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Copy of OPEC'S Effect on Canadian Economy

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Kartik sagar

on 9 November 2016

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Transcript of Copy of OPEC'S Effect on Canadian Economy

"lowest its been in five years"
“The car has become an article of dress without which we feel uncertain, unclad, and incomplete in the urban compound.”
Marshall McLuhan
OPEC'S Effect on Canada
Canadian Lonnie
Automobile Industry
Monday, February 17, 2014
Vol XCIII, No. 311
Who is OPEC
History of OPEC
‘Dramatically lower oil prices’ will hurt our balanced budget, Harper says
Canadian Budget
What is it?
OPEC'S Effect on Canadian Economy
Organization of Petroleum Exporting Countries
Is a combination of 12 nations
OPEC is the text book definition of a Cartel.
Cartel-combination of independent commercial or industrial enterprises designed to limit competition or fix prices.
Created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five Founding Members were later joined by nine other Members: Qatar (1961); Indonesia (1962) – suspended its membership from January 2009; Libya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973) – suspended its membership from December 1992-October 2007; Angola (2007) and Gabon (1975–1994)
Mission Statement
The mission of the Organization of the Petroleum Exporting Countries (OPEC) is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.
1) Canadian loonies
2) Automobile industry
3) Canadian Budget
Canadian Oil Industry
invested $74 billion in 2013
largest single private investor in Canada
20% of value on Toronto Stock Exchange
employs 550,000 in Canada (direct & indirect)
payments to governments: $18 billion per year
OPEC's Effect
Canada produces 2.1 million barrels of oil a day while opec is producing 30 million barrels.
Canada is exporting less oil thus dropping production and cutting jobs.
Decreasing exports results in a decreasing GDP thus cutting jobs.
Decreasing GDP and low exports means the Lonnie will trade for a very low amount.
As we can see here the last time oil prices plunged was in 2009 and this dropped the Lonnie down to 85 cents
Price of oil is the biggest factor for the consumer in determining which vehicle to purchase
The drop in the price of oil due to OPEC's surplus has increased sales across Canada
Customers are buying higher quantities of vehicles and more expensive vehicles because of the decreased spending on gas
Statistics of New Motor Vehicle Sales
October 2014- 159,144
This is up 7.4 percent from the months before the price of oil decreased
October 2014-60,477
October 2014-24,025
As seen in this graph in 2009 large truck sales boomed due to low oil prices
What is the Budget?
The federal budget of a country is determined yearly, and forecasts the amount of money that will be spent on a variety of expenses in the upcoming year.

The Effect
The drop in oil prices could cut about $3 billion off nominal growth in Canada’s economy this year — and by as much as $16-billion annually through 2019. That would shrink Ottawa’s budget balance by $500 million this year and by $2.5 billion a year over the next four years.
Every dollar lopped from crude prices, revenues fall by about $215 million
There will be a budget shortfall of $6 billion to $7 billion in the next fiscal year

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