Nooz

Natural gas crisis on horizon: analyst

Wilf Gobert, vice-chairman of Peters & Co., said he sees a crisis looming in natural gas supply. "The newest energy crisis I believe is at hand and it's not over crude oil, but North American natural gas supply," said Gobert at the Outlook 2006 luncheon held in Calgary. "Crude oil is liquid product and the pun is intended. It can be transported to the United States by ocean tanker, by pipeline, by truck . . . US consumption of natural gas is supplied by US production. It's pipelined from Canada . . . US natural gas production has not grown in the past 10 years. So growth in the US economy has seen Canada be the source of new supply for nearly all of the incremental consumption." But he said Canadian natural gas production stopped growing in 2003. "It's the first time in our history that the industry has been unable to grow production," said Gobert. He was speaking at Outlook 2006, sponsored by the National Post and Roynat Capital in association with the Calgary Chamber of Commerce and the Calgary Herald. The luncheon tour also includes stops in Toronto, Vancouver, Winnipeg, Halifax and Montreal.
(Calgary Herald 060112)

the Peak Oilers have been saying this for years now. North America's NG supply is still almost completely domestically produced, and the infrastructure to import is prohibitively expensive, takes a long time to build and is typically something that falls under the 'not in my back yard' category, much like a nuclear reactor due to the dangers of the product involved (LNG). Continental Peak NG occurred a decade ago, yet the vast majority of homes, buildings, etc. are still piped into gas. I wonder whether those 4000 square foot McMansions in Springbank will still look as enticing when the heating bills per month are in the thousands of dollars???

Tory win may jolt loonie

The high-flying loonie may duck for a bit of cover and financial markets could be roiled on Jan. 24 if a Conservative government is elected the day before, some analysts say. If a largely unknown and untested Tory government is elected, markets could experience some turmoil, although the underlying strengths of the Canadian economy should soon help settle some of the uncertainty, they add. Public opinion polls are suggesting the Jan. 23 federal election could end with a minority Conservative government, with a few surveys even indicating a majority Tory mandate. That's triggering some questions about how financial markets -- accustomed to roughly 13 years of Liberal administrations -- might adjust to the change. The Canadian dollar is likely the most sensitive barometer of political change and uncertainty, says Doug Porter, deputy chief economist with brokerage BMO Nesbitt Burns. And it could experience some volatility, moving by a few cents up and down, if a new regime is put in place, he said. "What we can say is that we'd be dealing with a great deal of uncertainty if the Conservatives came in, at least initially, simply because you're dealing with a lot of unknowns." One of the greatest unknown factors is the personalities: almost none of the incumbent Conservative MPs -- including leader Stephen Harper -- or even candidates have served in a federal cabinet. Some have provincial experience but in general, the players are largely untested, said Porter.
(Calgary Herald 060112)

Don't the analysts know the only difference between Liberal and Conservative is 'same shit, different pile'? Everything will certainly remain status quo whomever gets elected in on the 23rd.

Global forces point to strong growth in West

Warren Jestin, svp and chief economist at Scotiabank Group writes that Canadian growth has averaged nearly 3% over the past two years and more of the same is likely in 2006. However, this steady national glide path masks major differences among regions, with solid momentum in the West and Newfoundland counterbalancing softer growth in other areas. This pattern is mirrored at the industry level, as buoyant commodity markets compensate for the drag from a high-flying loonie and the erosion of our US market share of manufactured products to low-cost overseas competitors. Is growth approaching 3% a good performance? Historically, it's in line with the Canadian average over the past three decades and much better than the meagre 1.5 to 2% growth outcomes likely in Japan and Europe. It also may be sufficient to regain G-7 leadership next year as the pace of US activity moves below 3% in 2007 for the first time in nearly half a decade. However, it is well below the trend in many new industrial powerhouses, led by China -- growing by 8.5 to 9% annually -- and India, which is cruising along at 7 to 7.5%. These nations are reshaping our economic landscape. For example, China is overtaking Canada as top foreign supplier of non-energy products to the US. Our market share in this segment dropped to 12.5% last year from 17% just six years ago. However, thanks to our substantial resource base -- and the increasing US dependence on imported energy -- we will still hold bragging rights as the top supplier of imports to our giant southern neighbour. Add in burgeoning Asian demand for a wide variety of commodities and Canada's merchandise trade surplus should stay above $50 billion.

While commodity markets are hard to predict, for 2006 we expect natural gas prices to fluctuate between US$9 to $10/mcf and oil to average just below $60/bbl. These prices are more than double the levels prevailing at the turn of the decade and provide a powerful incentive for exploration and development in Canada's resource sector. A similar story holds true for uranium. Markets for copper, nickel, zinc, iron ore and gold also are likely to be very buoyant. Taken together, the global forces fuelling commodity markets will help underpin solid gains in employment, investment and consumer spending in Western Canada. For 2006, Alberta is expected to grow by nearly five per cent, outpacing BC by about a percentage point. On a longer-term basis, this gap may vanish as major capital spending projects click in and BC more fully develops its pivotal position as Canada's gateway to Asia. With the notable exception of resource-rich Newfoundland, growth will likely be best in the West through the balance of the decade.
(Calgary Herald 060112)

People in Western Canada have been waiting decades, if not a century, for the balance of power in this nation to shift from East to West. It looks like the shift is finally happening. I wonder what the political map will look like in this country in 10 or 20 years?

Bumpy year ahead for autos, Ross says

Billionaire investor Wilbur Ross yesterday forecast a bleak 2006 for the US auto parts sector, saying the year could be a “perfect storm” for companies racked by bankruptcies in 2005 and facing possible declines in overall auto sales this year. “I think this could very well be a worse shakeout year for auto suppliers than we had even last year,” Ross said before his speech at a high yield conference held in conjunction with the North American International Auto Show in Detroit. The need for consolidation in the sector is “even more imperative” with the possibility of two more rough years in the US automotive industry, said Ross, chairman of private equity investment firm WL Ross & Co.
(Globe and Mail 060112)

Yikes - it looks like bigger and bigger problems for the idiots in Detroit. Even the investors are getting flighty, and who can blame them?

China says trade surplus tripled

China's trade surplus surged to US$101.9 billion in 2005, more than triple the $32B gap recorded the year before, according to customs figures released Wednesday. Exports rose 28.4% year-on-year in 2005 to $762B, while imports rose 17.6% to $660B, the General Administration of Customs said in a report. With total global trade of $1.42 trillion, China is now the world's third-biggest trading country, the report said. China announced earlier that it had overtaken Japan in terms of merchandise trade and remained behind the US and Germany. The figures were largely in line with expectations, but they were likely to intensify pressure for Beijing to loosen foreign exchange controls that US officials and other critics contend keep the Chinese currency, the yuan, undervalued, making Chinese exports relatively cheap in overseas markets. China's trade surplus with the US is forecast to top $200B, up nearly 25% from the record-high surplus in 2004. The report gave no breakdown for imports and exports with the US and other major trading partners. It said that China's biggest trading partner was the EU, with two-way trade estimated at $217.3B, up 22.6% from the year before. The US was second, with imports and exports totaling $211.6B, up 25%. Trade with Japan rose 9.9% to $184.5B.

The government forecast that growth in exports would slow significantly this year due to higher oil prices and trade friction. The main planning agency, the National Development and Reform Commission, estimated in a report published Wednesday in the state-run newspaper China Securities Journal that exports would rise about 15% year-on-year in 2006, with imports climbing about 18%. Robust exports have been a key factor behind China's feverish economic growth in recent years. The commission estimated that growth hit 9.8% in 2005, and says it is expected to slow to a still stunning 8.5 to 9% this year. China's consumer price index, its main measure for inflation, is expected to rise only 1% this year, and maybe yield to deflation later in the year, due to overproduction in many industries and slow domestic demand, the report said. Autos, steel, cement and construction are among many industries facing a glut due to soaring investment in recent years. Aluminum smelters, also targeted for cutbacks, plan to cut annual output by 335,000 tons, or about 10% of total capacity, to counter excess production, the China Nonferrous Metals Industry Association said in a report on its website Wednesday. Meanwhile, the planning agency said China would spend at least 12 trillion yuan, or $1.5 trillion, in the next five years on energy and transport, areas severely strained by the breakneck pace of growth in recent years. More than half will go to road and railway construction, the commission said in a report carried by the official Xinhua News Agency.
(Canadian Press 060111)

Apparently China's Ministry of Finance can't count very well. They've been readjusting 2004/05 numbers for months now, and all indicators point to the need for the Yuan to be de-indexed from the USD and allowed to be valued on the open market. It's only fair, isn't it?