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- Crude oil price. The price of crude oil is the most important factor that drives production and investment in the oil and gas extraction sector. Chart 1 presents movements in two of the most relevant crude oil prices for Canada, the WTI and the Western Canadian Select (WCS) from January 2019 to February 2021.
- Production and employment. Chart 2 presents monthly production and employment in the oil and gas extraction industry and in all industries as a whole from January 2019 to April 2021.
- Crude oil and merchandise exports. The global value chain and, therefore, merchandise exports have been greatly affected by the pandemic because of declining demand.
- Capital expenditures. Capital expenditures in oil and gas extraction are highly related to crude oil price. Lower oil prices will drive down the profit level of oil and gas extraction and ultimately discourage investment in the industry, and this will affect its production capacity in the long term.
- Background
- The Input-Output Framework
- References
The oil and gas industry is an important contributor to the Canadian economy, especially in Alberta. From the year 2000 onwards, its share in the total economy averaged about 5% of Canadian and 21% of Albertan GDP. Its share of jobs was 0.4% and 2.9% in Canada and Alberta, respectively.Note The recent decline in oil prices will have a large impact ...
The cuts to the oil and gas industry’s capital spending and production will impact the economy. A million dollar reduction in oil and gas production has a direct effect on the total economy by the same dollar amount. But an exogenous shock to the sector will also reverberate to the broader economy. As production and investment decline in the oil an...
Bank of Canada, 2020, "Business Outlook Survey—Spring 2020", https://www.bankofcanada.ca/2020/04/business-outlook-survey-spring-2020/. Cardinal, 2020, "Cardinal Energy Ltd. Announces Fourth Quarter 2019 Year-End Financial Results and Updated Capital Budget and Dividend Suspension", News Releases, March 17, 2020, https://cardinalenergy.ca/wp-content...
In an oil and gas price forecast released Tuesday, Deloitte said it expects Canadian crude prices to rise moderately as a supply glut is drawn down by topped-up takeaway capacity via rail...
Mar 9, 2020 · In general, low oil prices drag down both interest rates and the Canadian dollar, which stimulates economic activity, Porter noted. Lower interest rates mean cheaper borrowing, while a...
Aug 13, 2015 · What lower oil prices mean for the Canadian economy. The reality that lower oil prices may be in place for more than a year—perhaps two, as opposed to months—is only now beginning to settle...
In response, oil companies in Canada reacted by adjusting down both capital expenditures and production plan in 2020. This article uses input-output multipliers to estimate the impact of such cut backs in production and investment on GDP growth and jobs in the total economy under different scenarios. Background.
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The Canadian Institute for Climate Choices Net Zero Report finds that only scenarios with high oil prices and high levels of carbon dioxide removals see Canadian oil production similar to current levels in the long term.
