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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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Biden is isolated at home as Obama, Pelosi and other Democrats push for him to reconsider 2024 race

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WASHINGTON (AP) — Democrats at the highest levels are making a critical push for President Joe Biden to rethink his election bid, with former President Barack Obama expressing concerns to allies and Speaker Emerita Nancy Pelosi privately telling Biden the party could lose the ability to seize control of the House if he doesn’t step away from the 2024 race.

Biden’s orbit, already small before his debate fumbling, has grown even smaller in recent days. Isolated as he battles a COVID infection at home in Delaware, the president is relying on a few longtime aides as he weighs whether to bow to the mounting pressure to drop out.

The Biden For President campaign is calling an all-staff meeting for Friday. It’s heading into a critical weekend for the party as Republican Donald Trump wraps up a heady Republican National Convention in Milwaukee and Democrats, racing time, consider the extraordinary possibility of Biden stepping aside for a new presidential nominee before their own convention next month in Chicago.

As anxiety and information swirled, Biden’s closest friend in Congress and his campaign co-chair, Sen. Chris Coons of Delaware, told The Associated Press, “President Biden deserves the respect to have important family conversations with members of the caucus and colleagues in the House and Senate and Democratic leadership and not be battling leaks and press statements.”

Late Thursday, Montana Sen. Jon Tester became the second Democrat in the chamber Biden served in for four decades to call on him to step aside, saying in a statement, “I believe President Biden should not seek reelection to another term.”

Some Cabinet members are resigned to the likelihood of Biden losing in November. They have concerns about the insularity of his team and are focusing on having policies finalized and in place ahead of the end of his term, according to a person familiar with their thinking. The person insisted on anonymity to discuss private conversations.

Campaign officials said Biden was even more committed to staying in the race even as the calls for him to go mounted. And senior West Wing aides have had no internal discussions or conversations with the president about Biden dropping out, according to an official.

But there was also time to reconsider. He has been told the campaign is having trouble raising money, and some Democrats see an opportunity as he is away from the campaign for a few days to encourage his exit.

Biden, 81, tested positive for COVID-19 while traveling in Las Vegas and is experiencing “mild symptoms” including “general malaise” from the infection, the White House said.

The president himself, in a radio interview taped just before he tested positive, dismissed the idea it was too late for him to recover politically, telling Univision’s Luis Sandoval that many people don’t focus on the November election until September.

“All the talk about who’s leading and where and how, is kind of, you know — everything so far between Trump and me has been basically even,” he said in an excerpt of the interview released Thursday.

But in Congress, Democratic lawmakers have begun having private conversations about lining up behind Vice President Kamala Harris as an alternative. One lawmaker said Biden’s own advisers are unable to reach a unanimous recommendation about what he should do. More in Congress are considering joining the nearly two dozen who have called for Biden to drop out.

“It’s clear the issue won’t go away,” said Vermont Sen. Peter Welch, the other Senate Democrat who has publicly said Biden should exit the race. Welch said the current state of party angst – with lawmakers panicking and donors revolting – was “not sustainable.”

Obama has conveyed to allies that Biden needs to consider the viability of his campaign but has also made clear that the decision is one Biden needs to make. The former president has taken calls in recent days from members of congressional leadership, Democratic governors and key donors to discuss their concerns about his former vice president.

Pelosi also presented polling to Biden that she argued shows he likely can’t defeat Republican Trump — though the former speaker countered Thursday in a sharp statement that the “feeding frenzy” from anonymous sources “misrepresents any conversations” she may have had with the president.

This story is based in part on reporting from more than half a dozen people who insisted on anonymity to discuss sensitive private deliberations. The Washington Post first reported on Obama’s involvement.

Biden said Monday he hadn’t spoken to Obama in a couple of weeks.

Pressed about reports that Biden might be softening to the idea of leaving the race, his deputy campaign manager Quentin Fulks said Thursday, “He is not wavering on anything.”

However, influential Democrats atop the party apparatus, including congressional leadership headed by Senate Majority Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries, are sending signals of strong concern.

Using mountains of data showing Biden’s standing could seriously damage the ranks of Democrats in Congress, frank conversations in public and private and now the president’s own few days of isolation, many Democrats see an opportunity to encourage a reassessment.

Over the past week, Schumer and Jeffries, both of New York, have spoken privately to the president, candidly laying out the concerns of Democrats on Capitol Hill. Control of the House and Senate is at stake, and leaders are keenly aware that a Republican sweep in November could launch Trump’s agenda for years to come.

Separately, the chair of the Democratic Congressional Campaign Committee, Rep. Suzan DelBene of Washington, spoke with the president last week armed with fresh data. The campaign chief specifically aired the concerns of front-line Democrats seeking election to the House.

Major political donors, particularly in Pelosi’s California, have been putting heavy pressure on the president’s campaign and members of Congress, according to one Democratic strategist. Schumer has told donors and others to bring their concerns directly to the White House.

Prominent California Rep. Adam Schiff, a close ally of Pelosi, called for Biden to drop his reelection bid, saying Wednesday he believes it’s time to “pass the torch.” And Rep. Jamie Raskin of Maryland used a baseball metaphor to suggest in a recent letter to Biden, “There is no shame in taking a well-deserved bow to the overflowing appreciation of the crowd.”

To be sure, many want Biden to stay in the race. And the Democratic National Committee is pushing ahead with plans for a virtual vote to formally make Biden its nominee in the first week of August, ahead of the Democratic National Convention, which begins Aug. 19.

Rep. James Clyburn, a senior Democrat who has been a key Biden ally, wrapped up several days of campaigning for Biden in Nevada and said: “Joe Biden has the knowledge. He’s demonstrated that time and time again.” He warned against those who he said “have an agenda.”

But among Democrats nationwide, nearly two-thirds say Biden should step aside and let his party nominate a different candidate, according to an AP-NORC Center for Public Affairs Research poll. That sharply undercuts Biden’s post-debate claim that “average Democrats” are still with him even if some “big names” are turning on him.

The Biden campaign pointed to what it called “extensive support” for his reelection from members of Congress in key swing states, as well as from the Congressional Black and Hispanic caucuses.

Other Democrats in Congress have shown less support, including when Biden’s top aides visited Democratic senators last week in a private lunch. When Sen. John Fetterman of Pennsylvania asked for a show of hands on who was with the president, only his own and a few others including top Biden ally Coons of Delaware went up, according to one of the people granted anonymity to discuss the matter.

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Associated Press writers Joey Cappelletti in Lansing, Mich., and Josh Boak. Ellen Knickmeyer, Steve Peoples, Will Weissert, Mary Clare Jalonick, Seung Min Kim and Stephen Groves contributed to this report.



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Trump, in highly personal speech, will accept GOP nomination again days after assassination attempt

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MILWAUKEE (AP) — Just five days after surviving an assassination attempt, a bandaged Donald Trump is set to address the Republican National Convention on Thursday to accept his party’s presidential nomination in a speech designed to unify his party — and the nation — behind his third consecutive White House bid.

The 78-year-old former president, known for his willingness to criticize his political foes in both parties, has promised to offer a softer and more personal message of unity following his brush with death.

Trump’s speech marked the climax and conclusion of a massive four-day Republican pep rally that drew thousands of conservative activists and elected officials to swing-state Wisconsin as voters weigh an election that currently features two deeply unpopular candidates. But with less than four months to go in the contest, major changes in the race are possible, if not likely.

Trump’s appearance comes as 81-year-old Democratic President Joe Biden clings to his party’s nomination in the face of unrelenting pressure from key congressional allies, donors and even former President Barack Obama, who fear he may be unable to win reelection after his disastrous debate.

Long pressed by allies to campaign more vigorously, Biden is instead in isolation at his beach home in Delaware after having been diagnosed with COVID-19.

While the often bombastic Trump was seeking to project a more gentle tone on Thursday night, the speaking program of the convention’s final day was also designed to project strength in an implicit rebuke of Biden. The program was decidedly more masculine than it has been for much of the week.

The most prominent speakers included wrestling icon Hulk Hogan, Ultimate Fighting Championship President Dana White, and former Fox News host Tucker Carlson. Kid Rock was also set to perform.

Like many speakers during the convention, Carlson suggested that recent events were divinely inspired and that he wondered “if something bigger is going on.”

“I think it changed him,” Carlson said of the shooting, praising Trump for not lashing out in anger afterward.

“He did his best to bring the country together,” Carlson added. “This is the most responsible, unifying behavior from a leader I’ve ever seen.”

Former first lady Melania Trump and Ivanka Trump, the president’s elder daughter and former senior adviser, were expected to be inside the convention hall for the first time all week, but neither was scheduled to speak.

Attorney Alina Habba, who represented Trump in some of the legal cases against him, also addressed the convention.

Trump was convicted in May of 34 felony counts related to a criminal hush money scheme in New York. But his allies largely avoided his legal baggage this week, which was focused instead on Trump’s near-assassination.

Trump entered the hall about two hours before he was scheduled to speak, wearing a large white bandage on his right ear, as he has all week, to cover a wound he sustained in the Saturday shooting. Some of his supporters were sporting American flag-themed bandages on the convention floor Thursday.

Speakers and delegates, gathered in Wisconsin from every state in the nation, have repeatedly chanted “Fight, fight, fight!” in homage to Trump’s words in the moments after the shooting when he rose and pumped his fist after Secret Service agents killed the gunman.

While Republicans were set to emerge from their convention more united than in recent memory, Democrats are bitterly divided about whether Biden should continue to lead the ticket. Biden, following his disastrous debate performance against Trump last month, has resisted increasing pressure to drop out, with Democrats’ own party convention scheduled for next month in Chicago.

Hours before the balloons were scheduled to rain down on Trump and his family inside the convention hall, Biden deputy campaign manager Quentin Fulks appeared nearby in Milwaukee and insisted over and over that Biden would not step aside.

“I do not want to be rude, but I don’t know how many more times I can answer that,” Fulks told reporters. “There are no plans being made to replace Biden on the ballot.”

Nearly two-thirds of Democrats nationally say Biden should step aside and let his party nominate a different candidate, according to an AP-NORC poll released Wednesday.

The convention has showcased a Republican Party reshaped by Trump since he shocked the GOP establishment and won over the party’s grassroots on his way to the party’s 2016 nomination. Rivals Trump has vanquished — including Sens. Ted Cruz of Texas and Marco Rubio of Florida, former U.N. Ambassador Nikki Haley and Florida Gov. Ron DeSantis — put aside their past criticisms and gave him their unqualified support.

Even his vice presidential pick, Ohio Sen. JD Vance, Trump’s choice to carry his movement into the next generation, was once a fierce critic who suggested in a private message since made public that Trump could be “America’s Hitler.”

Security was a major focus in Milwaukee in the wake of Trump’s near-assassination. But after nearly four full days, there were no serious incidents inside the convention hall or the large security perimeter that surrounded it.

The Secret Service, backed by hundreds of law enforcement officers from across the nation, had a large and visible presence. And during Trump’s appearances each night, he was surrounded by a wall of protective agents wherever he went.

Meanwhile, Trump and his campaign have not released information about his injury or the treatment he received.

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Associated Press reporters Michelle L. Price in Milwaukee and Emily Swanson in Washington contributed to this report.

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Follow the AP’s coverage of the 2024 election at https://apnews.com/hub/election-2024.



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‘Instant action plan’: More than 100 evacuated from nursing home amid flood

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As floodwaters poured into a Mississauga long-term care home –submerging much of the ground floor – rescue crews worked to rapidly get residents into inflatable rafts to evacuate the property while others worked on stopping the water from rising further.

The operation that unfolded over the course of 12 hours on Tuesday following torrential rains eventually saw more than 100 residents safely moved out of the nursing home, some by raft and others on foot once the water receded.

Mississauga Fire Captain Dan Herd said the evacuation of the Tyndall Seniors Village, which saw multiple emergency services from across the Greater Toronto Area come together, was on a scale he hadn’t seen before.

“There was water inside the building, the first floor – in between probably three to four feet high on the walls – and some windows were broken, damaged,” Herd said, adding that the parking lot was inundated by water at one point.

“We set up an instant action plan, and we started to move thousands of litres of water at a time … the water rescue team was using their rescue boats to assist the removal of ambulatory patients and occupants.”

The flooding began after incredibly heavy rains on Tuesday caused the nearby Etobicoke Creek to overflow, Herd said.

Once enough floodwater had been pumped out of the home, some residents were able to walk out of the building, he said. Those who were unable to walk were carried down stairs and out of the building by first responders using lifting equipment, Herd said.

“This is my first personal experience of something to this size,” he said of the operation.

None of the residents were injured, said Tom Kukolic, acting deputy chief for Peel Region’s paramedics service.

Once first responders determined that none of the 116 residents needed emergency care, efforts then shifted to a “safe extrication and relocation” operation, Kukolic said, with residents eventually taken to two long-term care homes and two hotels.

“Once the paramedics and firefighters were able to bring the residents out of the home and move them to the triage area, we then had assistance from Peel Wheel-Trans, Toronto TTC Wheel-Trans, and Mississauga Transit,” Kukolic said.

The relocation effort was “a seamless transition” thanks to the collaboration of several emergency response teams, including York Region and Toronto paramedics, he said.

“Extricating people, it’s very difficult. It is very laborious work … however, what we do from a paramedic practice perspective, is ensure that we have enough people to safely move residents,” Kukolic said.

Tuesday’s massive downpour caused chaos across Toronto and its surrounding communities, with flooding shutting down several major routes and terminals and knocking out power to thousands.

Mississauga Fire Chief Deryn Rizzi called the response at the nursing home “a great example” of how multiple agencies across the Greater Toronto Area can work together.

“We are there to work collaboratively together, to address the incident to achieve a common goal, which in this case, it was to evacuate the residents safely,” he said.

For Kukolic, the full-day operation showed how preparation can help first responders deal with large-scale responses triggered by sudden events such as Tuesday’s flooding.

“I was proud to be a member of paramedic services and a first responder,” he said.

“It was really great to see how everybody came together to ensure that our most vulnerable were taken care of.”

This report by The Canadian Press was first published July 18, 2024.

The Canadian Press. All rights reserved.



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