OPEC was founded in 1960 with 5 counties and the goals to be a dependable oil market for themselves, and to stimulate economic growth in other countries. Leading up to the 1970’s OPEC’s growth and business was relatively unnoticed until an Iranian revolution and Arab oil embargo pushed oil prices to new levels. Changing consumer opinions about oil and over supply led to a market crash in 1986; but from 1990 through to 2000 prices strengthened from increases in technology and a more global market. In 2008 the stock market crisis rippled through all industries and even caused the oil market to suffer. Oil prices then rebounded and at June 2014 oil prices set a record high. OPEC currently has just under 40% of the market share and …show more content…
Because so much of Canada’s economy is based off of profits from oil production, the dollar is largely influenced by oil prices. OPEC’s cartel based influence over international oil prices means that they also have a strong influence over the Canadian economy. A brief period of time, referred to as the “honeymoon period”, occurred when both Canadian businesses and consumers were highly profitable. All non-oil businesses would have felt this gain because their cost of business would have decreased, and as labour from ex-oil workers became more available, labour would have become cheaper. With the decrease in oil, the price of goods decreases, and new alternatives can be sought after that was previously too expensive due to transportation. International trade also increases because the cost of moving goods decreases. The “honeymoon” period ends when all citizens and businesses feel the lower income from oil. This is likely accompanied by a falling Canadian dollar, which will lead to gains for export companies, but losses for import companies. Trade agreements also lose their attraction to foreign governments because a key resource is no longer profitable.
Overview This paper will discuss the current situation of OPEC having an absolute advantage over oil production, how OPEC’s petroleum monopoly affects Canada 's economy and it’s effect in oil based job industries. It will discuss how OPEC has a significant amount of power over the Canadian
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The Canadian economy today is at an all-time high with higher economic growth and rising GDP Canada is seeing great changes in the economy. The GDP increase by 1.1 percent in just the first 3 months of 2017. Canada is quickly recovering from the decline in oil prices that significantly slowed down the growth of the Canadian GDP. Because oil plays such a major role in the Canadian economy this had a huge tole on the overall GDP of this country. But, as the country approaches an increased GDP the energy sector does not seem to be hindering the GDP any longer. With the price of oil and gas going back up this has significantly increased the GDP of Canada due to the large amount of petroleum that Canada produces.
The question that has arisen from this shift is whether or not the Canadian oil and gas industry inclusive of the upstream, and midstream sectors, has a net positive benefit to Canada. This essay will explore and seek to understand the myriad of issues that this industry faces daily.
The development and manufacturing of the oil pipelines would bring a tremendous amount of job opportunities to the Canadian economy. Creating more jobs is important in the development of a country. According to CBC, it is projected that the development of oil pipelines
Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.
However, most of the oil imports to the U.S. come from Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. The Organization of the Petroleum Exporting Countries or OPEC is part of where the Unites States imports their oil. OPEC countries only produce a small portion of American oil; the U.S. obtains most of its oil from Mexico and Canada. However, over the years Canadian oil production has risen while Mexico’s has fallen. It is obvious that it would be better to have a reliable, long-term supply of crude from Canada than rely on overseas suppliers, whether they are part of OPEC or not.
Canada’s economy has to face many issues. One of these being the rate of exchange. The canadian dollar has been going up and down constantly throughout many years. “The first paper money issued in Canada nominated in dollars were British Army notes, issued through 1813, The Bank of Canada was created in 1934 and given responsibility, through an Act of Parliament.” Much has happened to the dollar throughout the years; the economy always varied depending on the dollar worth because it has always played a major role on the economy. Pertaining to the issues of the exchange rate, I will discuss two main ways of it and how it plays a big role on the economy in present times.
Canada became a net oil exporter in the early 1980s and has since grown to become the world’s fifth largest producer of crude oil (US Energy Information Adminstration 2015). In 1981 Canada’s net trade surplus in energy goods relative to its GDP sat at around 0.6 percent and by 2000 it had increased to 3.3 per cent (Stuber 2001). Canada produces about 4.4 per cent of the world’s oil; owns close to 10 percent of the world’s oil reserves and consumes roughly 2.5 per cent of the world’s oil (KPMG-SECOR November 2013). The US is currently Canada’s top importer of crude oil, importing close to 37 per cent of oil in 2014 (US Energy Information Adminstration 2015).
For the last seven years Canada has become the top provider for oil to the united states edging out Saudi Arabia, its this need to produce oil on a large capacity that is fuelling the destruction of the surrounding
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
Oil has become extremely vital in our society, so vital that it has affected developed and developing countries. It is a massive contributor to economic growth as well as environmental destruction. The Alberta Oil Sands has destroyed acres of local ecosystems, but has also achieved and ensured that Canada stays as an economic power. The economical, cultural, and political benefits the oil sands give to Canada makes it an asset they can not function without.
Thirdly, the oil industry is still going down, also it impacts Canadian economy. Because oil is Canada's largest export. Price is expected to decrease in the future; one famous financial analyst is predicting prices will be $20 and even $10 a barrel.
This research topic focuses on the rise of Canadian oil production and how Canada’s economy has reacted to this rise. Canada is in a very unique position in terms of oil production. Within Alberta, Canada has had an abundance of oil that it could produce. However, oil prices used to be a lot lower than what they have risen to in recent time. With these low oil prices, no one could justify producing the oil within the Alberta. This is due to the issue that the oil located in Alberta is mostly from oil sands (Facts about Alberta’s, n.d.). These result in oil that is mixed with oil, clay, water, etc. Therefore, due to the nature of the oil sands, to extract the oil it is much more expensive than oil that is not from oil sands
Gasoline is a essential resource to most family’s daily life. The price of oil has plunged dramatically and reached the level that was last seen during the recession of 2009, even though it has started to bounce back a little bit. Brent crude, the international benchmark of oil price, was around $53 a barrel at the end of January 2015. The constant decline of the oil price may have affected all oil-producing countries, including Canada. The experience of plunging oil price and deprecation of the Canadian dollar lead me to analyze how Canadian economy was hit or benefited by low oil price.
Discuss how rising oil prices might affect the macroeconomic performance of an economy. (25 marks)