Calgary & Alberta Economy

[darwink]

Alberta oil production has hit a record.

Thanks Trudeau!

 

[JesseLikesCities]

Yes. But. It isn't that they captured us, but we captured their market and locked them in. Now neither side has flexibility and both sides are screwed because some real estate people now control commodity trading rules.

The refinery has to already be set up to accept similar crude. Iraq, Saudi, Mexico, Venezuela, Ecuador, Colombia, Brazil, some of Russia.
A very rough approximation:
View attachment 628737

For rule of thumb purposes to help understand this world, when the price difference between Maya and WCS is less than the cost of tolls to the Gulf +$2, WCS is worth more due to excess demand in the isolated market we serve (the Mid-West). When WCS is worth less than Maya-tolls-$2, then there is over supply or not enough transportation capacity to market.

There is a lot of heavy refining capacity in the world. Of course, a lot of the capacity is proximate to heavy production. Or is the USA. A very don't take this as gospel graph, but of general truths.
Heavy refining capacity (and hard to say about Singapore, I think they can but prefer not to source heavy)
View attachment 628739

IF the USA would allow loading of Canadian crude in Texas, markets would rebalance to have a WCS price not discounted by the tariff much at all, only by the extra transportation premium on the imported crude to replace the Canadian crude, and the extra transportation on the Canadian crude compared to the delivery points for that foreign crude.

In that world, it is also very important to remember than while Canadian crude might end up with a 25% tariff, other world crude will have a 10% tariff. So the margin is 15%. And either the market will be efficient and most of that 15% will be eaten by American consumers and logistics companies, working around the tariffs, or inefficient (the Americans ban Canadian re-export but continue to allow American export), and another layer of hell breaks lose.

That was a great explanation put in laymen's terms. Thanks darwink!

 

[UrbanWarrior]

What are the immediate effects we can expect of Shitler's tariffs coming in tomorrow? I understand gas and grocery (produce) prices will skyrocket pretty much instantaneously, what about other goods? I'm assuming the Canadian dollar value will be cut by around half... but don't really know what that means overall. Anyone have a breakdown on what to expect, in simple language please

 

[CalgaryTiger]

What are the immediate effects we can expect of Shitler's tariffs coming in tomorrow? I understand gas and grocery (produce) prices will skyrocket pretty much instantaneously, what about other goods? I'm assuming the Canadian dollar value will be cut by around half... but don't really know what that means overall. Anyone have a breakdown on what to expect, in simple language please

Depends on our retaliation. Big unknown is if Oil is going to be included. If it is, that could be bad for trump with gas prices and make him look weak. If it isn't, that could be bad for Canadian national unity.

 

[darwink]

I understand gas and grocery (produce) prices will skyrocket pretty much instantaneously

It really depends. Our gasoline prices link back to USA prices, and those prices (NY harbour, gulf coast, Chicago, and LA) interact, but now in Alberta the discount will be even larger. At the same time, the Canadian dollar will likely continue to fall.

Leafy greens would be the first produce to target with tariffs -- they don't last long and the USA has most production these days, though Canada does have some greenhouse production.

C$ won't drop by that much as a lot is already priced in. 63, 64 cents is possible, and would put all of Canada back on the same terms of trade as we were with the USA at 80 cents pre-tariff.

We wait until the countervailing tariffs and such. If you like any USA hard liquors and want another bottle within the next 6 months, I'd go buy them today.

Big change isn't in consumer facing things. But remember the instantaneous pull back of capital spending/business investment in 2008 with the world financial crisis and natural gas collapse? Think that, across almost every industry. The Alberta government could swing and have a $20 billion revenue shortfall.

 

[Mountain Man]

Depends what he tariffs and how much.

 

[darwink]

Depends on our retaliation. Big unknown is if Oil is going to be included. If it is, that could be bad for trump with gas prices and make him look weak. If it isn't, that could be bad for Canadian national unity.

If oil isn't included, it is the USA showing vulnerability, and Trump is weak. It also points to him as a liar, that he complains about the trade deficit yet exempts by far the largest component of it.

If oil isn't included, pain be damned, Canada must put in an export tax to exploit that weakness to force a return to the status-quo as fast as possible. The revenue from the export tax in Canada be turned back over to the Alberta government to do with as they see fit. We already know the industry will scream at the republicans.

If we think this is long term, like 4 years, and we really can't do anything about it, we should only put in countervailing tariffs. We should also put in notice that we are ending trade agreements, and evaluate whether we should stay in the WTO, and any other organization that the USA values our presence in that we only value for their functions of moderating the USA.

 

[NWUrbanism]

What are the immediate effects we can expect of Shitler's tariffs coming in tomorrow? I understand gas and grocery (produce) prices will skyrocket pretty much instantaneously, what about other goods? I'm assuming the Canadian dollar value will be cut by around half... but don't really know what that means overall. Anyone have a breakdown on what to expect, in simple language please

My advice to you is to read what the experts are saying about this rather than listen to potentially uninformed people on the internet. The Bank of Canada has a good summary of what could happen here. Most banks have released articles about the potential impacts too. The summary is we likely enter a recession, inflation will likely rise again, and the dollar will weaken (not by half though, more like in the sub 70 cent range). The impact to cost of goods in Canada will mostly depend on how our government chooses to retaliate (ie what goods we buy from the US get hit with new tariffs).

 

[CalgaryTiger]

But remember the instantaneous pull back of capital spending/business investment in 2008

I think about it like, in development forum terms... Canada is the community next to the big bustling centre that is the USA. If there's a toll to go from our community to the centre then people won't want to invest in our community to get access to the centre, they'll go to the centre.

 

[trtcttc]

I think about it like, in development forum terms... Canada is the community next to the big bustling centre that is the USA. If there's a toll to go from our community to the centre then people won't want to invest in our community to get access to the centre, they'll go to the centre.

Depends on how long term this is. Trumps tariffs on steel and aluminum in 2016 didn't have a lasting impact. The fact we see significant disagreement on tariffs between the corporate and ideological members of his cabinet, hopefully this will be short lived. If this is longer term, there are other levers we can pull. If our auto manufacturing sector dwindles over time, I can't see why we'd have tariffs on Chinese EVs anymore.

 

[Cowtown]

So 10% on energy. I suppose that’s not too bad, maybe we eat part of it with a bit of a discount and the American’s eat part of it?

 

[darwink]

So 10% on energy. I suppose that’s not too bad, maybe we eat part of it with a bit of a discount and the American’s eat part of it?

Temporarily. And it could be 25 tomorrow and 50 % in March.

 

[CBBarnett]

So 10% on energy. I suppose that’s not too bad, maybe we eat part of it with a bit of a discount and the American’s eat part of it?

There’s nothing about this situation that suggests it will end, regardless of what we accept or not. He could take them off or double them at a whim - the rationale is made up, so he doesn’t need a reason. If we play by the “rules” we aren’t guaranteed anything.

Appeasement isn’t a viable strategy with such an unreliable and untrustworthy trading partner.

Thats why this is going to suck so hard - stability is permanently damaged. Agreements don’t matter.

 

[DougB]

There’s nothing about this situation that suggests it will end, regardless of what we accept or not. He could take them off or double them at a whim - the rationale is made up, so he doesn’t need a reason. If we play by the “rules” we aren’t guaranteed anything.

Appeasement isn’t a viable strategy with such an unreliable and untrustworthy trading partner.

Thats why this is going to suck so hard - stability is permanently damaged. Agreements don’t matter.

Congress will rein in Trump at some point. The best strategy is to reach out to American Congressman, Governors and business leaders, not only appealing to the economic impacts of tariffs, but also to Trump's over-reach of executive authority.

 

[trtcttc]

Congress will rein in Trump at some point. The best strategy is to reach out to American Congressman, Governors and business leaders, not only appealing to the economic impacts of tariffs, but also to Trump's over-reach of executive authority.

Hmm.. the American congress is perhaps even more like playing dress up than the Canadian Parliament.