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Why high oil prices aren't creating an economic boom in Canada – CBC News

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The sky high price of gasoline is pushing many Canadians to their financial limits. Usually when this happens, the pain at the pumps is offset by a burst in growth for the Canadian economy. High oil prices used to mean a surge in investments and hiring. 

Not this time.

“Typically when oil prices are rising, Canadians get a bit of relief at the pump as a result of a higher Canadian dollar,” said CIBC’s chief economist Avery Shenfeld. 

“In this case the Canadian dollar is not following oil prices, in fact it’s moving in an opposite direction at the moment and that’s adding to the pain a lot of households are feeling.”

The loonie generally goes up because there’s an expectations that Canada’s oil sector is about to go on a spending spree, but this time it’s being a bit more cautious despite some record profits.

A pumpjack works at a well head on an oil and gas installation near Cremona, Alta., in October 2016. While higher oil prices normally trigger a new round of investment, the industry is showing more wariness. (Jeff McIntosh/The Canadian Press)

Less investment appetite

The last time the global price of oil surged this high, starting in 2008, there was a surge in investments and a hiring boom. Commodity expert Rory Johnston says years of low prices and low profits have made companies wary of moving too quickly this time.

“There’s a lot of scarring that occurred over the past decade,” said Johnston, author of the newsletter Commodity Context and managing director at Price Street Inc.

The boom bust cycle of oil is well known. When prices are high, companies dig new wells, buy new equipment and hire new employees. They do everything they can to squeeze out as much profit as they can while prices are high.

But like everything else, oil markets are governed by supply and demand. Prices surge because there’s not enough oil to keep up with demand. As companies produce more oil, that gap in supply shrinks and prices fall.

The global price of oil fell in 2015 and remained persistently low for years. It tried to rally in 2019 but then the pandemic hit. Oil prices collapsed into negative territory and investors were clobbered.

Johnston says those low prices were particularly felt in relatively high-cost jurisdictions like Western Canada.

“On top of everything else, [Western Canada] was facing pipeline constraints and environmental push back,” said Johnston. “I think what you saw was a gradual transition toward less investment appetite in the oil sands in any given price scenario.”

Record-setting profits

Higher oil prices are still a net positive for the Canadian economy, said CIBC’s Shenfeld, but things are different this time.

“When they’re caused by disruptions in the global economy they are not as powerful as when they are caused by strength in economic activity around the world,” he said.

As the price of oil has skyrocketed these past few months, oil companies have heaved a sigh of relief that they’re finally posting profits again. Saudi Aramco reported a record-setting $40 billion profit in the first quarter of 2022. Canada’s Cenovus posted its best first quarter ever with $1.6 billion in profit.

“We are getting better revenue and wicked profitability, given the fact that they’re not investing a ton of money right now,” said Johnston. 

But the bust part of the cycle now weighs heavily on the minds of oil companies and their investors.

Gas prices in P.E.I. on Tuesday. With high oil prices and a lack of new investment, some oil companies are seeing record profits. (Wayne Thibodeau/CBC)

“There’s much more of a tendency to be careful, to be cautious, to be sure these high prices are here to stay before plowing in as much money as we did during the last up cycle,” said Shenfeld.

Demand flexible, but steady

So will the high prices stay? These past two years have been some of the most tumultuous and volatile in modern history. It’s easy to wonder if maybe things have changed.

“I have an allergic reaction as an economist to any claim that this time is different,” said Brett House, formerly the deputy chief economist at Scotiabank.

He says there were many rash predictions that COVID-19 changed things forever. But more than two years in, those predictions aren’t panning out.

He says it’s clear the work-from-home phenomenon is not going away anytime soon, which gives some consumers more choice about how much they need to travel.

“What’s different potentially is the flexibility of demand in response to high oil prices,” said House. “We’re a bit less inelastic than we were previously.”

Not everyone can work from home, obviously. And not everyone who can work from home will do so — even when gas prices hit all new highs.

Cars drive on the Don Valley Parkway, in Toronto, on May 6. While the COVID-19 pandemic did give some workers more flexibility with commutes, there hasn’t yet been a large downturn in demand due to high gas prices. (Alex Lupul/CBC)

But if some of them do, that would reduce demand and allow the market to work its way back to balance more quickly.

But that comes down to our own habits. And as CBC columnist Don Pittis pointed out this week, even in the face of staggeringly high gas prices, for now at least, Canadian driving patterns are holding steady.

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Canadian Hockey League boosts border rivalry by launching series vs. USA Hockey’s development team

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The Canadian Hockey League is looking to capitalize on the sport’s cross-border rivalry by having its top draft-eligible prospects face USA Hockey’s National Development team in an annual two-game series starting in November.

Unveiled on Tuesday by the CHL, the series is being billed as the CHL-USA Prospects Challenge with this year’s games played at two Ontario cities — London and Oshawa — on Nov. 26-27. The CHL reached a three-year deal to host the series, with sites rotating between the group’s three members — the Ontario, Quebec Maritime, and Western hockey leagues.

Aside from the world junior championships, the series will feature many of both nation’s top 17- and 18-year-olds in head-to-head competition, something CHL President Dan MacKenzie noted has been previously lacking for two countries who produce a majority of NHL talent.

“We think we’ve got the recipe for something really special here,” MacKenzie said. “And we think it’s really going to deliver for fans of junior hockey who want to see the best payers of their age group play against each other with something on the line.”

A majority of the CHL’s roster will be selected by the NHL’s Central Scouting Bureau.

The Michigan-based NTDP, established by USA Hockey in 1996, is a development program for America’s top juniors, with the team spending its season competing in the USHL, while rounding out its schedule playing in international tournaments and against U.S. colleges. NTDP alumni include NHL No. 1 draft picks such as Patrick Kane, Auston Matthews and Jack Hughes.

For the CHL, the series replaces its annual top-prospects game which was established in 1992 and ran through last season. The CHL also hosted a Canada-Russia Challenge, which began in 2003 and was last held in 2019, before being postponed as a result of the COVID pandemic and then canceled following Russia’s invasion of Ukraine.

“The success of USA Hockey’s program has really evolved and sort of gets them in a position where they’re going to be competitive in games like this,” MacKenzie said. “We’re still the No. 1 development league in the world by a wide margin. But we welcome the growth of the game and what that brings to the competition level.”

The challenge series is being launched at a time when North America’s junior hockey landscape could be shifting with the potential of NCAA Division 1 programs lifting their longstanding ban against CHL players.

On Friday, Western Hockey League player Braxton Whitehead announced on social media he has a verbal commitment to play at Arizona State next season. Whitehead’s announcement comes on the heels of a class-action lawsuit filed last month, challenging the NCAA’s eligibility ban of CHL players.

A lifting of the ban could lead to a number of CHL players making the jump to the U.S. college ranks after finishing high school.

MacKenzie called it difficult for him to comment due to the litigation and because the CHL is considered an observer in the case because it was not named in the lawsuit.

“My only comment would be that we continue to be a great option for 16- to 20-year-old players to develop their skills and move on to academic or athletic pursuits by being drafted in the NHL, where we’re the No. 1 source of talent,” MacKenzie said. “And we’re going to continue to focus on that.”

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Boston Marathon lowers qualifying times for most prospective runners for 2026 race

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BOSTON (AP) — Runners hoping to qualify for the 2026 Boston Marathon are going to have to pick up the pace.

The Boston Athletic Association has updated its qualifying times for the world’s oldest annual marathon, asking most prospective competitors to run a 26.2-mile race five minutes faster than in recent years to earn a starting number.

“Every time the BAA has adjusted qualifying standards — most recently in 2019 — we’ve seen athletes continue to raise the bar and elevate to new levels,” Jack Fleming, president and CEO of the BAA, said in a statement posted Monday. “In recent years we’ve turned away athletes in this age range (18-59) at the highest rate, and the adjustment reflects both the depth of participation and speed at which athletes are running.”

The BAA introduced qualifying times in 1970 and has expanded and adjusted the requirements through the decades. Runners participating in the event to raise money for charity do not have to meet the qualifying standards.

The latest change means men between the ages of 18 and 34 will have to run a marathon during the qualification window in 2 hours, 55 minutes or faster to earn a spot in the 2026 race — five minutes faster than for this year’s edition.

Women and nonbinary applicants need to complete the distance in 3:25.

The slowest competitors that can earn qualification are in the 80 and over age group. The men in that category must complete a marathon in 4:50, while women and nonbinary competitors have 5:20 to finish. Those numbers were not changed in the most recent adjustment.

The BAA said it had 36,406 qualifier entry applications for next year’s race, more than ever before.

“The record number of applicants indicates the growing trend of our sport and shows that athletes are continuously getting faster and faster,” Fleming said.

The qualifying window for the 2026 race began on Sept. 1 and will run through the conclusion of the registration period of that race next September.

Next year’s Boston Marathon will take place on April 21.

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Former Canadiens, Senators defenceman Chris Wideman retires after six NHL seasons

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MONTREAL – Former Montreal Canadiens and Ottawa Senators defenceman Chris Wideman announced he’s retiring after six NHL seasons on Tuesday.

Wideman spent his last three seasons under contract with the Canadiens, but did not play during the 2023-24 campaign due to a back injury.

The 34-year-old said in a letter released by the Canadiens that he made several attempts at rehabilitation and sought a variety of treatments before deciding to hang up his skates. He finishes his career with 20 goals and 58 assists in 291 games.

Wideman, a five-foot-10, 180-pound blueliner, started his NHL career with the Senators in 2015-16. He played parts of four seasons in the nation’s capital before he was traded in 2018-19 to the Edmonton Oilers, playing five games in Alberta before moving on to the Florida Panthers, Pittsburgh Penguins and Anaheim Ducks organizations.

During the 2020-21 season, he played in Russia’s Kontinental Hockey League and was named the league’s defenceman of the year.

Wideman returned to the NHL the following season and produced a career-best 27 points (four goals, 23 assists) in 64 games with the Canadiens.

This report by The Canadian Press was first published Sept. 17, 2024.

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