I must argue with the headline. The Cons chose to ignore and turn their backs on manufacturing.....
Canada forgot to plan for its future by leaning on oil and the loonie
Off the backs of those industries, Canada’s gross domestic product (GDP) grew by 19 per cent between 2010 and 2014. But most of that growth was driven by factors outside Canada’s control. China’s economy was booming and, with it, its insatiable need for resources. Oil prices were fixed artificially high by the OPEC, Iranian petroleum supply was cut owing to sanctions, millionaires from precarious economies, including China’s, increasingly sheltered their wealth in havens such as Canadian housing, and “fracking” technology unlocked new petroleum resources in Western Canada.
Many remain optimistic that petroleum prices will recover, but there is strong reason to believe low prices are here to stay. Unlike previous price vacillations that were created by shocks in supply or demand, the price-setting regime of oil has changed. In the past, prices were set monopolistically by OPEC; they’re now set competitively. Low-cost producers, such as Saudi Arabia, used to intentionally lower output to create artificial shortages that boosted prices. With such high prices, more expensive resources such as oil sands and shale oil became viable. Realizing that high prices would eventually lead to OPEC’s demise, the cartel stopped price fixing. The world is now sitting on massive inventories of oil that will take years to consume. On top of that, Iranian oil sanctions are being lifted, adding to cheap supply. Barring some geopolitical catastrophe, the new prices are here to stay.
Canada forgot to plan for its future by leaning on oil and the loonie - The Globe and Mail
