Pipes at the landfall facilities of the Nord Stream 1 gas pipeline are pictured in Lubmin, Germany on March 8, 2022.HANNIBAL HANSCHKE/Reuters
The euro plunged to a new 20-year low and energy prices soared after Russia turned off the taps of the main source of natural gas to Europe, increasing the prospect of rolling blackouts and factory closures on a continent starved for fuel.
The euro dropped by as much as 0.8 per cent on Monday to US$98.78 cents, its weakest level since 2002. European Gas prices, already up tenfold in a year, took another leap, with benchmark Dutch futures opening about 30 per cent higher, to more than 270 euros per megawatt hour (MWh).
In energy equivalency terms, that is the same as US$450 per barrel of oil.
Oil prices also rose, partly because OPEC, the Saudi-led oil cartel, has signalled it may not raise output, as American and European governments want it to do, to bring down prices. Brent crude, the effective international benchmark, was up almost 4 per cent in early trading, taking it to US$97. That is up 33 per cent in one year though still well short of its recent high of US$139.
The trigger for the latest gas price was Russia’s decision over the weekend to indefinitely suspend gas flows through the Nord Stream 1 pipeline, the main source of Russian gas to Germany. Gazprom, the Kremlin-controlled company that holds a monopoly on gas exports, had signalled that it would reopen the pipeline on Sunday at 20 per cent capacity after three days of maintenance.
Russia claimed that a technical fault was behind the decision to keep Nord Stream 1 closed, but that argument was widely dismissed in Brussels and other European capitals.
European leaders have accused Russian President Vladimir Putin of using energy as a weapon against Europe, where many countries have implemented financial and economic sanctions against Russia and are supplying weapons to Ukraine. Moscow is no longer fully denying that the gas shortfalls are politically motivated. Dmitry Peskov, Russian President Vladimir Putin’s spokesman, said on Monday that Russia’s gas supplies would not fully resume until the “collective west” lifts sanctions against Moscow.
In a message posted on Telegram over the weekend, Russian president Dmitry Medvedev said that Germany was “acting as an enemy of Russia” and that European countries “have declared hybrid war against Russia.”
On Monday, Timothy Ash, strategist at BlueBay Asset Management of London, said on Twitter that “Medvedev’s comments make it clear that Russia is blackmailing the West – stop supporting Ukraine if you want energy from Russia.”
Energy prices have reached unaffordable levels for many European families and small businesses, with a wave of closures and bankruptcies expected. In Italy and the U.K., owners of restaurants and pubs have seen their electricity and gas bill rise about 400 per cent over a year.
High fuel prices are already triggering political instability and civil unrest in parts of Europe.
On Saturday, an estimated 70,000 people flooded into Prague’s Wenceslas Square to demand that the ruling coalition, which had just survived a confidence vote, take action to bring down prices. “The aim of our demonstration is to demand change, mainly in solving the issue of energy prices, especially electricity and gas, which will destroy our economy this autumn,” protest co-organizer Jiri Havel told a Czech news site.
The European Commission (EC) and European governments are scrambling to design support packages for utilities and consumers as energy reaches crippling price levels.
On Sunday, Finland said it will offer up to the equivalent of US$10-billion in liquidity guarantees to power companies that face insolvency. Sweden said it would do the same, offering as much as US$23-billion. “This has the ingredients for a kind of Lehman Brothers of energy industry,” Finnish Economics Affairs Minister Mika Lintila said, referring to the collapse of the Wall Street bank investment bank in 2008 that brought on the global financial crisis.
At the same time, German Chancellor Olaf Scholz announced that his coalition government will impose a windfall tax on electricity producers and use that income to finance a euros 65-billion package of relief measures to fund reduced prices. He called the tax an “electricity price brake,” which would allow householders buy basic amounts of electricity at reduced prices.
The EC, meanwhile, is considering a package gas price caps and a tax on excessive energy profits that would be applied throughout the 27-state European Union. These proposals, and other emergency interventions, such as an EU-wide credit line for struggling utilities, will be discussed Friday at a meeting of energy ministers.
With Russia having eliminated or reduce gas supplies to more than a dozen EU countries, EU energy ministers over the summer pledged to reduce gas consumption by 15 per cent to try to avoid an energy crunch over the winter that could result in gas rationing and rolling factory closures.
Europe’s energy crisis is made worse by the drought, which has hit the ability of hydro plants to generate electricity. In Italy, where rivers everywhere have dried up, electricity generation from hydro is down by almost half. Some nuclear plants in Europe have been forced to shut, or reduce output, because of lack of water, which is used to cool the reactors.
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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
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