Canada Sees High Oil Prices as Good for its Economy
Bank of Canada’s top administrator recently said that the high per barrel oil prices have a positive impact on the country’s economy. In the current day’s early trading, crude oil price per barrel were mixed as the production of North Sea crude fell due to maintenance. Meanwhile, refineries along the Gulf of Mexico have started to resume their operations after Hurricane Isaac. However, there seems to be much optimism in Canadian Prime Minister Stephen Harper’s administration with regards to the crude-driven potential of the country, in spite of persistent calls for emergency relief for the economy.
The current crude price of Brent moved closer to $115 per barrel with the drop in North Sea output due to maintenance. Around 14 percent of the crude production in the Gulf of Mexico remains shut in as operators keep marching back to work very slowly after the strike of Category 1 Hurricane Isaac in late August.
The crude oil price per barrel has risen at a quite steady rate since the month of June. The prices of Brent have moved up by over 25 percent since that time, igniting concerns from Oil Minister Ali al-Naimi from the Kingdom of Saudi Arabia. Naimi recently said that market fundamentals do not support the current crude prices.
However, Gov. Mark Carney of the Bank of Canada said that higher costs of energy were positive for the country’s economy and that nothing will be done to stop the value of its dollar from increasing further. Since the beginning of August, the Canadian dollar’s value has grown by almost 3 percent versus the U.S. dollar.
Carney rejected claims that higher per barrel oil prices, together with high values of its currency may cause a drop in the manufacturing sector of the country. He added that such a reversal would cause a production shut down of oil sands, thereby pushing the nation to leave their resource wealth.
Next to Venezuela and Saudi Arabia, Canada is the country with the third highest oil reserves worldwide,` with a total of 175.2 billion barrels, or 11 percent of the overall global reserves. United States politics and concerns on the environment surrounding the Keystone XL pipeline designed for Canadian oil partly caused the government of Canada to consider the markets in Asia for a more diverse consumer base. Northern Gateway and Keystone XL alone represent almost $14 billion in Canadian infrastructure.
The majority of crude produced from Canada aids in feeding the economy of the United States from having to import from OPEC. Without primary projects such as the Northern Gateway, that may possibly continue. Last February, Harper went to Beijing to seek more international interest in the petroleum economy of his country. Since that time, the government has begun a review for a takeover bid worth $15.1 billion. With a higher consumer base and increased oil prices to fuel its dreams, the Natural Resources Minister of Canada Mr. Joe Oliver said that his country was eager to further expand.