What do lower oil prices mean for Canada and Norway?
In 2007, the huge demand for oil by China and other developing countries seemed to suggest that commodities were a sure ticket to prosperity. Yet the Conference Board sounded a cautionary note in a comprehensive 2007 report on the future competitiveness of Canada’s resources industries—while Canada’s resource sectors were enjoying boom times, they had to prepare for an eventual slowdown. This was wise advice. During the first part of 2008, Western economies were already seeing sluggish growth. Oil prices plummeted from a record high of nearly US$150 per barrel in summer 2008 to just over US$30 in December. With the price of oil now lower than production costs, new exploration projects are being cancelled. This is particularly true in Canada, where the high price tag of Alberta oil sands development has put these megaprojects on hold. Being a resource-dependent country no longer seems to be such a blessing. Both countries have used some of their oil revenues to save for the inevitable r
