Quote:
Originally Posted by Cowperson
Most global economies are likely to see a resurgence in tax revenues in the coming years as business conditions normalize.
It's not just an issue of government spending that has created deficits but also the fact many governments saw tax revenues collapse by one-third or more in the 2008-09 period.
In a place like Alberta, there is extra leverage because we get a cut of a surging commodity. In other economies, oil is simply an rising input cost and nothing else.
America, which is one of the top three oil producers in the world, the effect of the latest jump in oil is probably beneficial overall . . . . . unless it gets crazy as happened in the summer of 2008.
For Alberta, the downside is going to be persistent lower natural gas prices which weighs on drilling activity in particular. Lots of different opinions on natural gas . . . .
A lot of the movement in oil and other commodities is a result of the global economy improving and money flowing away from the safe haven of the USA dollar and back into more risky areas of the world. When you continue to see supertankers full of oil anchored off coasts with nowhere to ship, you do wonder how much oil is really worth and if a collapse might be coming.
Cowperson
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Is America truly one of the top 3 producers in the world?? Just a little curious where you got that from, you might be right but there are a few other countries I can think of that would likely be close.
A decline in natural gas prices isn't necessarily all bad for Alberta. The oilsands and SAGD operations use a large amount of gas to create a useable oil product. Cheaper gas means larger netbacks per barrel of oil, which apparently you can sell for more (I'm not sure $87/bbl, quality I bet sure isn't the same as quoted in the OP article but too lazy to check). But overall conventional drillers can't meet economic hurdles if natural gas prices keep falling.
Also, what are the other "risky" areas of the world? Oil remains to be a primary energy source for emerging economies like China, India and Brazil. For sovereign reasons, a lot of countries would love to buy our stuff before they go drill and use their own, see China and Korea buying Canadian production, and China going to town all over Africa as well. Oil prices are just fine.
