Canada has the world’s third-greatest proven petroleum reserves, behind only Venezuela and Saudi Arabia.
Canada is currently both the fourth-largest producer and the fourth-largest exporter of petroleum in the world.
Ninety six per cent of Canada’s 168.5 billion barrels of oil is heavy oil.
Some experts believe Canada has heavy oil reserves in the trillions of barrels.
Canada, due to its political stability, has the world’s most secure source of heavy crude known as Western Canada Select.
What Canada currently requires are pipelines, which, in my opinion, will enable it to deliver its oil to market in the safest, most cost-effective manner.
Prior to pandemic
Prior to the onset of the COVID-19 pandemic, world oil production was slightly greater than the demand of 100 million barrels per day.
However, all of that changed with the onset of COVID-19, coupled with the flooding of the market by Saudi Arabia due to their conflict with Russia. We have now seen a dramatic drop in demand and it is unclear when demand will return to normal.
On April 20, 2020, the world experienced something that had never happened before. On that date the price of a barrel of West Texas Intermediate crude went from $17.73 to -$37.63 per barrel.
Futures Traders were caught off-guard and unable to trade out of their options for the May contract.
There were no buyers!
If you wanted to unload your contract, you had to pay someone to take your oil and as physical storage was scarce, in my opinion, the market had nowhere to go but down.
Efforts to get this valuable resource to market have been stymied …– Donald Benson
The carnage has impacted trading prices of our Canadian benchmark Western Canada Select.
However, fear not.
I believe that demand will rebound and Canada’s time will only continue to glow brighter as the century moves forward.
The world is evolving away from the internal combustion engine. It is light crude, notably Saudi Arabian Light and West Texas Intermediate, which will become out of favour, as the world shifts away from jet and internal combustion engines.
Light oil is the principal source of oil refined into gasoline and jet fuel. The market for light oil will continue to diminish as the increase of air and land vehicle traffic turns to electric.
But heavy oil, such as Western Canada Select, has a much wider market.
While it can be upgraded to allow for refinement into gasoline, due to the molecular makeup of heavy oil, with its greater numbers of long chain carbon molecules, it is the feedstock used for the manufacture of thousands of consumer products.
The following is a partial list of products that are derived from petroleum:
Ballpoint pens, ink, floor wax, upholstery, sweaters, boats, insecticides, bicycle tires, sports car bodies, nail polish, fishing lures, dresses, tires, golf bags, perfumes, dishwasher parts, tool boxes, shoe polish, shampoo, wheels, paint rollers, shower curtains, guitar strings, luggage, aspirin and safety glasses.
Because heavy oil is so utterly predictable and stable, and responds precisely the same way every time, companies are not looking to replace it as a feedstock.
What Canada needs now — and what will be required into the future — are pipelines.
Pipelines provide the ability for Canada to get its oil to market in a safe and sustainable manner. Canada is a unique country that has the capability of exporting its oil and gas to the north, south, east and west.
But efforts to get this valuable resource to market have been stymied — in my opinion — by political and environmental forces intent on keeping our country from being allowed to market its resources.
Quebeckers should embrace pipeline
Today, people have allowed the catastrophic 2013 train crash, which killed 47 people in the town of Lac-Mégantic, Que., to escape from their memory.
That terrible event would not have happened if we were shipping our oil to markets through the safe, dependable means of a pipeline.
Our eastern brothers and sisters in Quebec should be embracing the Energy East line of TransCanada Corp., now known as TC Energy Corp.
However, their application was withdrawn due to the impractical, unreasonable decision of Quebec’s leaders, who object to new pipelines in their province.
Instead the Quebec and New Brunswick refineries import their oil from Saudi Arabia, Venezuela and elsewhere.
In the West we are struggling to get pipelines built to tidewater.
What Canada must consider is a Manitoba pipeline …”– Donald Benson
The constant government interference, objections and (in my opinion) disobedience of others has to stop, if we Canadians are going to have the prosperity that our oil industry can provide.
The Trans Mountain and Coastal Gas pipelines must be built.
For far too long we have been held hostage by a minority of special interest groups, many of them from the U.S.A., which will go to whatever limits to destroy our country’s prosperity.
To the south, the never-ending interference from one group after another has again caused the Keystone XL Pipeline to be delayed.
On April 15, 2020, Montana Chief District Judge Brian Morris ruled more work needed to be done on permits required for two river crossings.
Now, news out of Washington that if elected in November, Democratic hopeful Joe Biden vows that he will cancel Keystone XL pipeline.
This $8-billion project has been needlessly held up for more than a decade.
Revenge for TC Energy will come, once the pipeline is completed and recourse from the provisions of the now-replaced NAFTA free trade agreement will be relied upon for the damages that TC Energy has endured.
What Canada must consider is a Manitoba pipeline to the northern Port of Churchill and a Northwest Passage route from Alberta, north to the Beaufort Sea.
Pipelines in the northern hemisphere are not new, neither is the task insurmountable. Russia has been transporting oil and gas through above-ground pipelines in the Arctic Circle for decades.
The Alaska pipeline, which is constructed above ground, was completed in 1977. Engineers faced a wide range of difficulties stemming mainly from extreme cold and difficult terrain. Special construction techniques had to be developed due to the difficulties caused by permafrost.
Today, the COVID-19 financial crisis is now unfolding and to what extent we can only imagine.
It will cause Canada to endure a deficit like never before.
How will we overcome that debt, which must be repaid?
It will take decades and Alberta oil once again will be one of the economic engines driving the recovery, and all of the have-not provinces, Quebec included, will be eagerly looking for Alberta’s continuation of transfer payments.
Canadians need to disregard the unfounded ranting from the likes of Elizabeth May, with all her negativity toward the oil industry.
Canadians need to come together and bend a little where necessary to see the common good achieved, through the construction of pipelines north, south, east and west.
Be a proud Canadian!
Australia central bank sees glimmer of hope as economy restarts after pandemic shutdown – The Guardian
By Swati Pandey
SYDNEY (Reuters) – Australia’s central bank held rates at all-time lows on Tuesday and sounded less gloomy as the economy gradually re-opens during what is likely to be the worst quarter since the Great Depression.
The Reserve Bank of Australia (RBA) left rates at 0.25% at its monthly policy meeting in a widely expected decision, and said the “accommodative approach will be maintained as long as it is required.”
In a short post-meeting statement Governor Philip Lowe said the RBA was prepared to scale up government bond purchases if needed to ensure three-year yields held around 25 basis points.
Australia’s A$2 trillion ($1.4 trillion) economy is experiencing its biggest contraction since the 1930s in the current quarter but “it is possible that the depth of the downturn will be less than earlier expected,” Lowe added.
A significant decline in new infections, earlier-than-expected easing of restrictions and signs that hours worked stabilised in early May auger well for a recovery.
“There has also been a pick-up in some forms of consumer spending,” Lowe added.
States and territories across Australia have been easing social distancing regulations at differing paces in recent weeks, slowly ending a partial lockdown ordered in March, having largely contained the COVID-19 pandemic.
Australia, which has about 7,200 coronavirus cases, has not reported a death from the disease for more than a week.
The country’s success in containing the virus has sent the Aussie dollar soaring to five-month highs. Yet, that is leaning against monetary stimulus and won’t be welcome by the RBA.
The central bank made no mention of the exchange rate in the statement.
Highlighting the depth of the pandemic-driven global economic downturn and the fallout on Australia, many economists expect interest rates to remain at record lows for at least two more years.
Some are even predicting negative interest rates, though Lowe has ruled it out.
“While we have also become more optimistic about the outlook for the economy in recent weeks, we still expect the unemployment rate to jump to nearly 9% by Q3,” said Capital Economics analyst Marcel Thieliant.
He expects the central bank to announce an expansion of its government bond buying programme at its August policy meeting.
“And we only expect the unemployment rate to fall below 7% by 2022. That would leave it far above the RBA’s estimate of the natural rate of 4.5%, underlining that the RBA will miss its full employment mandate for years to come.”
Q1 GDP MAY DODGE CONTRACTION
Official data out earlier showed Australia boasted a record current account surplus last quarter as firm export prices and a fall in imports provided a timely boost to growth.
Other data out on Tuesday showed government spending also added to growth in the March quarter, while companies reported better sales and profits than many expected.
The figures led analysts to upgrade their forecast for first-quarter gross domestic product due Wednesday with some saying the economy might not have shrunk in the quarter as previously feared.
GDP had been forecast to show output contracted 0.3%, the first fall since early 2011.
“A small positive print cannot be ruled out,” said Su-Lin Ong, chief economist at RBC Capital Markets.
“But the likely collapse in activity in the current quarter and accompanying impact on the labour market…is a sharp and deep shock through the whole economy with likely lasting ramifications.”
(Reporting by Swati Pandey; Editing by Shri Navaratnam)
Saskatchewan's economy was already shrinking before COVID – Regina Leader-Post
New data from Statistics Canada suggests Saskatchewan was already in a “mild recession” last year, even before COVID-19 and the latest oil shock began pummelling the province.
Saskatchewan’s gross domestic product (GDP), a measure of total economic output, shrunk from $82.2 billion in 2018 to $81.5 billion 2019 after factoring in inflation. That’s a decrease of 0.8 per cent, the worst number of all the provinces. The only other province to see its economy shrink last year was Alberta, which faced a contraction of 0.6 per cent.
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Joel Bruneau, head of the economics department at the University of Saskatchewan, said the new data shows the province wasn’t even managing to tread water before COVID hit.
“We’ve averaged negative growth over four quarters, so I would call it a mild recession,” he said.
The data shows that most of the hit to Saskatchewan in 2019 came from goods-producing industries, rather than the service sector. Industrial production was down, as was mining and quarrying, while the energy sector was basically flat.
Lockdown or no lockdown, study shows COVID-19's economic destruction followed a similar path either way – National Post
A group of economists studying how South Korea fought the COVID-19 outbreak without stay-at-home orders found that the country still experienced significant job losses in a pattern similar to that of countries that imposed lockdowns.
The study, from economists at Seoul’s Myongji University, Queen Mary University of London and St. Louis’s Washington University, also suggests that Canada’s slowly reopening economy may not go back entirely to normal as long as the virus is still prevalent.
“At most, half the job losses in the United States and the United Kingdom can be attributed to lockdowns,” the economists argue. Most job losses came from reduced hiring by businesses and a significant amount of non-participation in the labour market, rather than unemployment.
The same types of workers are feeling the effects, whether their country implemented a lockdown or not, the study claims. Less-educated workers, young people, workers in low-wage occupations and the self-employed lost were hardest hit, even when researchers controlled for industry effects that might over-represent these people.
“Lifting of lockdowns may lead to only modest recoveries in employment absent larger reductions in COVID-19 rates,” the paper warns.
The economists looked at labour-market effects in South Korea, where no lockdown was imposed, and compared the economic impact across different areas. One particularly bad local outbreak allowed the researchers to estimate that one additional infection for every thousand people causes a two to three per cent drop in local employment.
“The best way to revive the labour market is to eradicate the virus,” reads the paper by economists Sangmin Aum from the Myongji University in Seoul, Sang Yon Lee from Queen Mary University of London and Yongseok Shin from Washington University in St. Louis.
The study manages to untangle the many different factors in unemployment by concentrating on a localized outbreak in South Korea caused by a notorious event that spiked the transmission rate in the country.
In mid-February, the country had only 30 infections, but “Patient 31” attended a religious gathering in the city of Daegu. Ten days later, the country had more than 3,000 infections almost entirely clustered around Daegu. More than 60 per cent of them were traced back to that single gathering.
South Korea managed to quash the outbreak and maintains one of the lowest death rates in the world, mainly due to widespread testing, a robust contact-tracing regime and comparatively intrusive tracking measures, including monitoring quarantine-breakers with electronic wristbands.
The study is a working paper released for discussion by the National Bureau of Economic Research in the United States before peer review. Although working papers haven’t gone through the rigorous publication process, they are a timely way to compare the results of the COVID-19 outbreak around the world.
Countries that didn’t implement a lockdown have also suffered economic damage from the pandemic due to the disruptions in global travel and trade.
Sweden, which kept most schools, businesses and restaurants open after experiencing its own COVID-19 outbreak, is still expecting its economy to contract by seven per cent this year. Sweden’s exports depend heavily on demand from other countries, many of which went into full lockdowns.
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