Canada boo-hoo estimates of the day

by on December 20, 2016 at 3:08 am in Current Affairs, Data Source, Economics | Permalink

It’s good for others, however:

The value of Canada’s natural resource assets stood at $287 billion in 2015, down 73% from 2014, largely due to lower energy prices. This decrease followed a 28% increase in 2014.

Timber resources accounted for 55% of the value of all natural resource assets in 2015, followed by minerals (26%) and energy resources (19%).

The value of energy resource assets, which consist of reserves of coal, crude bitumen, crude oil and natural gas, decreased by 93% in 2015 to $56 billion, following a 49% increase in 2014. The large decline in 2015 came primarily from lower crude bitumen prices. As a result, this also increased the shares of mineral and timber resources of total natural resource wealth.

The value of mineral assets fell 38% to $74 billion in 2015 following a 24% decline in 2014. In general, lower commodity prices, combined with stable labour and energy costs compared with the previous year, contributed to the decline. The decrease in iron ore values made the largest contribution to the decline, although decreases in potash, copper-zinc and nickel-copper values were also major contributors.

The value of timber assets declined by 1% in 2015, following a 9% increase in 2014.

Here is the link, via Dan Wang.

1 Dan in philly December 20, 2016 at 3:56 am

The social thinker Ren Hoek said about 20 years ago that Canada’s greatest natural resource was dirt. That might be true again now.

2 So Much For Subtlety December 20, 2016 at 4:16 am

The more interesting question would be why have the Canadians avoided the resource curse. Why does the relatively large value of natural resources cause civil war in Africa or despotism in the Middle East, but in Canada produce one of the most polite and boring nations on the planet?

Still the Greens should be happy because that means more POL remaining in the ground.

3 Joan December 20, 2016 at 4:52 am

The oil in Canada is expensive to produce, unlike the the oil in the middle east and Africa,and has no value if the market price is under the cost to produce. That is why when the market price of oil falls by half the value of Canadian oil can fall by 93%.

4 jorgensen December 20, 2016 at 12:51 pm

What does Canada have in common with Norway – a cold climate. That must be the difference.

5 Art Deco December 20, 2016 at 6:48 pm

Fuel exports are contextually more consequential in the Norwegian case. Canada has oil, but oil exports are a modest fraction of Canada’s production mix.

N.B. Norway was an affluent and orderly country before oil was discovered. Norway the petrostate does not antedate 1969.

6 Troll me December 20, 2016 at 2:08 pm

Try to tell Ontario manufacturers that oil has nothing to do with their cost margins or competitiveness.

Double the price of oil and the dollar goes up 30%. That might be like a mini resource curse, but fortunately we were already in a good spot to crunch some numbers and some other stuff, and remaining businesses are obviously competitive.

7 Troll me December 20, 2016 at 2:15 pm

70% of annual GDP and 7% of GDP kind of fit the “quantity is a sort of quality unto itself” kind of thinking.

It probably didn’t help that they only “started” from scratch with basically no pre-existing political structures, only about 50 years ago. Probably they were just all hunter gatherers before that, but rumour has it some foreigners conquered them and ruled for a century of two, and this might be related to the absence of effective political structures in 1960.

Generally speaking, in terms of Greens an resource development in these kinds of situations, they tend to get more behind the rights of long-standing inhabitants over the rights of central authorities who sell rights to foreign developers. There really isn’t all that much talk about the toxic crap coming out of the gold mines in Guyana, for example, but it definitely gets mentioned when talking about the collective property rights of the people who lived there from …. who know when until anyone else got there.

8 Art Deco December 20, 2016 at 6:46 pm

The more interesting question would be why have the Canadians avoided the resource curse. Why does the relatively large value of natural resources cause civil war in Africa or despotism in the Middle East, but in Canada produce one of the most polite and boring nations on the planet?

For Canada, the ratio of the sum of fuel, ore, and mineral exports to nominal GDP varies around a set point of 6%. Natural resource rents vary around a set point of 4.6% of GDP. They’re not that resource dependent.

9 So Much For Subtlety December 20, 2016 at 7:05 pm

They are now. I wonder what it has been historically.

If the Saudis allowed the wealth of the country to stay in the hands of the majority of the people, or even a few small landowners, I would think that Saudi Arabia would have a more diversified economy now. Oil barons will look for something to do with their money besides hookers, coke and expensive weapons. They might even give some to the local equivalent of the University of Chicago. Over time the economy would become more diversified.

Canada is wealthy enough *now* that resources are a small part of the economy. But Canadian resources are a significant part of the world’s trade in resources. Which came first?

10 Art Deco December 20, 2016 at 10:13 pm

They are now. I wonder what it has been historically.

Those are the median figures for the period since 1970.

11 Art Deco December 20, 2016 at 10:29 pm

About 10% of Canadian exports (by value) ca. 1826 consisted of petroleum products, ores, and minerals.

12 Art Deco December 20, 2016 at 10:30 pm

1926

13 prior_test2 December 20, 2016 at 5:07 am

Somehow, this estimate seems not to take into account the likely rise in Canadian assets in connection with an increasingly ice free Arctic Ocean (think oil prospecting/drilling), not to mention easier accessibility to regions that till now were simply ignored due to forbidding amounts of snow/ice.

After all, several nations are likely to reap a windfall as the Arctic continues to warm at a rate that surpasses the clearly flawed climate models which suggested things we are seeing today, in real time, would not happen for decades or generations.

14 The Original Other Jim December 20, 2016 at 8:33 am

>Somehow,

Facts, most likely.

They just don’t always jive with whatever it is that you use while other people are using facts.

15 Slocum December 20, 2016 at 8:50 am

So you’re saying it should be possible to make easy money shorting Florida real-estate and investing in the Canadian arctic. Are there hedge funds based on this strategy? And are you an investor?

16 jorgensen December 20, 2016 at 12:54 pm

If you were wanting to make a long bet on global warming, buying land in Canada’s Maritime provinces is probably a better bet.

17 Brian Donohue December 20, 2016 at 9:31 am
18 TMC December 20, 2016 at 11:42 am

We found the cause of the ice melting. Who knew polar bears could breathe out fire?

19 Troll me December 20, 2016 at 2:19 pm

Can you name one asset class in Canada that will increase in value as a result of trade through there?

Basically none of the gains and most/all of the risks associated with an ice-free Arctic accrue to Canada. It might even be reasonable to charge a transit levy for an insurance fund or something. Like, maybe 20 or 50 grand per container ship as thanks for coming to bail them out with no questions asked if something goes wrong.

20 The Anti-Gnostic December 20, 2016 at 4:25 pm

Due to the sea level rise from the melting of the North polar ice cap?

21 Troll me December 20, 2016 at 7:00 pm

The melting temperature of ice is 0C. (Simplifying a bit for the fact that there’s salt in the ice up there, so it’s actually a few degrees lower).

Kind of like when you put ice into a pretty warm glass of water as compared to a cold glass of water, more ice melts faster when it’s warmer.

So, there will be less and less ice as things warm, and in time this will mean some weeks or months of the year where advance planning to transport through that route can be done. Maybe next year it won’t be quite a sure thing yet for cargo sized vessels.

So, no, nothing about sea levels rising. All about the ice melting. But, funny thing, remember that glass of water? Why don’t you try the experiment where you fill a glass of water, put some ice in it, and see if maybe some water spills over the edge.

If some water spills over the edge, you might be able to understand why all that stuff about rising oceans.

But actually, the point for the NW passage is that there will be less ice if average temperature is warmer.

22 The Anti-Gnostic December 21, 2016 at 9:02 am

Ice asteroids? From space?

23 Boris_Badenoff December 20, 2016 at 5:57 am

My father had a friend who was a “land-poor” rural property owner, since timber land incurs taxes and other expenses each year, but only yields income in harvest years. This man had been complaining of his financial straits for some time, but then, after not not seeing him for a couple of weeks, he drove into Dad’s yard in a new Cadillac. Dad demanded to know how he could afford this extravagance, given his incessant whining. “Son, I reappraised!” came the answer. O, Canada!

The precision of the calculations, too, take me back to 1970, when the consensus estimate was that the world had only 30 years’ oil reserves remaining, assuming the high end estimates if consumption continued to increase at the then-current rate. Well, consumption increased more than twice that fast, yet somehow in 2000 the world had more known reserves remaining than the total estimate three decades earlier. The intervening unknowns of new discoveries and technologies rendered the estimates useless.

In the immortal words of Donald Rumsfeld, “We do not know what we do not know.” And there is evidently much Canada doesn’t know. Sure, we have Trump – but Justin Trudeau?

24 jorgensen December 20, 2016 at 12:55 pm

I loathe Justin Trudeau but I would take him over Trump any day.

25 Troll me December 20, 2016 at 2:23 pm

Might be a little remnant anti-NEP programming. It was anti-constitutional after all…

But who knows. Maybe you actually have a reason that doesn’t basically come down to programming from the “nice hair” ads and all the Mr. Selfie attacks against the guy that everyone (not you or me) wants to take a photo with. .

26 Art Deco December 21, 2016 at 12:29 am

Because a lapsed drama teacher / serial grad school dropout is better prepared for an executive position than DJT. Got it.

27 N.K Anton December 21, 2016 at 9:31 am

Perhaps just as prepared as a man who did a movie with Bonzo the chimpanzee?

Plus, most people probably voted for the technocratic Laurentian consensus that ran Canada, especially after a blunderous year by the incumbent.

28 Art Deco December 21, 2016 at 12:38 pm

Perhaps just as prepared as a man who did a movie with Bonzo the chimpanzee?

You’re an ass. Reagan had been Governor of California, had made himself wealthy from real-estate investments, knew something of the business side of film production from his years as President of the Screen Actors Guild, and had prospered in radio, film, and television as a performer and also earned a living in public relations. He appeared in 60 films between 1936 and 1962. He’s also spent 20 years educating himself on policy questions (first co-incident with his SAG work and then while working in public relations for General Electric). He was 55 years old and had earned a living in the private sector for over 30 years before he ever ran for public office. His family was impecunious small-town petit bourgeois, yet both he and his brother built lucrative careers for themselves starting out with just their upbringing and the education you could get from the local high school and the tiny denominational college they attended.

Justin Trudeau spent 7 years teaching drama. That’s the most serious thing he ever did before entering politics. He’s a legacy pol that Liberal Party sachems elected to use to corral the marks which dominate the Canadian electorate.

29 chuck martel December 20, 2016 at 6:44 am

Isn’t there an asset value to realized and potential hydro-power?

30 Troll me December 20, 2016 at 2:30 pm

It’s not non-renewable so you don’t have to account for the lost assets when you take it out of the ground.

31 rayward December 20, 2016 at 7:15 am

Asset prices: they go up, they go down, they go all around. Speculation in asset prices has become the investors’ favorite strategy. Unfortunately, what goes up will inevitably go down. On the other hand, what goes down will inevitably go up. The problem for investors is knowing up from down. The problem for central banks is a prevailing investment strategy based on asset prices.

32 Derek December 20, 2016 at 7:28 am

Our prime minister is due. Isn’t that with anything?

33 Derek December 20, 2016 at 7:32 am

Cute. Damned autocorrect.

34 jorgensen December 20, 2016 at 12:56 pm

He makes my skin crawl.

35 Troll me December 20, 2016 at 2:37 pm

Might be the “nice hair” ads did it to you.

“Just not ready” 20 times a day might have had some effect too.

Unfortunately, he managed to show up at the debate with his pants on (surprising fact – the guy can dress himself) and it pretty much went on from there. It turns out he’s not an idiot no matter how much you wish it were otherwise.

36 Tom from Calgary December 20, 2016 at 5:01 pm

The bozo eruptions he produces when goes off script very much show he’s an idiot.

Fortunately the people behind the scenes in The Big Red Machine are not idiots. If it wasn’t for his handlers (and daddy’s name) he’d probably be as generally electable as May.

37 Troll me December 20, 2016 at 7:12 pm

Well, Latvia “isn’t a THING”. So maybe he’s not quite as much the monkey brains as some people would let on.

Also, the point of comparison for purposes of insult, it might be worth noting that she is SOOOOOO electable that she won a seat in parliament despite leading a party that attracts only 3-4% of votes nation wide.

38 Thor December 20, 2016 at 8:39 pm

Canadians: “You American idiots! You only elect people based on their name. Gores, Bushes, Clintons … just wait til Chelsea runs. Or one of the Obama daughters. Or a Trump scion.”

Americans: “You think Justin Trudeau ran on his acumen, accomplishments and experience?”

Canadians: “But but … that’s different.”

39 Tom from Calgary December 20, 2016 at 9:44 pm

Latvia?

I’m sure the Latvians are sleeping better knowing that Canada will have 450 troops there next year.

And I’m also sure NATO… and more importantly the US… will be absolutely awed by our commitment too. After all we sent as many troops as Albania did.

40 Turkey Vulture December 20, 2016 at 7:53 am

Invade now. Buy low, sell high. We will be welcomed as price inflators.

41 The Original Other Jim December 20, 2016 at 8:34 am

The problem is that if the US took over Canada, no one would notice.

42 Decimal December 20, 2016 at 9:52 am

Please no. We don’t want to be part of that beautiful mess.

43 Troll me December 20, 2016 at 2:42 pm

Great ally, one that can casually discuss such possibilities.

I think the Chinese and Russians and everyone else on the bloody planet might just notice something or other …

Also, there’s no reason. Also, there are mutual interests. Also, there’s no possible excuse to “liberate us” (maybe in reverse one day? But, come on, you know you’ve got more guns).

Also, did you know that the USA could probably win a war against Mexico if it really wanted to? I thought it was worth highlighting that. It will really contribute to something. Like maybe buy a bunch of bombers and jets from ANYbody ELSE, while making clear that mutual interests and common traditions aspect of things.

44 goliv December 20, 2016 at 11:00 am

Statistics Canada does not appear to include the value of marijuana plantations in British Columbia. I recall (but sadly cannot immediately provide a reference to) an estimate that marijuana was a bigger cash crop than timber for BC.

45 Matt S December 20, 2016 at 1:17 pm

Crops likely wouldn’t be worth much compared to timber. Timber takes 30 years + to grow, weed ~ 5 months. Annual crop value would be a different story.

46 Troll me December 20, 2016 at 2:05 pm

There’s a bit more in the ground that hasn’t been monetized yet. Maybe. Or maybe financial markets always tell us everything we need to know.

A bet some energy industry folks have some interesting methods for business cycle corrections to get more stable estimates relative to mark-to-market sort of accounting of this stuff.

47 Shaun December 21, 2016 at 2:25 am

I work in the sector. The oil sands has seen its operating costs come down ~30%. Combined with the weaker dollar, the better companies are reaching breakeven (even with depreciation and cost of capital) at $45/Bbl USD and making a decent return at $55/Bbl. Junior and mid-cap companies are already beginning to ramp up 2017 capital by 20-30%. What used to take $80/Bbl USD, now take $60 USD/Bbl.

48 Thor December 20, 2016 at 8:33 pm

So much for Canada using its resource wealth to become a veritable Brazil of the north…

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