#MoneyCrushMonday, OPEC, Carbon Tax,& China
Yep, Things Are Still Bad With China
Relations between China and Canada have yet to warm up, and opposition leaders are taking the opportunity to flex on Trudeau about how they could handle the situation better.
Here’s the quick rundown; 1) The US Justice Department issued a warrant for the extradition of Meng Wanzhou, a Huawei (Chinese electronics) executive, 2) Canada detained her, 3) China did not like that, and is holding two Canadian men in prison, even upping one of their sentences to the death penalty, 4) China has suspended or obstructed imports of Canadian pork and canola, claiming they were fraudulently inspected.
Canola farmers in Alberta and Saskatchewan are feeling the impact of the trade restrictions, and the pressure on PM Trudeau to find a solution to the conflict with our second-largest trading partner is mounting. PM Trudeau says he’s had “constructive interactions” with Chinese President Xi, and that US President Trump will back him up.
On Friday, Conservative leader Andrew Scheer said, “not good enough”. He issued a letter calling on Trudeau to consider retaliatory tariffs on Chinese imports, increase inspections on their imports to Canada, cut funding to the Asian Infrastructure Investment Bank, and to take matters to the World Trade Organization (WTO).
Expect this issue to be a major hot-point for the upcoming election, and stay tuned for further updates.
Vlad & MBS, BFFs for life
The Organization of Petroleum Exporting Countries (OPEC), which is comprised of the major oil-producing countries (minus Canada and the USA), met last Monday to determine oil production capacity for the next nine months.
OPEC members agreed to continue with production cuts, in order to keep oil prices high. Saudi Arabia, considered by some analysts to be the de facto leader within OPEC, needs oil prices relatively high – at $80/barrel, in order to balance their federal budget. It appears that Russia, though only a partner of OPEC (not a member), had a role to play in encouraging OPEC countries to agree with Saudi Arabia’s production. Because Putin knows how to win friends and influence people, right?
So what does this mean for Canada? Basically, lower supply means higher prices for our oil. However, we’ve got competition to the South. The US is pumping out record amounts of oil, and on top of that, we’re still dealing with few options to transport our oil to tidewater.
On the ticker above, you can see the difference in price between West Texas Intermediate (WTI) and Western Canadian Select (WCS), which are benchmark indicators for prices of oil in the US and Canada, respectively. Because of our inability to get oil to foreign markets (no pipelines, you know the deal), we sell at a discount, so we won’t benefit too much from the OPEC news.
C is for….
Climate, conservatives. While our political neighbours to the South are deciding whether to hold a dedicated climate debate for Democratic presidential hopefuls, here in Canada, climate change is one of the top issues for voters in the upcoming election. By this point, each major party has released their own climate policy platform.
Andrew Scheer’s plan, titled “A Real Plan to Protect our Environment”, centres on “keeping money in Canadians pockets”, primarily (and unsurprisingly) by knocking out the carbon tax. The plan would remove Canada’s current carbon pricing system and replace it with a policy requiring hefty carbon emitters to pay into a Research and Development fund for green technologies. It would also subsidize eco-friendly home renovations.
The plan does not specify climate targets, though it indicates a goal of reaching the Paris Agreement. Much of the sixty-page doc focuses on Liberal shortcomings in reaching internationally agreed-upon targets. In short, the plan would leave room to expand fossil fuel development.
On a provincial level, while Alberta’s conservative government officially ended its provincial carbon tax in June, the Ontario government’s attempt to overturn the carbon law was struck down by Ontario’s Court of Appeal, who deemed the carbon pricing system constitutionally sound. TBD how much the Canadian electorate values the elimination of the carbon tax – millions of taxpayer dollars have been used to fight the tax in court.