Oliver Says Energy Companies to Suffer, Consumers to Enjoy Oil Price Drop

Canada’s Finance Minister Joe Oliver hosted a meeting of private-sector economists ahead of Ottawa’s fall fiscal update on Tuesday and mentioned at the time that the recent drop in oil prices is “an issue of supply and demand.” Furthermore, the minister elucidated that although it will have a negative impact on Canadian energy companies, it will benefit eventually consumers in this country.

It was noted that oil prices are down by US$2.05 a barrel to US$83.71 in midday trading in New York, which is two-year low for crude oil. Mr. Oliver alleged that “we’re talking here, of course, of an issue of supply and demand. The supply has increased with the shale revolution in the United States.” He explained that “demand in some parts of the world, particular Europe, has somewhat declined. There will be implications for some companies. On the other hand, Canadian consumers can benefit from lower prices.” Furthermore, Mr. Oliver stated that “I’m not forecasting where they’re going. Commodity prices tend to be somewhat volatile and we’re monitoring the situation.”

In addition to that, Mr. Oliver stressed that the Canadian economy remains on track for solid growth, i.e. a forecast shared by the International Monetary Funds. The economists and the minister speculated domestic growth of around 2.25% this year and 2.5% in 2015. Mr. Oliver stated that “there’s a particular concern in Europe because inflation, for the last month, was 0.3%. So there is a concern about potential deflation. And growth was insipid — it was about 0.8%.”

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