2005 Perspective

December 2004 Newsletter

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On January 13th, the National Post presented its 2005 outlook to a Calgary audience at the Fairmount Palliser Hotel. Here are some of the main* highlights:

Currency/Interest Rates:

• $.90 Canadian dollar - the US dollar will go lower and global investors are getting nervous holding US dollar reserves. The US has to borrow to maintain its trade deficit.
• The US will continue its low dollar policy
• .5% increase in interest rates

GNP

• 2.5% GNP in Alberta
• China's GNP - 9% in 2004 and estimated to be under 9% in 2005 (Today, China's economy is about the same size as New York State's economy)
• India to grow and surpass China's growth

Oil/Gas Prices

• Oil prices at $56/barrel due to:
  • tight oil supplies
  • large discoveries hard to come by
  • disruption in supplies will increase oil prices
  • global demand
  • OPEC is effective at managing oil prices
  • low USD, and
  • OPEC wants to make up for the low USD
• Gas prices will go up due to supplies are light and there aren't any new discoveries. There are gas sources in the McKenzie Delta and these sources will be available by the end of the decade
• Drilling at 23,000 wells in 2005 - the hot spots are the oil sands, NE BC (gas), Foothills, Arctic and the Beaufort
• Three major pipelines underway - BC, Arctic Pipeline and McKenzie Valley Pipeline
• There will be a labor issue in the oil and gas industry over the next 5 years

Real Estate

• Real estate - 7% increase in the average price of houses
• Real estate - Calgary has had record sales and there is much growth in Red Deer

What is interesting to note is that the speakers did not discuss the outlook for technology, manufacturing, gold or base metals. (What is also interesting to note is that China is Canada's second largest trading partner as well as Alberta's second largest trading partner.)

*Note: There were similarities and differences in the speakers' perspectives. This article simply summarizes the highlights and does not compare differing points of view.