XPost: can.politics, bc.politics, ab.politics   
   XPost: sk.politics, nf.general   
   From: Panca@nyet.ca   
      
   "Please God, let there be another oil boom, I promise not to piss it all away   
   next time”. . . .  Alberta bumper sticker circa late 1980s.   
      
   The latest 'boom' coming to an end?   
   ____________________________________________   
      
   CBC News Posted: Oct 10, 2014   
      
   Oil price at $85 costing provinces and economy billions   
      
   Bad news for oil companies should leave more money in consumers' pockets   
      
      
   The sudden new reality of oil at $85 US a barrel is a jarring wake-up for the   
   three oil-rich provinces of Alberta, Saskatchewan and Newfoundland and   
   Labrador.   
      
   Oil prices touched new lows Friday, down almost $1 to $84.90 a barrel. That's   
   the lowest price seen since April 2013. The price for the main North American   
   oil benchmark, known as West Texas Intermediate, is now down more than 20 per   
   cent from recent highs — which means oil has met the technical definition of   
   a   
   price correction.   
      
   In a report titled 'Life with $85 Oil' BMO economist Robert Kavcic noted those   
   lower prices are costing billions to Canada's three most oil-dependent   
   provinces: Alberta, Saskatchewan and Newfoundland and Labrador.   
      
   In recent budgets, all three provinces made revenue projections based on   
   assumptions that oil prices would be a lot higher than they are.   
      
   Alberta's estimates are based on oil being about $97 a barrel. Saskatchewan   
   assumed just under $100 a barrel. And while Newfoundland and Labrador bases its   
   oil projections on Europe's benchmark, known as Brent Crude, that province was   
   assuming the price would average about $105 a barrel. Brent was going for about   
   $115 per barrel as recently as June. Today, it's at $89.   
      
      
   'Quiet windfall' for consumers   
      
   Drivers may be breathing a sigh of relief at the pumps because of lower crude   
   prices, but that cheaper oil is costing oil companies — and possibly more   
   important, governments — billions.   
      
   Kavcic estimates that at current prices, based on its royalty regime Alberta is   
   missing out on $1.2 billion in revenue. That's about three per cent of the   
   province's entire funds.   
      
   "After a strong start to the year for prices, there’s now downside risk here   
   if   
   prices stay at or below recent levels for the remainder of the fiscal year,"   
   Kavcic said. "Longer-term plans (mostly in the $95 range) would also be at risk   
   if these prices stick."   
      
   If it keeps up, the damage could be significant. "What does all this portend?"   
   CIBC economist Peter Buchanan asked rhetorically Friday, "Much depends on   
   whether prices stay at their beaten-down lows, sag still further or reclaim   
   some of the last two months’ losses."   
      
   Capital Economics economist David Madani estimates the Canadian economy as a   
   whole could lose as much as $11-billion worth of exports this year — as much   
   0.6 per cent of GDP — because of lower oil prices.   
      
   His outlook is not as bleak as Kavcic's, however, in that he thinks oil would   
   have to drop a lot further still before expansion plans in the Athabasca   
   oilsands would halt.   
      
   "Canadian price per barrel remains at levels above ... cost, which we figure is   
   between $60 and $80 per barrel," he said. "We suspect that world oil prices   
   would have to fall below $70 per barrel before seriously endangering future   
   production prospects."   
      
      
   Loonie cushions price drop   
      
   Much of the drop in prices, however, is being cushioned by a corresponding drop   
   in the value of the loonie. Oil is priced on the U.S. dollar, which has been on   
   a tear of late compared to the loonie. So cratering crude values aren't hurting   
   Canada as much as they could be, because oil companies are taking in more   
   loonies for every U.S. dollar they get for selling oil.   
      
   There's also another economic upside to lower oil prices, in that cheaper   
   energy generally means lower transportation costs for all other industries, and   
   more money in Canadians' pockets to spend on other goods, which grows the   
   economy elsewhere.   
      
        'It’s a quiet windfall for global consumers'— BMO economist Doug   
   Porter   
      
   The parts of the country that import oil (namely Ontario and Quebec) are likely   
   to see a benefit from cheaper crude, Buchanan said. That alone could be enough   
   to make the current weakness in oil a wash, from the perspective of the   
   national economy. "The regional implications of oil price changes for that   
   reason have typically overshadowed the national ones," Buchanan noted.   
      
   Other countries are also likely to benefit from cheaper oil, and that's good   
   news for Canadian companies that sell to them.   
      
   "While lower oil prices is bad for Canada, the benefit to other net importing   
   nations may boost economic growth, promoting non-oil exports to Canada," Madani   
   said. "This would help cushion the blow to Canada's economy."   
      
   As Kavcic's colleague Doug Porter put it:  "While this is bad news indeed for   
   the hottest regions of North America it’s a quiet windfall for global   
   consumers."   
      
   "The drop in energy prices acts as a tax cut for consumers by giving a small   
   bump to real disposable income."   
   _______________________   
      
   ANALYSIS: Why Canada just pumps out cheap oil​   
        FROM 2012: Oil price gap costing Canada billions   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)