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  • CCPA's National Office has moved! May 11, 2018
      The week of May 1st, the Canadian Centre for Policy Alternatives' National Office moved to 141 Laurier Ave W, Suite 1000, Ottawa ON, K1P 5J2. Please note that our phone, fax and general e-mail will remain the same: Telephone: 613-563-1341 | Fax: 613-233-1458 | Email: ccpa@policyalternatives.ca  
    Canadian Centre for Policy Alternatives
  • What are Canada’s energy options in a carbon-constrained world? May 1, 2018
    Canada faces some very difficult choices in maintaining energy security while meeting emissions reduction targets.  A new study by veteran earth scientist David Hughes—published through the Corporate Mapping Project, the Canadian Centre for Policy Alternatives and the Parkland Institute—is a comprehensive assessment of Canada’s energy systems in light of the need to maintain energy security and […]
    Canadian Centre for Policy Alternatives
  • The 2018 Living Wage for Metro Vancouver April 25, 2018
    The cost of raising a family in British Columbia increased slightly from 2017 to 2018. A $20.91 hourly wage is needed to cover the costs of raising a family in Metro Vancouver, up from $20.61 per hour in 2017 due to soaring housing costs. This is the hourly wage that two working parents with two young children […]
    Canadian Centre for Policy Alternatives
  • Mobility pricing must be fair and equitable for all April 12, 2018
    As Metro Vancouver’s population has grown, so have its traffic congestion problems. Whether it’s a long wait to cross a bridge or get on a bus, everyone can relate to the additional time and stress caused by a transportation system under strain. Mobility pricing is seen as a solution to Metro Vancouver’s transportation challenges with […]
    Canadian Centre for Policy Alternatives
  • Budget 2018: The Most Disappointing Budget Ever March 14, 2018
    Premier Pallister’s Trump-esque statement that budget 2018 was going to be the “best budget ever” has fallen a bit flat. Instead of a bold plan to deal with climate change, poverty and our crumbling infrastructure, we are presented with two alarmist scenarios to justify further tax cuts and a lack of decisive action: the recent […]
    Canadian Centre for Policy Alternatives
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The Progressive Economics Forum

Saskatchewan Budget Saved by Falling Loonie

Following last week’s troubling news about potash, the Saskatchewan government released its first-quarter financial report today. The headline seems to be “Oil Keeps Budget in Black”, with a forecast increase in oil revenue more than offsetting a forecast decline in potash and other revenues.

But the forecast West Texas Intermediate price is only up by a couple of dollars since the provincial budget. A larger difference is that the forecast exchange rate has fallen from 99 to 96 US cents.

As shown at the bottom of page 4 (3 of 5 in the PDF), the forecast US-dollar price of oil is up by 2.4% from the budget estimate (i.e. $95.03/$92.84). But the Canadian-dollar price of oil is up by 6.3% (i.e. $80.01/$75.29). This comparison also includes changes in transport costs and/or grade differentials since the Canadian-dollar value is an average wellhead price.

However, the exchange rate’s effect is not limited to oil. The lower loonie has the same positive effect on the Canadian-dollar value of all commodities priced in US dollars.

The forecast-US dollar potash price is down by 5.8% (i.e. 1 – ($372/$395)). But the Canadian-dollar potash price is down by only 2.8% (i.e. 1 – ($636/$654)).

Indeed, the potash comparison purely reflects the three-point shift in the exchange rate. Both prices are mine netbacks, so there is no difference in transport costs. (Although the US price is per KCl tonne and the Canadian price is per K2O tonne, the physical ratio of KCl to K2O has not changed since the budget!)

While Premier Wall blasted federal NDP leader Tom Mulcair for questioning the overvalued loonie, Wall is now reaping the fiscal benefits of a slightly more moderate exchange rate.

I am not holding my breath for Wall to acknowledge that Mulcair had a point, although I note that he has come around to the NDP’s position on the Senate.

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