Larry Short says there is a continued reliance on oil because the transition to renewable energy is hitting several bottlenecks. (Garrett Barry/CBC)
There has been a major worldwide push to decarbonize economies as much as possible, with many industrial countries committing to strategies to develop alternative sources of energy.
Yet a major forecast points to a growing, not shrinking, demand for oil. The International Energy Agency released its 2023 forecast for oil supply and demand, with indications pointing to an increased demand for oil.
At the same time, the conversion to renewable energy sources has not been happening as quickly as some may like, and that’s in part because of a shortage of what are called critical minerals — nickel, zinc, lithium and copper, to name a few — that can power electric cars, batteries, turbines and other products.
Larry Short, portfolio manager and senior investment advisor at Short Financial, went through the issues with Krissy Holmes during a recent interview on CBC Radio’s St. John’s Morning Show.
His thinking may surprise some people. He believes the mining sector may be in for a boom that could exceed what the province has seen with offshore oil development.
This interview has been edited for length and clarity.
Q: So what is going on? Why is demand for oil expected to grow next year?
A: Largely because China has still been in lockdown during the last eight months. As much as the rest of the world has come out of the COVID crisis, China has not. So, they’ve been battling it by doing major lockdowns. There’s still hundreds of ships off the coast of Shanghai waiting to load and unload.
The reason why we’re still seeing shortages throughout the world is because the manufacturing that China has been trying to do, the products cannot get into the ships.
The burning of coal, like at this plant, also releases mercury into the atmosphere. (Shutterstock)
Electrification — we’ve certainly been talking about that transition in the last number of years. Is there a relation? Is that happening as fast as it should be?
Oh, heavens no, nowhere near it. Based on numbers that we’re still building, 33 per cent of the world’s energy is still coming from coal, for heaven’s sake. In fact, China recently announced a new project using coal, which will actually use more coal than all of Europe is currently using.
We’re not moving forward to reduce carbon emissions largely because we aren’t able to make changes quickly enough due to bottlenecks.
A key one of those bottlenecks is critical minerals. Basically, we’re not mining all of the things that we need to mine in order to make the conversion at a fast enough rate.
Looking at countries like Indonesia, Pakistan, and Bangladesh, with large populations. They all want air conditioning, running water, televisions and automobiles. The world is still trying to keep up with demand for those products and services, meaning that the total energy demand around the world is increasing, while the ability for the world to generate alternate energy is simply not there.
Russia’s invasion of Ukraine this winter helped trigger a huge spike in oil prices around the world, with many countries cutting off purchases from Russia. (Andrey Rudakov/Bloomberg)
Let’s talk about what this means for Newfoundland and Labrador. Where do we fit in on the supply side here?
We’ve had many people over the years argue that if you just shut down the oil off the coast of Newfoundland, that will contribute to the conversion of the world over to alternative fuels. What we’ve seen in the last little while is 4-million barrels a day being shut down because of the Russia sanctions.
The result has not been a conversion to alternative fuels quickly. There’s actually been an increase in inflation. If anything, that should help people understand that in terms of this transition, the focus has been in the wrong area. The focus has been on the supply of oil, when it has to be on replacing oil entirely by using alternative energy, which requires critical metals.
The one thing that the province of Newfoundland and Labrador has proportionately more than anywhere else on Earth, are all of these critical metals that have to be mined in order to build the electric vehicles.
In terms of the supply, what is the opportunity here for the offshore? What could this mean? Is there the potential for another boom here?
We could definitely see a repeat of the boom. Oil development, any field that has already been found, such as Bay du Nord, will be developed before new exploration takes place, because the world is still not financing new oil projects or new oil exploration projects.
The potential boom in minerals in the province of Newfoundland and Labrador from this is larger than what the oil boom has been.– Larry Short
Again, the reason we’re in this crisis is because the thought was that the world could convert faster than it could. What we’re finding is that everybody has given up on oil at the same time, therefore the supply that we need to even do the conversion, we don’t have.
The second piece is that the potential boom in minerals in the province of Newfoundland and Labrador from this is larger than what the oil boom has been. So, the opportunity here is much greater if we can find a way to help supply the world with all of the metals that are needed in order to do the conversion, because that is where the money is pouring into right now throughout the planet.
Earlier this spring, Vale signed a supply deal with Tesla to provide nickel for electric car batteries, with some of that coming from its nickel mine in Voisey’s Bay, in northern Labrador. (CBC)
The potential for mining could be bigger than the potential for oil for this province? Can you give us a sense of the scale we’re talking about here?
Just to make an electric automobile, you need roughly six times as much metal, most of it being copper, lithium, cobalt, nickel, those things. There’s an article out a short time ago talking about how basically we need to increase the amount of minerals being mined by a factor of a thousand over the next ten years in order to meet the climate goals.
You can see the opportunity for this province. The opportunity there is absolutely huge going forward.
Are you saying that actually leaning in on mining could help to cancel out some of the, for lack of a better word, bad [things that come] with some of the emissions with oil production? Could one cancel out the other?
More than that. The fact is that for a long time, environmentalists have been saying we’ve got to get off oil. This is how the province gets off the oil revenue side.
The key part here is that as a province, we have to find a way to open mines faster than the average of 14 years, because that misses the whole opportunity. But, on the other side as well, if we can find a way to do it ethically, if we can find a way to do it staying inside of environmental standards, then we become one of the leaders in the world. We have that opportunity.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
