Investment

Opinion: Gov't policies paying off in energy investment – Edmonton Journal

Published

5 years ago

February 7, 2020

Steel pipe to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, British Columbia, Canada. File photo.

Dennis Owen / REUTERS/Dennis Owen

Policy matters — and that fact is reflected in the 2020 Capital Investment Forecast from the Canadian Association of Petroleum Producers (CAPP). The 2020 forecast expects a $2-billion increase in capital spending in Canada’s upstream oil and natural gas sector compared to last year.

Total capital investment this year is forecast at $37 billion, up from an estimated $35 billion in 2019, for an overall increase of six per cent.

This is big news for the oil and natural gas sector, which has experienced significant challenges and a dramatic decline in investment over the last half decade. Back in 2014, capital investment in Canada’s upstream industry reached $81 billion.

An inventory of what’s driving the positive investment forecast reveals key policies in producing provinces have helped to create a more competitive economic environment. A competitive platform attracts optimism and, in turn, attracts business, investment and creates jobs.

For example, the additional $2 billion in capital spending expected in 2020 creates or sustains about 11,800 direct and indirect jobs across Canada.

Nearly 70 per cent of those jobs (about 8,100) will be in Alberta, with the remainder across the rest of the country where Canadians make their living in the oil and natural gas industry.

Tax reform has played a key role in Alberta’s ability to attract long-term focused investment. In 2019, the Government of Alberta introduced the job creation tax cut. As of Jan. 1, 2020, Alberta’s corporate tax rate dropped to 10 per cent, as part of a plan to reduce the corporate income tax from 12 per cent in 2019 down to eight per cent in 2022.

The province also enabled producers to ship more crude by rail under curtailment and allowed new conventional oil drilling without the restriction on production. Again, a move to open the door to positive investment, new drilling, and job creation.

Notably, Saskatchewan recently released its Vision 2030 goal to increase oil production by 25 per cent to 600,000 barrels per day. The province continues to improve its efficient and effective regulatory environment. Capital investment in that province is expected to increase 10 per cent in 2020, going up to $4.4 billion from about $4 billion in 2019.

Investment in British Columbia is also expected to go up this year, to $3.6 billion from about $3.4 billion last year. That province is on the cusp of a global opportunity to provide liquefied natural gas for growing demand around the world.

For that to happen, pipelines are essential to move Canadian oil and natural gas within Canada and for export, and there is cautious optimism that capacity is in fact on the horizon.

Part of the optimism is due to the federal government’s continued commitment to the Trans Mountain expansion project, and its affirmation that this project is in the best interest of Canadians. In addition, the Federal Court of Appeal very recently cleared the way for the Trans Mountain expansion project to proceed. Enbridge’s Line 3 is scheduled to come on stream in late 2020, and pre-construction activities are ongoing for Keystone XL. The ability to get pipeline projects built is essential.

Canada’s oil and natural gas sector contributes to the economy in more ways than people may realize. The oil and natural gas industry accounts for 44 per cent of environmental protection spending, according to data from Statistics Canada; $3.7 billion in 2016. In addition, in the three years from 2016 to 2018, the industry contributed an average of $8 billion annually to government revenues through royalties and tax payments across the country.

The forecast $2-billion increase in investment is just a glimmer of the potential of Canada’s oil and natural gas industry. With record global demand for oil and natural gas, there is opportunity to significantly increase investment in Canada’s energy sector. Global energy demand is growing and Canada should be the supplier of choice.

Tim McMillan is president and CEO of the Canadian Association of Petroleum Producers.

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Economy

S&P/TSX composite down more than 200 points, U.S. stock markets also fall

Published

1 week ago

September 6, 2024

Anne Joseph

TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 239.24 points at 22,749.04.

In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.

The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.

The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.

The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.

This report by The Canadian Press was first published Sept. 6, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets also higher

Published

2 weeks ago

August 29, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.

The S&P/TSX composite index was up 171.41 points at 23,298.39.

In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.

The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.

The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.

The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.

This report by The Canadian Press was first published Aug. 29, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Investment

Crypto Market Bloodbath Amid Broader Economic Concerns

Published

1 month ago

August 5, 2024

Harry Miller

The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.

The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.

Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.

The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.

Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.

Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.

Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.

Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.

The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.