Effects Of Lower Oil Prices On Canada 's Economic Activity

There is a huge debate if the oil sands of canada are affecting canada positively or negatively.The social and community improvements are a result of the oil sands in alberta. The economic benefits are another positive that the oil sands bring. Finally the direct and indirect jobs created in the oil sands are a huge benefit to canada. The oil sands are one of the best things that happened to canada.

The unemployment rose from 0.8 percent to 5.3 percent. In January there was an employment rate of 14,000 which is the highest since September 2011, according to Statistics Canada. Canadian economist predicted there would be a 5,000 net loss nationally, however the numbers turn out much lesser than their prediction, there was a net loss of 1,000 nationally. Also as more job seekers enter the Canadian market, the unemployment rate went higher from 6.6 percent to 6.8 percent. In February, Full time employment started to climb back to 34,000 but Part time employment dropped severely to 35,000, according to Statistics Canada. Furthermore, resource sector lost 17,000, and manufacturing lost 20,000. On the other hand, Construction gained 17,000 jobs and service 23,000. Also, provincially Quebec added 17,000 jobs compared to Ontario which added 14,000. In January, the Bank of Canada cut its benchmark rate to 0.75. This was done as insurance against the impact of falling oil prices. Since 2014 prices for crude oil has been cut in half due to there is lots of supply let and a shrinking global demand. Hence, oil and gas producers plan to cut thousands of jobs and Provincial and Federal government revenues are likely to fall by billion dollars. Nonetheless, Bank of Canada predicts Canadian economy will expand in

Diverse and multi-faceted, the Canadian business market is one of the strongest functioning mixed market economies in the world. Within the Canadian economy, the oil and gas sector stands as one of the largest and most influential sectors. The oil and gas industry is unique as it affects almost every person and sector of the economy worldwide, whether it is through commodity or material input costs. In Canada, this growing industry could allow for the country to be the one of the “biggest energy producers in the world” leading to a massive paradigm shift globally.

Exchange rates fluctuate in response to a multitude of factors. Upswings and downswings in the exchange rate can have both positive and negative consequential effects. Depreciation drops the value of the dollar and permits owners of foreign currencies to purchase a greater amount of Australian goods. Hence, depreciation makes Australian exports cheaper and accordingly

While import costs for goods and services are rising, the average income is not. Imports costs are increasing as the value of the Canadian dollar falls. People who are working for a minimum wage have almost no chance to purchase their own property in the near future. Housing prices in Canada are constantly growing and are reaching record highs. In Canada, the average cost of living is about $20,164 per year; which makes it quite difficult for individuals earning a minimum wage to support themselves (Young, 2015). The increasing cost of living is often mentioned from consumers based on an eye test. However, with the fallen value of the Canadian dollar, this is becoming truer by the day. In its most recent decline, the Canadian dollar has decreased by fourteen percent to just above seventy three cents US (Sreauss, 2015) Canada imports almost 81% percent of its fruits, vegetables and nuts. Thus, as the Canadian dollar decreases in value, the cost of these items has increased. This results in families spending more of their income on living expenses. Unfortunately for Canadians, their income has not increased at the same rate (CBCNEWS, 2015). For individuals on social assistance, the amount received rarely covers both the cost of shelter and food, leaving many to rely on food banks. On social assistance, a family would need to spend 37% of its income on food and 69%

The most obvious national influence on the Canadian dollar is the well being of the Canadian economy. A strong economy makes the country interesting for investors because it provides a strong economic return. This increases the demand for Canadian dollars and raises the exchange rate. Furthermore, a relatively small supply of investment returns decreases the demand for Canadian dollars economy. It is important to note however that economic strength is a relative concept. A prolonged period of economic growth in Canada will result in not increasing the exchange rate relative to the US dollar. This depends on the country experiencing growth, equal or higher

For the period of high inflation, government’s goal is to lessen the spending in the economy by making it less attractive to acquire loans or by taking currency out of circulation which eventually reduces inflation (Investopedia, 2008). “A major reduction in the rate of money-supply expansion ultimately will reduce even strongly entrenched inflation. But this accomplishment may take several years during which output and employment both fall (Wirick, 2001)”. The new contractionary monetary policy in New Brunswick will directly raise the interest rate by making money harder and more expensive to obtain. As a result, investment in New Brunswick will fall because the cost of borrowing money increases. Net exports tend to rise due to an increase in the interest rates because New Brunswick’s investment will relatively be more attractive to both domestic and foreign investors.

The oil crash in Alberta has caused severe issues not only in the economy of Canada, but also in the livelihood of Albertans. Oil from the Middle East( Saudi Arabia and Iran) had flooded the oil market with large supplies of oil. Due to the principle

The government has an enormous influence on the economy of its nation. As of November 2015, Canada will be under the leadership of Justin Trudeau and his Liberal party. The article predicts how the newly elected government will influence the Canadian economy. The government affects the economy through the manipulating the value of its currency, government bonds, and annual spending. Factors such as interest rates and government debt would affect a nation’s currency and consequently, the economy. Government bonds help determine interest rates. Annual spending on government projects, such as infrastructure, would increase the GDP (Gross Domestic Product) of a country. GDP increases will boost the economy.

The effects of plunging gas price could be not always negative on most Canadian house holds or most civilians. I used data of this research to state the huge effects of gas price to Canadian households with details.

Canada has a large stake in the international oil market. It is currently the 6th largest producer of crude oil and last year the Canadian oil industry produced 3.8 million barrels of oil per day (Canadian Association of Petroleum Produces, 2016). Since oil is a significant part of the Canadian economy, fluctuations in the international price of oil will affect all Canadians. However, due to the fact that some provinces produce more oil than they consume and others consume way more than they produce, the impact of a significant increase in international oil prices on Canadians will be dependent on which province they reside in. More specifically an increase will positively impact the economic welfare of Canadians living or operating in resource rich provinces but will have a negative impact on the economic welfare of Canadians living or operating in

Canada is one of the wealthiest companies and have a strong import and export to United States and other countries. The country is rich in nature resources and a strong economy. During the Economic Crisis Canada was not hit as hard as their counterparts such the United States because they have a strong financial banking system and most of their loans are traditional and not sub-prime loans. They were impacted in import and export because the countries they had contracts with was impacted.

Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)

Commodity prices: canadian dollar is related to the strength of the world commodity prices. Commodity prices rise - canada’s terms of trade improve due to goods becoming more valuable - purchasing power increases - higher exchange rate. The opposite is also true; weaker commodity prices result in a weaker canadian dollar.

Since the past few decades, owning a car has become a necessity in order to commute from one place to another. However, cars do not work automatically, they require fuel. Since the past decade, the petroleum industry has become one of the leading industries impacting the nation’s economy. Oil has become an essential commodity as it is utilized in transportation vehicles, serves as a raw material for manufacturing plastics, and is utilized in homes for cooking. America’s economy is greatly dependent on petroleum as it is the “black gold” of the nation. The considerable significance of oil has led to the drilling of it, which is not only limited to land, but also the oceans. Offshore drilling is a method in which petroleum is extracted from underneath the seabed. It is one of the significant technological advancements in the past few decades. However, the ones who are involved in the process of offshore oil production are humans, and humans tend to make mistakes. In 1969, due to a human error, an oil spill occurred and natural gas, oil, and mud shot up the well and oozed into the ocean (“Offshore Drilling”). The oil spilled led to an environmental disaster which killed thousands of marine animals and distorted the environment. In order to prevent the same error, the government passed a moratorium in 1981, banning more than 85 percent of the country’s oil drilling sites (“Offshore Drilling”). The moratorium restricted the United States to mass-produce its natural resource.