Canada column for
Sunday, Dec. 9/18
THE CANADIAN REPORT
(c) By Jim Fox
Turmoil in Western
Canada’s oil patch hit by low prices is reverberating across the country’s
economy.
Stephen Poloz, Bank
of Canada governor, made the comment as the central bank held steady on its
trendsetting interest rate upon which banks set their prime lending rates.
Even so, Poloz said
he expects interest rate increases will be coming “over time.”
The stronger
economy allowed the bank to slowly raise rates but the future will hold more
gradual increases due to economic developments.
Leaving the bank rate
unchanged at 1.75 percent “remains appropriate for the time being,” Poloz said,
but the rate should rise in time to 2.5 to 3.5 percent.
Key factors are the
steep slide in Canadian oil prices due to “geopolitical developments,” uncertainty
about global growth, expansion of U.S. shale oil production and a decline in
business investment.
“It is already
clear that a painful adjustment is developing for Western Canada and there will
be a meaningful impact on the Canadian macro economy,” Poloz said.
---
The Alberta
government is ordering an 8.7 percent cut – or 325,000 barrels – a day in oil
production to stabilize prices.
Premier Rachel
Notley said the cut will begin next month to help deal with a backlog of 35 million
barrels of oil awaiting shipping.
“We are essentially
giving away our oil for free,” she said, noting it is costing Canada $80
million a day in lost revenues.
Western Canada
Select crude sells for about $15 a barrel while the North American benchmark,
West Texas Intermediate, is $52.
Alberta’s move is
expected to narrow the price gap and raise $1.1 billion for the government in
the next fiscal year.
---
News in brief:
- The checks and
Christmas parcels might be in the mail, but many aren’t going anywhere. Canada
Post has taken back its holiday delivery guarantee as five weeks of rotating
strikes, now ended by the government, have caused a significant backlog. Spokesman
Jon Hamilton said the backlog is triple that of a normal holiday season and “more
than we’re able to get out the door.”
- Montreal-based Bombardier
forecasts a revenue boost of 10 percent next year after restructuring plans to lay
off 5,000 workers. Total forecasted revenues are $18 billion U.S. as its
longest-range business jet enters service. The company has reduced its
workforce by 14,500 in the aerospace and railway divisions in recent years.
---
Facts and figures:
Canada’s dollar is lower
at 75.06 cents U.S. while the U.S. dollar returns $1.332 Canadian before bank exchange
fees.
The Bank of Canada’s
key interest rate remains at 1.75 percent while the prime-lending rate is 3.95 percent.
Stock markets are lower, with the Toronto
exchange index at 14,795 points while the TSX Venture index is 572 points.
The average price for gas in Canada is lower at
$1.06 a liter or $4.02 (Canadian) for a U.S. gallon.
Lotto 6/49: (Dec. 5) 11, 13, 18, 23, 26 and 46; bonus 12.
(Dec. 1) 10, 14, 16, 27, 33 and 47; bonus 30. Lotto Max: (Nov. 30) 5, 8,
15, 20, 25, 26 and 47; bonus 22.
---
Regional briefs:
- Hydro One’s
proposed $6.7-billion takeover of Avista Corp. has been rejected by Washington
State regulators citing political interference by the Ontario government. It
ruled the deal is not in the public interest because decisions impacting Hydro
One were influenced by politics. That was in reference to Conservative Premier
Doug Ford’s mandated retirement of Hydro One CEO Mayo Schmidt.
- Well, this takes the cake – a donair
cupcake. T. J. Peach, owner of Susie’s Shortbreads, helped create the confection
as a tribute to Halifax’s official food for Saturday’s National Donair Day. She
worked with the King of Donair chain to make the vanilla cake with donair meat
baked in, topped with cream cheese sauce frosting and sundried tomato
sprinkles. Peach said she decided to substitute sundried tomatoes for onions to
avoid a soggy mess.
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Jim Fox can be reached at canadareport@hotmail.com
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