With a barrel of Canadian oil now going for the same price as a cup of coffee, some renewable energy experts say it’s time for a different approach to building Canada’s energy sector.
They say the massive job losses and economic turmoil hammering the oil industry could be at least partly offset by a more aggressive shift toward renewables, energy-efficiency retrofits and other sustainable infrastructure.
“There are very practical reasons it would make sense,” said Martin Boucher, of the University of Saskatchewan’s Johnson Shoyama Graduate School of Public Policy.
Western Canada Select crude oil has been selling for less than $5 a barrel since the coronavirus-imposed travel bans and business shutdowns caused demand to plummet more than a month ago. Even last week’s deal between OPEC and other world powers to cut supply by 10 per cent failed to ignite crude prices. On Friday, WCS was listed at $2.87.
“Only gradual increases in crude oil prices are expected through all of 2020 as these factors persist, which could lead to record levels of expected global oil inventory builds in the first half of 2020,” the U.S. Energy Information Administration said in its most recent forecast.
Simply put, the global demand for oil has plunged and oil producers are putting it in storage in the hope of better prices. It will take a long time for that to change.
Saskatoon energy consultant Jason Praski hopes the health and economic crisis caused by the coronavirus may cause more people to care more about their communities and the environment. (submitted by Jason Praski)
Others believe the price could go even lower, and Canada could soon see negative prices. Oil producers who’ve run out of space to store their nearly worthless product “will be paying people to take away our resources,” Alberta Premier Jason Kenney said this month.
That may seem like good news for consumers filling their cars or trucks at the gas station for 60 cents a litre, but it’s a huge loss for the oil-heavy economies of Saskatchewan, Alberta and Newfoundland and Labrador.
Revenue from non-renewable resources like oil could drop as much as $1.2 billion this year in Saskatchewan alone, according to government forecasts released Friday.
Boucher and others say COVID-19 has caused this most recent price crash, but it’s not the only dark cloud hanging over the industry.
Since the July 2008 peak of more than $110 per barrel, the WCS price has steadily declined. In February, before the COVID-19 restrictions were announced, WCS had already dropped to $27.
Trade wars and production increases by the U.S., Saudi Arabia, Russia and other global powers, the lack of pipeline capacity in the landlocked Canadian Prairies are combining with labour-saving technology to decrease prices. That will not change in a post-coronavirus economy, they say. These aren’t things anyone in Saskatchewan or Alberta can control.
That’s why those urging Canada to keep tackling climate change say the post-coronavirus economy must include a more rapid transition to renewables and energy efficient upgrades.
“Stimulus and recovery measures in response to the pandemic must foster economic development and job creation, promote social equity and welfare, and put the world on a climate-safe path,” Francesco La Camera, director-general of the International Renewable Energy Agency, said in a statement this month.
Martin Boucher of the University of Saskatchewan’s Johnson Shoyama Graduate School of Public Policy said a more aggressive shift toward renewable energy and energy-efficient retrofits would help ease the job losses caused by the oil downturn. (submitted by Martin Boucher)
Boucher, who teaches energy transition policy, said this approach will provide far more jobs per dollar invested than investing in the oil industry. He said shifting even a small percentage of the investment and government support currently going to the oil industry would make a big difference.
It could begin with more energy-efficient retrofits of homes and businesses – better windows or thicker insulation, he said. Most of this work would be labour-intensive and done by local contractors and businesses. Profits would stay in the community and homeowners would benefit from lower fuel bills.
“These are simple approaches, but they’re domestic. They don’t put us in a situation where we’re overly exposed to the ebbs and flows of oil and gas,” Boucher said.
Saskatoon energy consultant Jason Praski agreed. Praski and Boucher said Saskatchewan is increasing its renewable energy capacity, but much more could be done. Solar, wind, geothermal and biomass energy from wood and crop waste could all deliver government tax revenue and jobs, they said.
“Saskatchewan’s got so much potential,” Praski said.
Praski said many people have already warmed to these ideas, but the ongoing coronavirus situation could help convince others.
“I think the whole pandemic is helping us pay more attention to each other and look after each other, and the climate change crisis is really a similar problem, it’s just longer term,” Praski said. “As we think about this whole thing, rethinking our lives, you know, it may get us all thinking a little closer toward doing the greener thing if we can.”
No one from the Canadian Association of Petroleum Producers was available for an interview.
Saskatchewan’s Energy and Resources Minister Bronwyn Eyre was not available for an interview but an official sent a written statement detailing more than 500 megawatts of pending wind and solar projects across the province.
It reaffirmed the province’s commitment to reduce greenhouse gas (GHG) emissions by 40 per cent from 2005 levels by 2030 through these projects, as well as other methods such as carbon capture or possible small modular nuclear reactors.
Last week, Eyre announced COVID-19 relief measures for oil companies, including an extension of drilling leases. She pledged more help in the coming days for oil and gas and mining companies. It’s unclear whether that will extend to renewable energy.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
