Energy Prices Impacting Canada and US Economies

THUNDER BAY – BUSINESS – The price of a barrel of Western Canadian Select fell to $39.66 Canadian on Tuesday. That works out to $32.20 US after conversion. Falling energy prices have been the focus of cheering over lowered energy prices at the gas pump for consumers.

Last night during the State of the Union Address, American President spoke about moving America forward into new directions with energy. “At this moment – with a growing economy, shrinking deficits, bustling industry, and booming energy production – we have risen from recession freer to write our own future than any other nation on Earth. It’s now up to us to choose who we want to be over the next fifteen years, and for decades to come”, stated the President.

The President appeared at times during his speech to be taking a victory lap over his handling of the American economy.

Canadians are watching our economy appear increasingly less powerful, where the Americans are seeing increased jobs, Canada is seeing job numbers fall.

The price of Western Canadian Select, is at a rate that puts it at a significant difference from West Texas Intermediate or Brent Sea Crude oil. That contrast on Tuesday was over $16.

The ripple effect is starting to show across the economy.

Statistics Canada reports, “Manufacturing sales declined 1.4% in November to $51.5 billion, reflecting lower sales of motor vehicles, chemicals, primary metals and food. This was the third decrease in four months. Year-to-date sales in 2014, however, were 5.2% higher than those in the first 11 months of 2013.

“Sales declined in 16 of 21 industries, representing more than 80% of total Canadian manufacturing. Constant dollar sales fell 1.4%, indicating that a lower volume of manufactured goods was sold”.

The impact on Ontario’s manufacturing sector is starting to show.

Statistics Canada reports, “Sales in Ontario fell 2.1% to $23.7 billion as 18 of 21 manufacturing industries, representing nearly 90% of the province’s manufacturing sector, posted lower sales. This was the third decline in four months. Sales of motor vehicles and chemicals were down 5.9% and 6.1% respectively. Ontario manufacturing sales in the first 11 months of 2014 were 5.8% higher than in the first 11 months of 2013”.

“Sales in Alberta declined 3.8%, reflecting lower sales of petroleum and coal products. Sales in the province were at their lowest level since January 2014. The decline was largely due to a drop in prices in the petroleum and coal product industry”.

Now is the time for the Conservative federal government to demonstrate the leadership that they have repeatedly said they have offered to build a strong Canadian economy.

James Murray