Sunday, 21 December 2014

The Oil Market: Comments are All Over the Map

The politist thing to say about the oil market is that opinions are very democratic: everyone has one and at this point the "truth is out there." I have been following the prices and the comments because of its obvious effect on Kindersley and our neighbours in the region.

The Economist explains: Why Oil Prices are Falling

The Conventional Wisdom on Oil is Always Wrong.

We've Been Incorrectly Predicting Peak Oil for Over a Century.

Conrad Black's Perspective.

A J.P, Morgan Economist's Thoughts.

How Cheap Oil Changes the World.

Crude Oil Prices

How the US Could Beat OPEC in an Oil Price War.

The Impact on the Railways.

I would be foolish to predict what is going to happen to the oil market. Better informed people than me are unable to agree on trends.

From a municipal perspective what do we need to consider?

  • Our growth plan is based on volumes triggering actions not forecasts.
    • As consumption and use grow certain targets are hit. When a target hits that means we start planning for expansion of the lagoon or the water treatment plant. If the target is not hit then expansion doesn't occur.
  • A healthy community, which is also more economically diverse, means a community that has a quality of life level that attracts residents and retains residents.
    • This is important but it has to be fiscally responsible.
  • The provincial transfers we receive will hold for 2015 but will may have, depends on the length and depth of the oil price fall, will effect our 2016 budget.
    • Provincial transfers are based on the PST and municipalities receive approximately 20% of the PST.
I hope this helps. My perspective is that we not make any knee jerk reactionary decisions realizing that this industry is cyclical. As a result prudence is being proactive keeping the big picture in view as we make the necessary adjustments for the present.

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