YOUR MONEY

The World Gone Mad – Canada style

For 3 days last week the Globe and Mail’s business section featured articles in favor of high oil prices. This included a speech by Bank of Canada head, Mark Carney.

The argument goes as follows:  

Canada’s economy is currently heavily dependent on oil production for jobs, government royalties and gas pump taxes (which are a percentage of the cost, not a flat fee).  To ensure growth in the oil sector, the price of crude should be – are you ready for this – at least $100 a barrel.

At present, the fluctuating range is a mere $85 to $93. 

In addition, it is suggested that high oil prices and oil industry jobs will compensate for the high value of the Canadian dollar.

RESPONSE/REBUTAL

1.    The price of oil (whether Brent or West Intermediate Texas) are WORLD WIDE PRICES.

Almost everyone in the Western world, and most of the rest of the planet, are oil dependent for transportation or heating/electricity.  The higher crude goes, the more everyone suffers – as the costs of food, clothing, plastics (made from oil) all go up.  That’s called INFLATION!!!  World wide inflation!!!

2.    $100 or more a barrel is WINDFALL PROFIT RANGE.  The tar sands of Alberta are profitable at $70 a barrel according the the OPEC minister from Saudi Arabia (just a year ago).  Even he considered then prices above $100 excessive.

3.   Today, thanks to the new technique called fracking, oil and gas in deep shale beds are now retrievable.  New massive oil and gas fields have been found off the shores of Brazil and Israel to name just two oil import dependant countries. And upper Middle America – especially North Dakota – have become the envy of even Texas.  Production has already started and will soon be in full gear – adding millions of barrels of oil to the world’s supply (and even more natural gas).

In a world with permanent oil and natural glut for at least the next 50 years, $100 oil is a delusional speculator’s pipedream.  Think of oil at $60 to $70 a barrel as the coming ‘new global normal’.

4.    As for the high value of the Canadian dollar, it is a direct result of high oil prices. Yes, we produce other commodities such as grains, lumber, fertilizer, copper and coal to name a few world demand resources, but oil seems to be the strongest factor in the minds of currency traders; put simply, the Canadian dollar is seen as a ‘petro’ currency. Just watch the Canadian dollar’s daily ups and downs  and the parallel moves of oil benchmarks. So lower oil prices will also lower the Canadian dollar’s international exchange rates and help exports of manufactured goods and commodities.

 

CONCLUSION

So what of the pro-high gas advocates and their vision?    It’s not based on the general welfare of Canadians and the world’s population of 7 billion.  It is not based on reasonable or fair profits but profiteering!!!!

We pay enough taxes to government in a thousand ways. ‘Milking’ oil for more revenue is disgusting and only in Canada would someone of Mr. Carney’s stature even consider such ‘extra taxation’ as ‘good’.

When prime Minster Trudeau instituted the National Energy Program (NEP) in 1980, when Middle East oil became exorbitant, when Central and Eastern Canada could no longer stay in business importing such oil, (and prime was at 10%), Western Canada’s oil prices were regulated within the country and surplus wealth redistributed to keep more than half the country afloat.  The idea of affordable oil was essential to the prosperity of the nation, Trudeau argued.   

I remind Mr. Carney, high oil advocates/shills  and the western oil companies of that time and philosophy.

Trudeau was right to create a balance between the interests of the oil industry and the West and the manufacturing/service based rest of Canada.

A new, national plan to balance the interests and needs of West and East must be found.