News articles for week of April 14

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Oil could reach $300, says expert

Matthew Simmons, chairman and founder of specialized energy investment banking firm, Simmons & Company International, said the current highs of $100 per barrel are "cheap".
He noted that in the UK's capital, London, where typically the price per gallon can reach as much as $9, it hasn't deterred motorists from continuing to use their cars.
Simmons is a leading expert in his field and author of the controversial book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. In the book Simmons argued that Saudi Arabia will, in the coming decades, be unable to maintain its current level of oil production, with huge economic repercussions. Simmons said that the peak oil issue is poorly understood and the world's data on production, demand and inventories is inaccurate.
We haven’t seen the beginning of high oil prices, and every time the cost of oil goes up, more money flows into Calgary.
For the first time ever in Canada, the cost of 1 litre of gas at the pumps now costs more than 1 litre of milk. Would you rather never leave your house, or have no milk... Gas is still dirt cheap.

Sub Note:

Matt Simmons (Bloomberg): Peak Oil Now, Oil Perhaps to $300 (Video)

Recorded 14 months ago, this is a six minute video about the future price of oil interviewing the same fellow from the above article. He continues to say that we've hit peak oil globally, that $65/barrel is only $0.10 a cup, and the price will only go up from here – WAY up.
Note the reporter's shock of $300/barrel. It doesn’t seem like such a shocking number now, does it?

Soaring oil, gold point to widening economic divide

The loonie soared close to parity Wednesday on the back of record oil prices and new evidence of a widening North American economic divide. U.S. reports pointed to a deepening of the housing recession while Statistics Canada reported an unexpected second straight monthly surge in factory shipments.
Meanwhile, oil hit a new all-time high of more than $115 US a barrel, ending the day at a record close of nearly $115 US, while gold, silver and copper prices all also posted gains. Investors responded by going on a shopping spree for commodity stocks and sending the benchmark TSX soaring by nearly 250 points.
However, the western provinces should grow between two and three per cent, led by Saskatchewan, followed closely by British Columbia and Alberta, and then Manitoba, all of which are expected to continue surging ahead in 2009.
Because of the cost of oil, rising commodity prices in general, and the booming economy out West, we’re the envy of the rest of the continent out here.

Alberta sidesteps economic anxiety

Amid unease around the economic future in Canada's heartland in Ontario and Quebec and anxiety about the United States' outlook, a raft of recent indicators paint a sharply contrasting picture for Alberta and Calgary. Simply put: Alberta remains an island of prosperity in a roiling sea of economic uncertainty.
"There almost seems to be distinct economies between Alberta and the rest of North America, really," notes Calgary Economic Development chief economist Adam Legge.
"Alberta is doing even better than most people thought . . . and we expect Alberta to remain quite strong," CIBC World Markets chief economist Jeff Rubin told the Herald.
Alberta's employment in March topped the two-million mark while the provincial jobless rate sank to a cross-Canada low of 3.4 per cent and the participation rate -- those working or looking among adults -- rose to an all-time Canadian high. Job creation in Alberta is running at 3.4 per cent annually compared with 1.9 per cent nationally.
You have love reading that “Alberta remains an island of prosperity in a roiling sea of economic uncertainty”, and it’s true. The global investment community is looking to Alberta as a safe haven for the next five or so years of investments.
Those of us that live here are so close to it, that we become a bit jaded by it, not able to see what the rest of the world sees. All of a sudden, investing in Florida seems to be a good option.

Canada will 'sit out' U.S. recession, CIBC forecasts

The Canadian economy will avoid being dragged into a recession by the U.S. downturn thanks to healthy domestic activity and strong commodity prices, a major Canadian financial institution forecast Monday.
CIBC is forecasting that high commodity prices, which are cushioning Canada's resource sector, will push the loonie to $1.05 US by year end. The currency closed at 98.08 cents US Monday, up from 97.71 cents US Friday.
CIBC forecast that continuing high commodity prices and the strong dollar will hurt central Canada's manufacturing-based economy. "Weakness in the Ontario economy, which will likely come the closest to outright recession of any of the provinces, will likely spur further Bank of Canada rate cuts," Rubin said.
Another forecast that Canada’s economy is doing great on the world scale, and we’re not tied to the US nearly as much as we have been in the past. The old adage that when the US sneezes Canada catches a cold sure isn’t true this time around.

Alberta pursues 41,000 foreign workers

The workers, being brought in to ease the massive labour shortage, would create a new city half the size of Red Deer if they all lived in one place.
The new data provided by Human Resources and Social Development Canada also indicate the number of temporary foreign workers could grow even larger in the coming months because "a significant number" of applications are still being processed over and above the 41,218 requests approved in the past 12 months.
"We are being swamped with requests from employers for temporary foreign workers because they simply can't find people," Greene said.
This is one of my favourite articles this week, just because the rental market here is incredibly tight as it is, but if you add another 41,000 people to the market it will get even tighter.
Canada Mortgage and Housing Corporation (CMHC) is predicting a 0.5% increase in Calgary’s vacancy rate this year from 1.5% to 2.0%. Of course the papers are running headlines like ‘Vacancy rate skyrockets’, but keep in mind that 2.0% of a year is 7.3 days. I’m not sure about everyone else, but one week of vacancy in a year sure doesn’t scare me.

Posted by David Sandbrand on 04/20/2008 03:41 PM

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