Not that long ago there was a joke making the rounds about a woman who doubled the value of her vehicle, by filling the gas tank. The question now on the minds of drivers on the prairies and elsewhere, ‘When will gasoline drop below a buck a litre?’
It has seldom been at that level in the past 15 years, but you have to wonder with the world oil price falling below $73 U.S. per barrel this week. The OPEC boys met in Vienna, and decided not to cut production. There was a time when the oil price would strengthen if the Saudi’s and the rest of them turned down the taps, but it’s far less likely these days.
We’re told that there is a glut of oil in the world, and it will continue well into 2015. It’s terrific news for anyone who drives or has to fire up a furnace in the dead of winter, but it’s a nightmare for the ministers of Finance in Edmonton, Regina and Ottawa.
Saskatchewan’s Ken Krawetz is still projecting a provincial surplus of more than $70 million next year, but that has to be not much more than a creative guess – wishful thinking. If oil falls much below $70 a barrel next year, just imagine how many jobs will start to disappear in places like Fort McMurray and the Bakken Play region near Estevan.
What will it mean for those pipelines that have yet to be built, particularly Keystone XL ? Global economics may well shut the huge project down, rather than politics in Washington.
By the way, Manitoba is not an innocent bystander in this drama. The province is selling Hydro power to the northern U.S. at a loss right now. Those numbers will only get worse as oil prices drop.
See why it’s affectionately known as the dismal science ?
I’m Roger Currie