A decision by the OPEC+ alliance of oil-exporting countries to sharply cut production and boost crude prices has dealt a blow to consuming nations, prompting accusations that Gulf producers are siding with Russia at the expense of the United States and its Western allies.
The 13-nation OPEC group, plus 10 allies led by Moscow, agreed at a meeting in Vienna to slash output by two million barrels per day (bpd) starting in November, the group announced in a statement on Wednesday.
The Biden administration, which for months has engaged in diplomatic efforts to dissuade its Middle Eastern allies from cutting oil production, reacted frustrated at the prospect of pump prices increasing further before a key midterm election.
White House press secretary Karine Jean-Pierre told reporters on Wednesday that the OPEC+ decision was “short-sighted” as the global economy was still languishing from “the continued negative impact of [Russian President Vladimir] Putin’s invasion of Ukraine”.
“It’s clear that OPEC+ is aligning with Russia with today’s announcement,” Jean-Pierre concluded.
But OPEC has denied that accusation. The group’s secretary-general, Haitham al-Ghais, on Friday said, “This was not a decision from one country against another.”
“I want to be clear in saying this, and it’s not a decision from two or three countries against a group of other countries,” al-Ghais told Al Arabiya TV.
Saudi Arabia, one of the main players in OPEC, also said the move was necessary to respond to rising interest rates in the West and a weaker global economy.
“Show me where is the act of belligerence,” energy minister Prince Abdulaziz bin Salman said, adding that markets required “guidance without which investment would not happen”.
A gamble on high prices
Kuwait’s acting oil minister, Mohammed al-Fares, said on Wednesday that while the alliance understood consumers’ concerns over soaring prices, their main concern was “maintaining balance between supply and demand”.
Carole Nakhle, head of the consultancy firm Crystol Energy, dismissed the explanation. “The market always balances itself, that’s the basics of the interaction between demand and supply,” Nakhle told Al Jazeera.
“The difference is that if you leave it to the market, it might give you a price that is much lower than what OPEC wants to see.”
Analysts viewed the move as raising the risk of a global economic downturn, as well as the geopolitical temperature, in a bid to see prices hold around current levels.
“OPEC+ probably feels it has some time on its side to see if the world economy can avoid a recession and whether it can hold crude prices on what the group would view as the correct side of $90 a barrel,” energy analyst Clyde Russell wrote in a column for Reuters.
While a cut to production quotas of two million bpd does not translate into a decrease of the same amount in the global supply, the research company Rystad Energy still placed the likely actual drop at around 1.2 million bpd.
“We believe that the price impact of the announced measures will be significant,” Vice President Jorge Leon told Al Jazeera via email.
Forecasts had predicted that oil prices would fall by the end of the year, but after the OPEC+ decision, the price of Brent oil could now reach more than $100 per barrel in December, up from an earlier call of $89 per barrel.
A political shift towards the Kremlin?
Washington has been angered that Saudi Arabia would support a step that, while to its short-term economic benefit, is at odds with Riyadh’s long-term security interests and weakens Biden’s outlook in advance of the November elections.
Additionally, Russia stands to benefit from high oil prices, which have so far allowed the Kremlin to withstand the shock of Western sanctions.
The OPEC+ decision came a day after EU ambassadors agreed to impose a new round of economic measures in an attempt to weaken Russia’s war effort in Ukraine, including a price cap on Russian oil sales and a ban on most crude oil imports to be rolled out in the next months.
While a direct correlation between the two events can only be inferred, “there must be some politics [in the OPEC+ decision],” Ben McWilliams, energy consultant at the Brussels-based Bruegel think-tank, told Al Jazeera.
From the economic perspective, the argument brought forward by oil-producing countries that a global recession was driving prices down, appears to contradict current crude prices being above $85 per barrel – a healthy rate that in normal times would not have called for intervention.
“It looks clear that there is some kind of alignment with Russia,” McWilliams said.
But not everyone agreed.
Dina Esfandiary, senior adviser at International Crisis Group for Middle East-North Africa, played down the desire of Gulf states – who in March voted for a UN General Assembly resolution condemning Moscow’s invasion of Ukraine and have since largely sought to maintain a low profile – to align with Russia.
“It’s unfair to say that they’re siding with Russia – they’re siding with themselves,” Esfandiary said.
Nonetheless, the move could well be “a snub” to the Biden administration, whose unsuccessful diplomatic effort to halt the oil production cut is a signal of its weaning influence over Gulf allies.
The months-long pressure campaign culminated in Biden’s fist bump to Saudi Arabia’s Crown Prince Mohammed bin Salman in July, a sign of the administration’s intention to move on from its stated goal of holding the Saudi leader accountable for the killing of journalist Jamal Khashoggi.
“Ultimately, I think we’re just in this new era where the Gulf Arabs are deciding for themselves,” the ICG analyst said. “While the US is an important security guarantor, they are no longer listening to everything the US asks them to do.”
Consumer debt tops $2.36 trillion in third quarter, up 7.3 per cent from last year – BNN Bloomberg
Equifax Canada says an increase in borrowers helped push total consumer debt to $2.36 trillion in the third quarter for a 7.3 per cent rise from last year, even as mortgage volumes decline.
It says average non-mortgage debt rose to $21,183 for the highest level since the second quarter of 2020, with early signs of strain starting to show in auto loans and credit cards.
Overall non-mortgage debt came in at $599.9 billion for a 5.3 per cent climb from last year, and up 1.9 per cent from the third quarter of 2019, as the number of borrowers rose by 3.1 per cent.
Rebecca Oakes, Equifax Canada’s head of advanced analytics, says the rising debt stems from a combination of growth from immigration, pent-up spending, as well as increased borrowing as consumers feel the strain of higher living costs.
Credit card spending in the quarter was up 17.3 per cent from last year to an all-time high for the time period.
Average spending put on credit cards was almost $2,447, a 21.8 per cent jump from the third quarter of 2019.
There’s been an increase in credit card spending and new cards issued across all consumer segments, including the sub-prime segments, said Oakes in a statement.
She said there are some signs that borrowers are starting to have trouble covering the bills, with average payment rates for those who carry a balance down from a year ago, she said.
“Consumers have been making strong payments, but we are starting to see a shift in payment behaviour especially for credit card revolvers — those who carry a balance on their card and don’t pay it off in full each month.”
Delinquencies on auto loans have also started to trend up, especially those opened since late 2021, she said.
The overall rate of more than 90 day delinquencies for non-mortgage debt was 0.93 per cent, up from 0.87 last year, though insolvencies are still well below pre-pandemic levels.
New mortgage volume dropped 22.7 per cent in the quarter compared with last year and by 14.9 per cent compared with the third quarter of 2019. First-time home buyers are paying over $500 more for almost the same loan amounts as first-time buyers last year.
Overall insolvency rates are up from a year ago but from a relatively low starting point, and there are some areas of concern including a rise in consumer proposals by seniors, said Oakes.
“The true impact of interest rate hikes could be visible by the end of 2023.”
This report by The Canadian Press was first published Dec. 6, 2022.
Trudeau, Ford mark opening of Canada's first full-scale electric vehicle plant – CP24
The Canadian Press
Published Monday, December 5, 2022 5:06AM EST
Last Updated Monday, December 5, 2022 1:17PM EST
Prime Minister Justin Trudeau and Ontario Premier Doug Ford are celebrating the opening today of Canada’s first full-scale electric vehicle manufacturing plant.
Trudeau says electric delivery vans have started rolling off the line today at the General Motors CAMI production plant in Ingersoll, Ont., which has been retooled to build the company’s BrightDrop all-electric vehicle brand.
The prime minister was joined by Ford and the province’s Economic Development Minister Vic Fedeli to mark the milestone.
The provincial and federal governments each invested $259 million toward GM’s $2-billion plan to transform its Ingersoll plant and overhaul its Oshawa, Ont., plant to make it EV-ready.
The federal government says the Ingersoll plant is expected to manufacture 50,000 electric vehicles by 2025.
Canada intends to bar the sale of new internal-combustion engines in passenger vehicles by 2035.
This report by The Canadian Press was first published Dec. 5, 2022.
Food prices in Canada: Families to pay $1,065 more in 2023 – CTV News
Canadians won’t escape food inflation any time soon.
Food prices in Canada will continue to escalate in the new year, with grocery costs forecast to rise up to seven per cent in 2023, new research predicts.
For a family of four, the total annual grocery bill is expected to be $16,288 — $1,065 more than it was this year, the 13th edition of Canada’s Food Price Report released Monday said.
A single woman in her 40s — the average age in Canada — will pay about $3,740 for groceries next year while a single man the same age would pay $4,168, according to the report and Statistics Canada.
Food inflation is set to remain stubbornly high in the first half of 2023 before it starts to ease, said Sylvain Charlebois, lead author of the report and Dalhousie University professor of food distribution and policy.
“When you look at the current food inflation cycle we’re in right now, we’re probably in the seventh-inning stretch,” he said in an interview. “The first part of 2023 will remain challenging … but we’re starting to see the end of this.”
Multiple factors could influence food prices next year, including climate change, geopolitical conflicts, rising energy costs and the lingering effects of COVID-19, the report said.
Currency fluctuations could also play a role in food prices. A weaker Canadian dollar could make importing goods like lettuce more expensive, for example.
Earlier this year the loonie was worth more than 80 cents US, but it then dropped to a low of 72.17 cents US in October amid a strengthening U.S. dollar. It has hovered near the 74 cent mark in recent weeks, ending Friday at 74.25 cents US.
“The produce section is going to be the wild card,” Charlebois said. “Currency is one of the key things that could throw things off early in the winter and that’s why produce is the highest category.”
Vegetables could see the biggest price spikes, with estimates pegging cost increases will rise as high as eight per cent, the report said.
In addition to currency risks, much of the produce sold in Canada comes from the United States, which has been struggling with extremely dry conditions.
“The western U.S., particularly California, has seen strong El Nino weather patterns and droughts and bacterial contaminations, and that’s impacted our fruit and vegetable suppliers and prices,” said Simon Somogyi, campus lead at the University of Guelph and professor at the Gordon S. Lang School of Business and Economics.
“The drought is making the production of lettuce more expensive,” he said. “It’s reducing the crop size but it’s also causing bacterial contamination, which is lessening the supply in the marketplace.”
Prices in other key food categories like meat, dairy and bakery are predicted to soar up to seven per cent, the researchers found.
The Canadian Dairy Commission has approved a farm gate milk price increase of about 2.2 per cent, or just under two cents per litre, for Feb. 1, 2023.
“The increase for February is reasonable but it comes after the unprecedented increases in 2022, which are continuing to work their way through the supply chain,” Charlebois said of the two price hikes of nearly 11 per cent combined in 2022.
Meanwhile, seafood is expected to increase up to six per cent, while fruit could increase up to five per cent, the report said.
Restaurant costs are expected to increase four to six per cent, less than supermarket prices, the report said.
Rising prices will push food security and affordability even further out of reach of Canadians a year after food bank use reached a record high, the report said.
The increasing reliance on food banks is expected to continue, with 20 per cent of Canadians reporting they will likely turn to community organizations in 2023 for help feeding their families, a survey included in the report found.
Use of weekly flyers, coupons, bulk buying and food rescuing apps also ticked up this year and is expected to continue growing in 2023, the report said.
“We’re in the era now of the smart shopper,” said Somogyi, also the Arrell Chair in the Business of Food.
“For certain generations, it’s the first time that they’ve had to make a list, not impulse buy, read the weekly flyers, use coupons, buy in volume and freeze what they don’t use.”
Last year’s report predicted food prices would increase five to seven per cent in 2022 — the biggest jump ever predicted by the annual food price report.
Food costs actually far exceeded that forecast. Grocery prices were up 11 per cent in October compared with a year before while overall food costs were up 10.1 per cent, according to Statistics Canada.
“We were called alarmists,” Charlebois said of the prediction that food prices could rise seven per cent in 2022. Critics called the report an “exaggeration,” he said.
“You’re always one crisis away from throwing everything out the window,” Charlebois said. “We didn’t predict the war in Ukraine, and that really affected markets.”
This report by The Canadian Press was first published Dec. 5, 2022.
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