Canada's energy sector service and equipment exporters are in for tough times, and cash flows for oil and gas exporters will tighten significantly. This is already beginning to spill red ink on Canada's trade and fiscal statistics. However, Canada's non-energy sector exporters should see a substantial boost.
Hydro-Québec indirectly subsidizes the wind power sector to the tune of $695 million a year, which amounts to some $200 per Quebec household to produce a tiny fraction of the province's energy. With an estimated 40 billion barrels of oil, developing this resource would provide a minimum of $160 million a year in royalties for the Quebec treasury over 30 years.
Periods of instability that punctuate oil price history, highlight the importance of energy sector reform, which can be made all the more effective if paired with climate change considerations. To avoid climate change pitfalls created by falling oil prices it is necessary to approach environmental reform in new and innovative ways.
The new TransCanada pipeline isn't about getting energy east -- it's about getting crude oil east. When discussing the environmental impact of oil sands development, stop using the benign sounding "tailings ponds" when we're actually talking about "toxic sludge." Ducks aren't killed when they land in ponds.
These factors have brought hard times to some industries and uncertainty about the impacts to the Canadian economy as the whole. While uncertainty is never comfortable, it can present some opportunities and challenges depending on your situation or sector. Here are three to watch for the rest of the year.
According to the Oil & Gas Journal (OGJ), Norway had 5.83 billion barrels of proven crude oil reserves as of January 1, 2014, the largest oil reserves in Western Europe. The enormous income to the state from the industry made it possible to create a global pension fund that now owns more than one per cent of global share value.
The short term problem is that Alberta has expensive oil which will make it challenging for all governments to achieve their fiscal goals. Revenues are down. Already we are seeing the incredible shrinking surplus of the Harper government. Medium term the market will right itself and business will pick up.
For the people of Bhopal, the disaster never ended. They still suffer from water contamination, respiratory illnesses, and higher rates of infant mortality and birth defects. They've waged one court fight after another for more compensation. Thirty years ago the world failed to protect Bhopal. We owe it to them, and all developing communities, to enshrine corporate responsibility in national and international law.
Higher oil costs spell the end of globalization. The messages flashed across the globe repeatedly, and were so believable that speculation heightened the havoc. But the bubble burst, and six years on, prices are south of $90 per barrel and falling. Do lower prices make sense, or is this just temporary?
If anybody can operate pipelines and oil tankers, Canadians can. Proof of this is the track record of the Port of Vancouver which has operated safely with no major oil spills in more than 100 years. Voting for Gregor Robertson means voting to support a foreign-funded campaign that is keeping Canada over a barrel and costing our country billions.
A recent plunge in oil prices as been driving a steady stream of commentary from leading economic voices across the spectrum in Canada calling for everything from outright panic to 'stay the course'. With oil hovering just north of $80 per barrel, many are starting to question the future of pipelines, tar sands and other resource intensive extractive projects.
The Toronto Stock Exchange is plummeting in lock step with the fall in oil prices. The loonie is heading in the same direction, hopefully putting to bed any debate as to whether Canada has a petro-currency. Provinces that rely on oil royalties and revenues will likely have difficulty balancing their budgets.
Already there have been three near misses. Four months after Quebec's deaths, another derailment and explosion occurred outside an Alabama town without deaths. This was followed by a collision of two trains that resulted in an evacuation of more than 2,000 persons and a 400,000-gallon oil spill. A third derailment and explosion happened in Virginia forcing another evacuation. Safety is bad enough, but rail is also terrible for the environment.