When Albertans woke up on Monday morning, they were confronted with shocking news about the province’s energy industry and its economy.
Oil prices had collapsed to their lowest level in four years – with the largest single-day drop in decades – in the face of an escalating price war between Russia and Saudi Arabia. Alberta’s provincial budget, released less than two weeks ago, was in tatters. And the future of Alberta’s economy, which is still hurting from a downturn that began in 2014, was now in serious jeopardy.
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The price crash came as the province was already staring down problems related to the novel coronavirus outbreak, which had weakened demand for oil and pushed prices down.
And now this.
Oil producers saw billions in stock value evaporate in a matter of hours. Ovintiv Inc., the successor to Encana that is now based in the United States, lost more than 70 per cent of its share price by the end of the day. Calgary-based Cenovus Energy Inc. lost half. And other energy companies saw their stock prices fall 30 per cent or more. The TSX Composite Index plunged 10 per cent.
Cenovus later announced significant cuts to its capital spending plan and it suspended its oil-by-rail program. MEG Energy also cut its capital spending.
The federal government has offered a measured tone, promising help to people who are hurt by the economic fallout but insisting that Canada’s fiscal position remains strong. The crisis adds to pressure to include relief for the energy sector and Alberta in the coming federal budget.
Premier Jason Kenney attempted to reassure Albertans, telling them that the province was ready to weather the storm while calling on the federal government for urgent action. Mr. Kenney acknowledged that his provincial budget, which projected a deficit of $6.8-billion in the coming year on the assumption that oil prices would be double what they are now, will need to be adjusted as the year progresses.
He says he’ll be pressing for a federal response during a trip to Ottawa this week for the first ministers conference. In particular, he is looking for payroll tax relief and an acceleration of infrastructure spending to inject life into the economy. Mr. Kenney also said the province is looking at what it could do, but he acknowledged: “This is uncharted territory.”
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Early Wednesday, Prime Minister Justin Trudeau announced a $1-billion funding package to help provincial healthcare systems cope with the increasing number of coronavirus cases and to help Canadian workers who are forced to isolate themselves.
The money will help buy masks and other supplies for healthcare workers, as well as fund research for a coronavirus vaccine.
The announcement also included loosening restrictions on employment insurance payments for people who are off work due to illness by waiving the waiting period for benefits. The hope is that this will allow people to stay home and avoid infecting others, by quickly getting them money so there isn’t a disruption in income.
There was no money earmarked for the economic impact the coronavirus has had on Alberta’s oil industry.
Here’s what our columnists had to say on the recent collapse in oil prices:
Kelly Cryderman writes that Alberta has seen economic troubles before, though not like this: “But at this scale, all at once, and coming off a five-year period where the province was already crawling out of a hole? That hasn’t happened before.”
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Jeffrey Jones says energy companies need to act quickly to respond to the crisis if they want to make it through to the other side: “Given the magnitude of the drop, and the likelihood that the path to recovery will be very bumpy, many companies already know the drill: cut first, and adjust later.”
And Gary Mason is reviving a long-standing debate in Alberta about whether to have a provincial sales tax. He says the current crisis should make that idea more palatable: “Now is precisely the time to ask people in the province to make the kind of ‘sacrifice’ they should have been making for years. A modest 2 per cent sales tax would hardly impose an impossible burden on Albertans, while helping alleviate some of the damage that the price collapse is imposing on the province.”
This is the weekly Western Canada newsletter written by B.C. Editor Wendy Cox and Alberta Bureau Chief James Keller. If you’re reading this on the web, or it was forwarded to you from someone else, you can sign up for it and all Globe newsletters here. This is a new project and we’ll be experimenting as we go, so let us know what you think.
Around the West:
CRUISE SHIPS: Preparations are underway at Victoria’s cruise ship terminal for the start of this year’s cruising season on the West Coast, with extra hand-sanitizing stations being installed amid concerns about COVID-19. But Canadian port authorities, cruise lines and the hospitality sector are waiting to find out if the season will begin at all. Health officials including Theresa Tam, Canada’s chief public health officer, are urging Canadians to avoid all cruise ship travel because of COVID-19, but Transport Canada has not yet decided if the tens of thousands of visitors due in the month of April alone will be welcomed.
COASTAL GASLINK: A Wet’suwet’en Nation matriarch who supports Coastal GasLink’s B.C. pipeline project says the Indigenous group’s hereditary governance system needs to incorporate the views of elected band councils. Theresa Tait-Day told a House of Commons committee in Ottawa on Tuesday that Canada and British Columbia legitimized “a group of bullies” when ministers for the federal and B.C. governments met with the hereditary chiefs but did not meet with elected representatives. “Hereditary chiefs are representative decision-makers. They are not autocrats,” Tait-Day said. “The bands and the community have been left out.”
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ADDICTION TREATMENT: The Alberta government is giving people in the province’s injectable opioid agonist treatment program a one-year extension to transition out of the effort. The program’s participants are prescribed and inject hydromorphone, a pharmaceutical-grade drug, to manage opioid withdrawal symptoms. This change comes after the province released a report looking at supervised consumption sites, which many addiction experts have panned. One of the findings in the report suggests that a large number of methamphetamine users are frequenting supervised consumption sites that were designed to respond to opioid overdoses.
HOMELESSNESS: Reporter Wency Stueck tagged along with a city worker to participate in the Metro Vancouver’s count of homeless population, which occurs every three years. The 2017 count found 3,605 people who were homeless in Metro Vancouver, up 30 per cent since 2014. Thirty-four per cent of respondents identified as Indigenous. Experts say the increase in homeless numbers reflects a host of factors, including expensive housing, untreated mental illness and young people “aging out” of government care and struggling to find a foothold as adults.
TEACHERS: The Saskatchewan Teachers’ Federation says its members will not provide any voluntary or extracurricular services starting on Thursday. The government and the union met last week in an attempt to get back to the bargaining table.
CORONAVIRUS: B.C. associations involved in seniors’ care have set up a working group in response to the new coronavirus, hoping to streamline communications between government officials and the operators of seniors’ facilities. The communications push follows the death of a man at a long-term care home in North Vancouver, believed to be the first COVID-19 death in the country. Meanwhile, Alberta has announced it has 14 cases.
HERRING ROE FISHING: The annual Pacific herring roe fishery is winding down in the Strait of Georgia, amid protests from conservationists who say the harvest threatens a species that is critical to the recovery of dwindling chinook salmon, and to the survival of the endangered southern resident killer whales. The herring are a keystone species, an important source of food for seabirds, larger fish, sea lions and seals, and whales.
ALCOHOL IN ALBERTA PARKS: Grant Hunter, a UCP MLA, said late last month the governing United Conservative Party would erase the dictate that says adults must have food with them if they are consuming alcohol in parks. However, this will not affect whether alcohol will be prohibited in municipal parks. That will still be up to local politicians.
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Opinion:
André Picard on Dr. Bonnie Henry: “Canada is an oasis of calm amid the global coronavirus freak-out, in no small part thanks to Bonnie Henry, British Columbia’s Provincial Health Officer. Her daily media briefings are a master class in crisis communication – clear, factual and surprisingly intimate.”
Brian Pallister on the possibility of the federal government adopting UNDRIP legislation: “More confusion and uncertainty will reign. Investors and businesses will focus elsewhere. Opportunities will be lost. Acrimony will continue. And the twin goals of economic development and Indigenous reconciliation – and the essential pathway between them – will not be advanced.”
Justine Hunter on the Wet’suwet’en solidarity protests in front of the B.C. Legislature: “British Columbia has never before had so many Indigenous voices in the legislature at one time. There has never been a better time for members of the house, who last fall unanimously passed legislation to commit to human rights for Indigenous people, to listen with empathy to the concerns of the youth outside. But the protesters demanded complete allegiance with their position, dismissing alternative perspectives within Indigenous communities on the Coastal GasLink pipeline. The Wet’suwet’en themselves are divided on the issue, and are in the midst of a sensitive consultation process on issues of rights and title.”
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.
