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Canada no longer knows how to sell anything to the world except oil and gas.
Okay, that’s an exaggeration, but if things keep going the way they are, it won’t be for long.
StatsCan’s latest numbers on Canada’s trade balance, released Thursday, look positive on the face of it: Exports and imports both grew, and Canada’s trade deficit with the world shrank by more than half, to $435 million.
But dig a little deeper into the data, and what you see is a story of two different export sectors. As BMO chief economist Doug Porter put it in a client note Friday morning, “there is energy (doing just fine) and there is everything else (doing anything but fine).”
While energy exports have seen a $63.6-billion surplus for the past 12 months, everything else has seen a $72.9-billion deficit.
Check out this chart of Canada’s trade balance for energy (blue) and everything else (red).
The gap between energy and everything else is translating into a regional divide in Canada — between the booming, oil-reliant West and the plodding economy of the rest of the country.
“The rapid pace of oilsands development is creating economic risks and regional disparities that need to be addressed,” the left-leaning Pembina Institute said in a report released this week.
The report said the “overwhelming majority” of economic benefits from the oilsands boom “are limited to Alberta. Other provinces will benefit less: even the United States would gain more employment opportunities from the oilsands than the rest of Canada if oilsands development goes ahead as projected.”
Bringing more jobs to the oilsands wouldn’t work as a solution; the oil, gas and mining sector employs 225,000 people, compared to 1.5 million jobs in manufacturing. Booming oil exports simply can’t replace stagnating factory exports. (Incidentally, jobs in oil, gas and mining actually fell by about 0.2 per cent over the past year.)
In a report this week, BMO’s Porter called Canada’s stagnating export sector the country’s biggest economic challenge.
“Since 2000, Canadian exports have suffered through their own version of the lost decade, with volumes essentially unchanged over that spell,” Porter wrote.
“To put that in perspective, the next slowest 13-year stretch for real exports over the past half-century was 42 per cent growth from 1970-83.”
Porter notes that manufacturing employment in Canada — which is heavily dependent on exports — has shrunk by 20 per cent since 2000, even as jobs in the rest of the economy grew by a bit more than 20 per cent.
Nowhere is this more clear than in the auto industry, once one of the major drivers of central Canada’s economy. Vehicle production is down nine per cent this year — and that’s despite a global boom in auto sales
And the worst may be yet to come. Analyst Joe McCabe recently told an auto industry conference he expects car manufacturing to shrink another 28 per cent over the next decade.
So what’s to blame for this? Porter notes that the last 13 years of stagnation coincide with “the long upward march of the loonie,” which bottomed out around 62 cents U.S. in 2002 and steadily climbed to parity by 2008. The rising dollar has made Canadian exports more expensive on the global market.
That “played a key role in undercutting the manufacturing sector in particular,” Porter writes, though he’s cautious not to blame the rising loonie on oil exports — the old “Dutch Disease” debate.
But the Pembina Institute has little doubt Dutch Disease is Canada’s diagnosis.
“Recent analysis suggests that surging commodity prices explain as much as 40 to 75 per cent of the dollar’s rise,” the Pembina Institute said, referring to the loonie’s reputation as a “petro-currency.”
The report urges the government to launch a federal committee to look at the problem and recommend solutions “to ensure a robust, diverse economy that supports economic growth and competitiveness across Canada.”
Thousands of people were removed from villages in the central Philippines on Thursday before one of the year’s strongest typhoons strikes the region, including a province devastated by an earthquake last month.
Typhoon Haiyan has sustained winds of 215 kilometres per hour and ferocious gusts of 250 km/h and could strengthen over the Pacific Ocean before slamming the eastern province of Samar early Friday, government forecasters said.
The U.S. Navy’s Joint Typhoon Warning Center in Hawaii said it was the strongest tropical cyclone in the world this year, although Cyclone Phailin, which hit eastern India on Oct. 12, packed winds of up to 222 km/h and stronger gusts.
Facing another possible disaster, President Benigno Aquino III warned people to leave high-risk areas, including 100 coastal communities where forecasters said the storm surge could reach up to seven metres. He urged seafarers to stay away from choppy seas.
Aquino urged people to stay calm and avoid panic-buying of basic goods and assured the public of war-like preparations: Three C-130 air force cargo planes and 32 military helicopters and planes were on standby, along with 20 navy ships.
“No typhoon can bring Filipinos to their knees if we’ll be united,” he said in a nationally televised address.
Governors and mayors were supervising the evacuation of landslide- and flood-prone communities in several provinces where the typhoon is expected to pass, said Eduardo del Rosario, head of the government’s main disaster-response agency.
Even in southern Misamis Oriental province located farther from the typhoon’s expected track, more than 12,000 people abandoned their homes in six coastal towns and a mountain municipality that have been hit by past landslides, said Misamis Oriental Governor Yevgeny Emano, who also suspended school classes.
Aquino ordered officials to aim for zero casualties, a goal often not met in an archipelago lashed by about 20 storms each year, most of them deadly and destructive. Haiyan is the 24th such storm to hit the Philippines this year.
Edgardo Chatto, the governor of Bohol island province in the central Philippines, where an earthquake in October killed more than 200 people, said that soldiers, police and rescue units were helping displaced residents, including thousands still in small tents, move to shelters.
Rescue helicopters on standby
Bohol is not forecast to get a direct hit but is expected to be battered by strong wind and rain, government forecaster Jori Loiz said.
Army troops were helping transport food packs and other relief goods in hard-to-reach communities and rescue helicopters are on stand-by, the military said.
“My worst fear is that the eye of this typhoon will hit us. I hope we will be spared,” Chatto told The Associated Press by telephone.
Haiyan was forecast to barrel through the country’s central region Friday and Saturday before it blows toward the South China Sea over the weekend, heading toward Vietnam.
It was not expected to directly hit the densely populated capital of Manila farther north, but residents in the flood-prone city were jittery, with one suburb suspending classes and authorities ordering giant tarpaulin billboard ads to be removed along the main highway.
A North Dakota farmer who discovered an enormous oil spill while harvesting wheat says crude was bubbling up out of the ground when he found it.
Steve Jensen said he smelled the crude for days before the tires on his combines were coated in it. At the apparent break in the Tesoro Corp.’s underground pipeline, the oil was “spewing and bubbling six inches high,” he said Thursday.
What Jensen had found on Sept. 29 turned out it was one of the largest spills recorded in the state. At 20,600 barrels it was four times the size of a pipeline rupture in late March that forced the evacuation of more than 20 homes in Arkansas.
But it was 12 days after Jensen reported the spill before state officials told the public what had happened, raising questions about how North Dakota, which is in the midst of an oil boom, reports such incidents.
The spill happened in a remote area in the northwest corner of the state. The nearest home is a about a kilometre away, and Tesoro says no water sources were contaminated, no wildlife was hurt and no one was injured.
The release of oil has been stopped, state environment geologist Kris Roberts said Thursday. And the spill, which spread out over three hectares, has been contained….
- Massive oil pipeline break under N.D. farmer’s wheat field (cbsnews.com)
- North Dakota Pipeline Spills Over 20,000 Barrels Of Crude Oil (thinkprogress.org)
- Wheat farmer discovers oil spill the size of seven football fields (billingsgazette.com)