Mederlock posted:

could it be... that you're a tragically hip fan?

Anyways serious talk, peep dis
http://m.theglobeandmail.com/news/national/murky-future-for-fort-mcmurray-as-oil-prices-fall/article22422885/?service=mobile

quote:

Important Bank of Canada speech coming in 20 minutes: Deputy Gov Lane on "Oil Prices and Impact on Economy" http://t.co/E2v6YIMbHo

Coylter posted:

Negative interest rates.

eXXon posted:

Hmm? There's still another 1% that could be cut, and then why not go negative if you can? efu Coylter.

LemonDrizzle posted:

Central banks can do QE at will, and if the government wants direct stimulus it could just take a leaf out of dubya's playbook and cut everyone in the country a check.

sbaldrick posted:

The problem with a dubya style stimulus is Canada is pretty broke and it would make the Harper government look like they failed (which they did).

LemonDrizzle posted:

Central banks can do QE at will, and if the government wants direct stimulus it could just take a leaf out of dubya's playbook and cut everyone in the country a check.

Franks Happy Place posted:

It's not "at will" easy when you don't have a reserve currency everybody is interested in owning, no. Then you're just printing buttwipe.

Xoidanor posted:

Except that inflation is super-low which means this is exactly the kind of situation where printing should be able to do some good.

LemonDrizzle posted:

Sweden did QE with a population of like ten million, and I can't imagine anyone's using SEK as a reserve currency.

Cultural Imperial posted:

quote:

RBC: #Canada household #debt grew 4.5% for 2nd straight month in Nov; mortgages up 5.2% vs year ago, higher than 5.1% in Oct, Sept #cdnecon

Cultural Imperial posted:

What do you mean by "pretty broke"?

quote:

OTTAWA — The Bank of Canada says low oil and commodity prices are putting the Canadian economy’s post-recession recovery at risk.

The central bank’s deputy governor Timothy Lane told an American audience Tuesday that if cheap crude prices persist, they will significantly discourage investment in the oil sector, which he said accounts for about three per cent of Canada’s gross domestic product.

In prepared remarks of his speech in Wisconsin, Lane said lower oil prices produce benefits such as putting more disposable cash in consumers’ pockets and helping to cut costs for other sectors, like manufacturing.

Lower oil prices are likely, on the whole, to be bad for Canada

But, Lane predicts the gains will be more than outweighed by the losses because lower incomes in the oil patch and along its supply chain will hurt the rest of Canada’s economy.

“Despite the mitigating factors I enumerated, lower oil prices are likely, on the whole, to be bad for Canada,” Lane said.

His remarks follow Bank of Canada governor Stephen Poloz’s statement last month that low oil prices could knock 0.3 percentage points off the pace of economic growth.

In his fall update, Finance Minister Joe Oliver warned cheaper crude could drain $500 million from Ottawa’s bank account in 2014 and $2.5 billion per year between 2015 to 2019.

Since the estimates by Poloz and Oliver, the price of a barrel of oil has tumbled even further.

Related

Oil collapse threatens Ottawa’s balance plans: ‘There’ll be a big hit right up front’Why Ottawa should cut taxes despite low oil revenues

TD Bank issued a report Tuesday that predicted sliding oil prices could turn the federal government’s promised 2015-16 surplus into a deficit. It projected Ottawa to run a $2.3-billion shortfall next fiscal year rather than the $1.6-billion surplus predicted by the government in November.

TD also said the government’s $4.3-billion surplus projection for 2016-17 is on track to become a $600-million deficit unless new revenue-generating or cost-cutting measures are introduced.

However, the deficit estimates are smaller than the government’s $3-billion reserve set aside for contingencies — which would help keep Ottawa in surplus territory.



The TD report also says low oil prices will make it difficult for the Conservative government to deliver on two outstanding 2011 campaign pledges: an adult fitness tax credit and doubling the annual contribution limit on tax-free savings accounts.

Lane’s gloomy outlook adds fuel to speculation the Bank of Canada will hold off before hiking the country’s trend-setting interest rate, which has been locked-in at one per cent for more than four years.

The deputy governor also said the central bank will closely monitor the immediate yet temporary negative impact on total inflation, as well as its broader effects on growth and how it could delay Canada’s return to its full economic health.

However things play out, we have the tools to respond

“We will continue to work to bring the Canadian economy back to its potential and return inflation sustainably to our two per cent target,” Lane said.

“However things play out, we have the tools to respond.”

Lane said the bank will issue its complete forecast on the impact of low oil prices on the Canadian and global economies when it releases its monetary policy report next week.

etalian posted:

Baba Yagu after 30.

quote:

Alberta Premier Jim Prentice says he disagrees with a new Conference Board of Canada report that says Alberta faces the possibility of slipping into a recession this year because of the drop in oil prices.

"I didn’t find [the Conference Board's] analysis to be particularly cogent, to be frank, and the opinion that they’ve put forward is an outlier amongst all of the other opinions that have been put forward by every one of Canada’s chartered banks and by other respected economic forecasters," said Prentice, taking questions from reporters in Calgary.

"If you take the consensus of all of the other forecasts that have been undertaken, there is a slippage in economic growth in Alberta from something in the range of 3.2 per cent down to something between 1.8 and 2.2 per cent," he said.

"Certainly we intend to make measured, balanced fiscal choices that will continue to keep us in a positive growth mode."

Much lower energy prices are playing out in different ways across Canada, but the Conference Board said Tuesday the impact is likely to be the most prominent in Alberta's oil-heavy economy.

Many economists have slashed their growth expectations in recent months as the price of a barrel of oil has nosedived from $105 US as recently as June to under $50 today. But the Conference Board said the province faces more than just a slowdown — it could see an actual recession.

"Going forward, the province is certain to suffer, especially on the employment front, from the drop in oil prices — and it is likely to slip into recession," Daniel Fields, an economist at the not-for-profit research organization, said in a recent report.

Many provincial governments, and indeed the federal government, have benefited from high energy prices since the recession. But none are so reliant as Alberta. Edmonton relies on oil royalties for about a quarter of its revenues.

It's not just governments that are expecting leaner times. Companies in the real economy that have spent billions expanding the Athabaska oilsands are cutting back.

Late last year Total S.A. postponed its Joslyn oilsands project, while Statoil put the brakes on a Kai Kos Dehseh project. In December, Husky and Penn West both trimmed their spending budgets by billions of dollars. And just yesterday, Canadian Natural Resources, the giant of the space, slashed about $2 billion from what it plans to spend in the oil patch this year.

All those lost dollars are likely to trickle down into fewer jobs, compounding the pain. Shell announced Friday that it was trimming 200 positions.

Some oil patch watchers are bracing for more, as the last time oil prices cratered like this was in the recession of 2008.

"Engineering investment in the province nosedived by about $18 billion, some 30,000 jobs in Alberta’s mining sector disappeared, and housing starts fell 75 per cent," Fields said.

The Conference Board's chief economist Glen Hodgson will be a guest on The Exchange with Amanda Lang on Tuesday to give more details of his analysis.

etalian posted:

I also wonder how long the oil price bust will last?

Given the lethargic performance in the world economy especially in the Eurozone/emerging markets, it's not like their will be explosive growth and demand over the next few years.

Whiteycar posted:

I think the point is to starve out the tar sands and the newer upstarts in russia etc.

It will be a while.

etalian posted:

also lol:

etalian posted:

It wasn't so much a cunning Saudi scheme, as rage quit and also admitting that OPEC is a hilariously ineffective cartel.

The much bigger reason is also how the extraction costs decrease over time due to better technology or how the commodity bubble led to a big oversupply situation.

THC posted:

Low vacancy and high rent. Why am I not feeling the urge to move to Alberta

Whiteycar posted:

It appears I have more reading to do.

drat commodities markets!

quote:

Q: Should the Saudis cut production if they get an agreement with other oil producing countries to take oil off the market?

A: Frankly speaking, to get all OPEC countries to approve and accept it, including Russia and Iran, and everybody else, is almost impossible You can never have an agreement whereby everybody cuts production. We can't trust all OPEC countries. And can't trust the non-OPEC countries. So it's not on the table because the others will cheat. The past has proven that. When Saudi Arabia cut production in the '80s and '90s, everybody cheated and took market share from us. Plus, remember there is an agenda here also. Although Saudi Arabia and OPEC countries did not engineer the reduction in the price of oil, there's a positive side effect, whereby at a certain price, we will see how many shale oil production companies run out of business. So although we are caught off guard by this, we are capitalizing on this matter whereby we'll live with $50 temporarily, to see how much new supply there will be, because this will render many new projects economically unfeasible.

etalian posted:

It wasn't so much a cunning Saudi scheme, as rage quit and also admitting that OPEC is a hilariously ineffective cartel.

The much bigger reason is also how the extraction costs decrease over time due to better technology or how the commodity bubble led to a big oversupply situation.

Cultural Imperial posted:

Yo if you guys are really interested in oil, check this poo poo out:

http://ftalphaville.ft.com/2015/01/12/2084942/a-capital-contango-and-why-oil-storage-economics-may-be-dead/

TL;DR, back in 2008, motherufckers with shitloads of money lying around were making money off of renting out oil tankers to hold oil while prices...um...tanked. This is called contango. Now it looks like it's so easy to ramp up the extraction of oil, the same motherfuckers are hoarding money because it's not worth it to store oil.

I have no idea what this means!!!

etalian posted:

lmao when add up all the capital cost cuts for canadian energy companies it's already billions of dollars.

Cultural Imperial posted:

Hal, what's an example of one of these us energy companies which aren't worth the money theyre printed on?

Hal_2005 posted:

Well, this is a very easy question to ask and by observing the total debt vs the fully diluted enterprise value of the company, you can come to that answer on your own. I can say that if you check out the Permian, the Tuscaloosa Marine, or some Canadian companies in the Cardium and Bakken, then you may be able to imply that for yourself. Giving out specific companies is something I can't do, for the same reason if you watch BNN or CNBC you are not allowed to direct people (see the other thread). But literally a simple google at companies which have fallen more than 87% of their market cap since October should figure that out for you. Many companies defer their layoffs until the next year, because as I explained earlier in the thread, you don't want to report huge end of year tax losses, or pay out the severance packages which will affect your annual credit reviews or cash flow metrics for credit syndicate reviews. See below why this is important. Peak layoff season for the oil & gas world is Feb to April, during the "spring breakup". For downstream, everything from the pipe fitters from PEI to the losers pumping gas in Carstairs Alberta? Those guys get the axe around June, because thats when the non-farm payrolls need to show a "seasonally adjusted" layoffs, which enable you to claim help from the federal government for layoffs due to downturns in seasonal needs. Like rig work and fluffing beds.

Since many of these companies on an accounting profits basis are profitable, but on a cash flow basis, just like refineries and airlines are hopelessly unable to meet their cash flow needs, and are thus, cash flow bankrupt; working from their credit syndicate or as we say, net working capital lines. Think like goons who live credit card payment to card payment, and sometimes they get an equity infusion (a handout) from mom & dad, only mom & dad are investors with a dilutive equity raise and/or stock dividend at negative production per share growth.

Hope that helps

Lexicon posted:

If the Saudis wield so much power in the oil market, and have the ability to price out the oil sands and shale operations - why wait till late 2014 and not nip it in the bud way sooner?

Hal_2005 posted:

Norway's Soverign Wealth Fund likely going bust...