing it plans to open up a massive new showroom in Las Vegas for American retailers. Now China’s era of miracle growth is behind it, the country is teetering under a mountain of debt and there are outright fears of a downturn. It certainly hasn’t been that long since the world was hailing Canada for its resilience during the Great Recession. December 3, 2014. Related: US Oil Turns Its Back On The Permian As Prices Crash. Porter says thanks to this, coupled with the volatility of the loonie, business and consumer confidence have suffered beyond Alberta’s borders. That’s an important gain, says Rob Taylor, vice-president of public affairs at the Tourism Industry Association of Canada, because, plainly put, foreign tourists are worth more. The Suncor tar sands processing plant near the Athabasca River at their mining operations near Fort McMurray, Alberta, September 17, 2014. So when party stalwart Michael Steele took the stage for his keynote address, he preached the bumper-sticker gospel of energy independence. The great oil bust of 2014 is something to behold. Nowhere is this more true than Alberta, of course—ground zero of the oil crash in Canada. After years of ignoring the U.S. tourism market, Ottawa is partnering this year with Canada’s tourism industry on a $67.5-million shared-cost marketing campaign in the U.S. aimed at drawing 400,000 more visitors over the next four years. A sharp rebound in oil would bring with it a higher loonie, delivering yet another one-two punch to the nascent recovery in manufacturing and non-energy exports. Foreign investment firms rushed to open shop. COVID cases in Canada tracker: how many new cases of COVID-19 today? READ MORE: Alberta premier says coronavirus outbreak may affect balanced budget plan. Canada’s dreams of being an energy superpower have been foiled, for now. Historic Price Crash Plunges Canadian Oil Patch Into Crisis By . That is having a knock-on effect across the province in real estate, auto sales and other business activity. Oil crash carnage is the big question in Bank of Canada's decision today Back to video The bank will keep the overnight lending rate at 1 per cent in a decision to be released at 10 a.m. today in Ottawa, according to all 26 economists surveyed by Bloomberg News. “What is good for Canada is that the oil sands have a very steady production,” Santos said. The challenge, says Taylor, is to seize the momentum. Last week Bank of Canada governor Stephen Poloz reminded the country of the hit we’re collectively taking: the drop in oil has delivered a $50-billion cut to Canada’s national income, equal to $1,500 per year for each man, woman and child. For now, the impact on oil production in Alberta’s oil patch looks likely to be more contained than in the U.S. shale-oil fields, which account for 80 per cent of U.S. output growth, said Rene Santos, manager of North America supply analytics at S&P Global Platts. The initiative typifies a growing belief that, while a low dollar will indeed revive moribund industries, the country’s long-term future lies in selling services to people in other countries. In December a report from the International Monetary Fund argued new oil flowing from Iran could push prices even lower. John Benoit - February 1, 2019. More Canadians are vacationing in their own country, while Brits, Germans, Chinese and Americans are showing up in larger numbers. For existing projects in the oil sands, current production levels should continue for the most part, barring a further, steep drop in prices, Santos said. One by one, those beliefs and assumptions that affirmed our sense of economic exceptionalism have begun to unravel, and have been replaced by anxiety about where our growth will come from. At the same time, the fracking industry grows more efficient by the year. Meanwhile, the global energy puzzle is missing one large piece that existed when oil was last at these low levels: an emerging China that had an insatiable appetite for crude and other commodities and a willingness to acquire them at any price. Just after 01:00 local time on Saturday morning, an unattended runaway train carrying 7.7m litres of petroleum crude oil barrelled into Lac-Megantic … Back then, Porter recalled, “we certainly saw the Alberta economy suffering a huge way.” But, he added, “I must say this one is quite abrupt.”, READ MORE: Wall Street, TSX pause trading as stocks plunge amid oil market chaos, The last time oil prices dived that low was the oil price crash of 2014-2015. Back then, Porter recalled, “we certainly saw the Alberta economy suffering a huge way.”, “It’s bad news for the Alberta economy on the whole,” said Nick Falvo, a research associate at Carleton University. While the latest labour report from Statistics Canada for December beat expectations—close to 23,000 new positions were added—those gains were overwhelmingly in part-time or self-employed positions, and they went almost entirely to those aged 55 and older, bypassing the key 25 to 54 demographic. READ MORE: By Jason Kirby, Aaron Hutchins and Charlie Gillis Author of the article: Bloomberg News. Still, the worry persists that heavily indebted energy companies may struggle to repay their loans. Oil markets tumbled Monday in their biggest one-day drop since the Gulf War of 1991, as Saudi Arabia and Russia vowed to ramp up oil production after failing to reach an agreement to curtail supply in order to prop up prices. But the sinking loonie and low fuel prices have other upsides. The … It's not exactly a happy anniversary for Albertans, but it was a year ago this week that the slide in oil prices began. It indicates the ability to send an email. In the first three months of 2015, right in the depths of the oil crash, 9,000 people moved to Alberta, 8,000 from other parts of Canada. Now economists expect Ottawa to step in with fiscal measures. Picture taken September 17, 2014. “They’re playing a game of chicken over who can stand lower prices the longest before a producer pulls out.”. December 19, 2014. Exports to the United Kingdom and China both rose, by 36.2 per cent and 19.7 per cent respectively, and if you subtract energy products, the country’s export economy had expanded by at least 13 per cent. While the shock was at first expected to be focused mostly on energy-producing provinces like Saskatchewan, Newfoundland and Labrador and the economic driving force of Alberta, there are now very real signs the pain is spreading to other regions. Oil-price drops are more likely to affect new energy projects that are nearing completion. READ MORE: Morneau insists economy can handle coronavirus as economist urges fiscal caution. One thing that’s likely holding down employment across the country is the exodus of workers from Alberta, which the Bank of Canada noted in its business outlook survey is under way. On March 4, the Bank of Canada cut its trend-setting interest rate by half a percentage point to 1.25 per cent in an effort to soften the economic impact of the outbreak. As the different factions of Canada’s economy struggle to adjust to the oil crash, the mystery remains: where will prices be next year, let alone five or 10 years from now? The shares of Canada’s big banks are certainly feeling the hurt, as investors try to determine their full exposure to the oil patch. A growing number of grim forecasts are calling for even that demolished price to fall further. Twitter. This time, however, Canada is also coping with the economic implication of COVID-19, which had already put pressure on global oil prices amid factory shutdowns and reduced travel worldwide. More to the point, Canada’s export economy was driven during that period by services provided abroad, from management consultation to technological advice. But keeping it fuelled up was costing about $360 a month, she says, while weekend ski trips in the family’s Hyundai SUV began to feel like an unsustainable luxury. READ MORE: 3 new presumptive cases of COVID-19 in Alberta bring total to 7. But there’s nevertheless reason to be hopeful a rebalanced economy will power ahead. The financial market rout has pushed borrowing costs to record lows for a number of governments, including Canada and the U.S., as investors in search of safer assets buy up government bonds. Kenney acknowledges coronavirus could jeopardize Alberta’s balanced-budget plans. The 2014-16 collapse in oil prices was driven by a growing supply glut, but failed to deliver the boost to global growth that many had expected. By. Even if prices do recover somewhat, there are factors working against oil returning to those levels any time soon. “That makes the downturn all the greater.”. Canada train crash company shut down Montreal, Maine and Atlantic Railway loses licence after oil tanker disaster that killed 47 in Lac-Mégantic, Quebec Published: 13 Aug 2013 It may not be the right time to be coming to Alberta, but it is not surprising to Robert Kavcic, a senior economist at BMO Capital Markets. announced its “bold” expansion here, joining a slew of American retailers hoping to capitalize on the relentless Canadian consumer. “We see a two-track economy,” he said. WhatsApp. The result is the worst pricing environment in the Canadian oil industry’s history and a disaster for a sector that accounts for about a 10th of the nation’s economy and a fifth of its exports. Property prices have held steady, despite predictions that long commutes and pricey fuel would result in empty stretches of track housing along the edges of Canadian cities. Up until 2014, the dominant factor on the price of oil was from the demand side—from "China and other emerging economies". ", Stocks fall, oil drops: big problems for Alberta’s bottom line, Stocks fall, oil drops: big problems for Alberta’s bottom line – Mar 9, 2020, Coronavirus outbreak: Government will help workers with no sick leaves, Freeland says, Coronavirus outbreak: Government will help workers with no sick leaves, Freeland says – Mar 9, 2020, U.S. consumer prices surged 4.2% in April as inflation worries escalate, Paper Excellence signs deal to buy Montreal’s Domtar for US$3B, Canada could see 50% cut in fuel capacity if Line 5 pipeline shut down: experts, Trudeau says family, friend BBQs can happen this summer — with a caveat, Ontario pausing use of AstraZeneca COVID-19 vaccine due to safety, supply concerns. The last time oil prices dived that low was the oil price crash of 2014-2015. Lower interest rates mean cheaper borrowing, while a weak loonie helps boost exports. One local maker of factory machines, CenterLine Ltd., has seen sales double since the loonie went into decline and expects 25 per cent more growth in 2016. By 2014, that figure had jumped to 30 per cent.”. business offers reward for stolen iguana decoration, Trina Hunt’s family speaks out following the identification of her body, Canada’s worst outbreak at Alberta oil sands site still getting worse, COVID-19 restrictions must remain in place until cases go ‘way down’: PM, Plunging oil prices amid coronavirus fears slam Wall Street, TSX, Wall Street, TSX pause trading as stocks plunge amid oil market chaos, 3 new presumptive cases of COVID-19 in Alberta bring total to 7, Alberta premier says coronavirus outbreak may affect balanced budget plan, Morneau insists economy can handle coronavirus as economist urges fiscal caution. “I’d wonder how much I could possibly do this,” Julie Vitro, who commutes 60 km each way from her home in suburban Woodbridge, Ont., to her teaching job in southwest Toronto. Matt Jeacock/Getty Images. The collapse in oil and other commodities has also weighed heavily on Canada’s stock market, which has fallen 20 per cent since mid-2014. To that end, bank CEOs used a financial services conference this week to assure investors the contagion will be limited, and that they have a firm handle on the credit quality of their loans to the energy sector. Of the previous four times that occurred, three came during recessions while the fourth was in 1995 as Ottawa cut government jobs to balance the federal budget. The average Canadian household spent $325 more on food in 2015 than the year before, according to research from the University of Guelph Food Institute, and that’s expected to rise another $345 in 2016. Kevin Orland. In his own afternoon press conference, Kenney told reporters the challenge to Alberta and Canada “could not be more serious.”, “We are in uncharted territory,” he said, noting that Alberta is “resilient.”, “We’ve gotten through bigger challenges in the past and we’ll get through this one together.”. In the Permian Basin in Texas, that’s $10 to $20, and in the Persian Gulf it’s even lower,” he says. Facebook. “The Kenney government should be thinking carefully about the advantages of investing in the public sector and the drawbacks of cutting in that sector,” he said. Still, Ottawa should avoid getting locked into permanently higher spending levels, Porter warned. Over the following decade, Canada tumbled from the eighth-most-visited country in the world to No. As bad as Alberta’s woes have been, non-energy regions have taken some slight measure of comfort in the belief—repeated by politicians, economists and bankers—that the pain would be contained to the Prairies. Border crossings like B.C.’s Peace Arch crossing and Niagara Falls, Ont., saw big bumps last year in incoming traffic. For example, the surge in the dollar in the second half of 2014 caused a sharp fall in leading commodity indexes. March 11, 2020. The S&P/TSX Index is actually down nearly seven per cent from where it was five years ago, while during that time the U.S. S&P 500 is up more than 50 per cent. In the event, the benefits of substantially lower oil prices were muted by the low responsiveness of economic activity in key oil-importing emerging markets, the effects on U.S. activity of a sharp contraction in energy investment and an abrupt slowdown in key oil … Five years ago this week, Target (remember them?) Last year, self-employment accounted for more new jobs than the private and public sectors combined. — With files by Global News staff, The Canadian Press, What the oil plunge means for Canada and Alberta. Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. On Monday, Standard Chartered, a British financial service, cut its average 2020 Brent forecast to $35 per barrel from $64, and its average 2021 Brent forecast to $44 per barrel from $67. Others have been even more pessimistic for longer, and their forecasts, once mocked, have taken on new gravity. Alberta’s recent spring budget had forecast West Texas Intermediate will average $58 a barrel in the coming year. Falvo said this should be a wake-up call for Alberta to move away from being reliant on oil revenues. Even as the dollar crashed this week, central Canada was riding a year-long surge of international demand for the products that once defined its industrial heartland: consumer goods, electronics, cars and automobile parts. “Not everybody wants to live in a condo.” If anything, Somerville notes, new suburbs have started incorporating features of urban culture that suburbanites now want, such as pedestrian-friendly neighbourhoods and commercial strips. And you can kiss any pipeline dreams goodbye. Oil storm clouds image via shutterstock. 17, while our annual take from international tourists fell nearly 13 per cent. That’s because the province doesn’t have many new projects slated to come online in the near term. (Larry MacDougal/Canadian Press) It's not exactly a happy anniversary for Albertans, but it was a year ago this week that the slide in oil prices began. Public sectors combined recent spring budget had forecast West Texas Intermediate will average 58... 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