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How Does Low Oil Prices Affect Canada's Economy

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Low oil prices are threatening the health of Canada's oil and gas sector, which is causing trouble in Canada's economy. The low oil prices are forcing billions of dollars in reduced spending for Canada's oil and gas industry. February 2015, Royal Dutch Shell (RDSA) moved away from plans for a project in Alberta that would have produced 200,000 barrels per day. In 2014, Petronas stopped plans to build a massive LNG export terminal on Canada's west coast. In fact, just a few of the 18 proposed LNG projects in Canada will be constructed. It is expected that in 2015, 37% ($43 billion) of revenue will be lost in the oil industry, extremely bad news for Canada's oil and gas. Canada's overdependence on oil and gas will threaten its broader economy …show more content…

Canada's GDP plummeted in January 2015, its economy appears to be shrinking by 1% annually. "Overall, unless oil prices rebound soon, the economy is likely to struggle much longer than the consensus view implies, even as the improving US economy supports stronger non-energy exports," Capital Economics concluded. (Cunningham, N., 2015)
Experts also worry that the collapse in oil prices will lead to less drilling, declining demand for supporting services, falling housing prices, a sinking stock market, and weakness in other sectors like construction and engineering. (Cunningham, N., …show more content…

Breakeven price for tar sands is between $90 and $100 per barrel, while steam-assisted extraction is between $60 and $80 per barrel. What has created an even worse problem is Canada's heavy oil trades at a discount to WTI (West Texas Intermediate, also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing), which is nearly $12 per barrel lower right now. A large reason for that discount is because of inadequate pipeline capacity that is trapping some tar sands in Canada. The main pipeline in Canada (Keystone XL) has been stalled and is currently the most controversial pipeline in Canada, but it is not the only pipeline that has been blocked. It has been stated that the inability to build enough energy infrastructure, plus Canada's near total dependence on the U.S. market, puts Canada's economy at future risk. (Cunningham, N., 2015) A survey done by The Bank of Canada asked top executives at 100 of Canada’s largest businesses, they found that two-thirds think it is critical to diversify the economy away from oil. Canada’s large dependence on commodities, along with the oil problem has force layoffs and has greatly increased unemployment in Canada. Hiring is at its lowest level since 2009, creating very low consumer confidence. Unfortunately, diversification can only be achieved over the longer-run, in the short-run Canada's economic fate will still be tied

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The Keystone Pipeline is a series of metal pipes that run from Alberta Canada to Patoka, Illinois and Port Arthur, Texas. The pipes pass through North Dakota, South Dakota, Nebraska, Kansas, Missouri, and Oklahoma. The current Keystone Pipeline transports approximately 700,000 barrels of oil a day from Canada to Texas. (n.d.) The Keystone XL Pipeline is a proposed 1,700 mile expansion to the current pipeline, which would branch west, impacting an additional state, Montana, and end in Cushing Oklahoma.

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Controversy Surrounding the Keystone XL Pipeline To build or not to build, this choice will impact the relationship between the US and Canada and determine the level of dependence the US will have on countries that are not so friendly. “TransCanada’s proposed Keystone XL Pipeline would transport oil sands crude from Canada and shale oil produced in North Dakota and Montana to a market hub in Nebraska for delivery to Gulf Coast refineries. The pipeline would consist of 875 miles of 36-inch pipe with the capacity to transport 830,000 barrels per day” (Parfomak, Pirog, Luther and Vann 4). The construction of the Keystone XL Pipeline would strengthen the United States economy, provide energy security and have minimal environmental impact. “The Keystone XL project would create $1.1 trillion in private capital investment at no

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Another misconception is that all of the oil the United States produces, now and in the future, is mostly exported. The truth is, “The United States consumes the vast majority of its refined products The claim that ‘much of this oil is for export’ is actually contrary to the facts, market analysis and what actual refiners and customers of Keystone XL have said. The fact is the U.S. consumes the vast majority of all the refined products it produces. In 2012, only about 9% of U.S. refined on-road motor fuel was exported – the other 91 per cent was consumed in the United States first.”

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The Economic insights into Seven Canadian Mid-sized Cities and the Lethbridge Herald that summarizes the report are all referring to a boom and bust cycle and how different sectors are impacted by it. The main bust (recession) referenced in this article would be the decline in oil prices as it has affected Albertans significantly. Intensive agriculture, “high inputs of labour, capital, fertilizer and seed per unit of land”, saved Lethbridge from feeling the recession to the same extent as Red Deer for example making it a unique Alberta city (Hayter & Patchell, Economic Geography, p. 216). This essay will look at the trends of three mid-sized cities, Lethbridge, Red Deer and Medicine Hat, in comparison to both Canada and Alberta and see the

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Analyzed Husky Energy financial position and performance using its financial statements for a 10 period and benchmarked Husky Energy to the top 5 oil production companies in Canada, while comparing them to the entire Industry averages. We also researched Husky Energy new ventures and whether the current drop in oil price has increased or decreased oil production. And we concluded by evaluating how the innovative technology of the automobile industry may cause future decline in fuel and diesel consumption.

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The uncertainty of whether or not the oil can assuredly reach refineries discourages future investment in tar sands (“Room for

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In addition, one of the major current problems that Gordon Ritchie, the former Canadian ambassador for trade negotiations, pointed out in his discussion on “Sunday Edition” is that Canada heavily depends on trade with the US. Over the past decade, most of the Canadian policies were short-sighted, meaning that Canada was more focused on improving trade relations with the US than with the rest of the world. As there is a pretty high chance that the NAFTA will be dissolved in the near future, the trade barriers will go up between these two countries and it will result in firms panicking in the short run2. They will start to contract their production, and they will start laying off staff, as a necessary procedure to decrease their cost. This will affect all of the industries across the country, including the lumber industry (even though NAFTA doesn’t include barriers reduction of the lumber industry, but as all industry contracts, it will inevitably negatively impact the lumber

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But now countries, private companies are extracting it so much that it will run out, and people will not have any means of work in order to feed their families. As the movie displayed, it shows that Chain increased their oil import by twenty-five percent, and they are number two in oil import. With the high demand of oil, it is said in the documentary that countries might get into a great recession once again. In other to prevent these kinds of problems, such as, lack of unemployment, and recession from occurring in countries with natural resources, they need to invest in alternate resources for the future generation of their

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In this day in age we rely on many of earth's natural resources to survive, with that being said our high demand of oil needs to be set in place. The rest of the world needs it, as well as Canada. So we should not let this opportunity go to waste. Here is a stat that shows Canada’s revenues that will be received from the pipeline. ” The authors of that report calculated that the project would result in “$18.5 billion in revenues for federal and provincial governments over the first 20 years of operations,” or $925 million annually, split primarily between Ottawa, Alberta, and BC.”

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Oil is an extremely valuable resource, and oil mining and sales has an irreplaceable benefit in the Canadian

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Therefore, Canada’s approach to these issues is always changing and people must be thinking on their feet, such as approaching climate change, and making sure there enough water and energy for everyone. When new things are developed, it changes the environment then in 10 years, there will be new problems and the cycle will continue, requiring us to come up with new ideas. Canada’s approach to environmental issues has changed over the years, because of constant growing population, new technologies always being developed, and ever changing social views and issues in our world. Canada population has grown by millions since the

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Canada is a country with vast amounts of natural resources. The

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INTRODUCTION On November 29,2016, the Government of Canada grated approval for the Trans Mountain Pipeline expansion project. The project allows for the expansion of 987 km of pipeline to the existing pipeline between Strathcona Country, Alberta and Burnaby, BC. The Trans Mountain Pipeline expansion project has been developed in response to requests from Western Canadian oil producers and West Coast refiners for increasing pipeline capacity in support of increasing oil production and gaining access to the growing West Coast markets. The expansion will create a twinned pipeline, which will increase the capacity of the system from 300,000 barrels per day to 890,00 barrels per day.

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However, in 2008, Newfoundland and Labrador stopped receiving equalization payments from the federal government, making it a "have" province for the first time in 60 years. This was due to the boom of the oil industry, as other natural resources have declined over time. Like most every region this province was affected negatively by the global economic crisis. Part of the population still travel to other areas for work; for example to the oil sands in Alberta where labour is needed. The top industries of Newfoundland and Labrador are focused in the service industry: Some examples are financial services, healthcare, and banking.

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The consequences now is that Canada has 97 lakes, three oceans, and 62 rivers protected in comparison to the 32,000 lakes, and 2.25 million rivers before the bill was passed (Graveline, 2012: 295). This means that Canadian waters are not environmentally protected are therefore easily accessible to companies and the industry as a whole. With the history of oil spills, which is the industry that Bill C-45 is benefiting, the people nearest those population will feel the impacts of this bill the most. The most recent oil spill happened on April, 2011 documented to be the largest land spill in Alberta known as the Little Buffalo oil spill which affected Lubicon Cree community the most (Graveline, 2012:

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