With the price of crude oil on the rise, how does it compare now to the long-term average?
Oil, at about $63 (U.S.) a barrel, is well below the peak of $147 it hit last summer, but the price is still substantially above its long-term average.
Of course, that average depends on when you start the calculations.
If you start the clock around the time of the oil shocks of the early 1970s, the average price has been roughly $35 a barrel (adjusting for inflation). If you look at data since the Second World War, the average price is about $25, and going back to the start of the 20th century, the average is about $23 (also adjusted for inflation).
If the price stays well above the average, which sectors will be affected?
Just about every sector will be affected, but one of the key effects will be felt in agriculture and food, according to a recent report from economist Benjamin Tal at CIBC World Markets.
He noted that modern agribusiness has been based on cheap energy, in the form of fertilizer and transportation fuel. High energy costs are reflected in recent inflation numbers, which show the increase in the overall consumer price index in the United States at about zero, while food inflation is at 5 per cent.
In Canada, food inflation is about 7.4 per cent, with the overall CPI up about 1.4 per cent. There are substantial spreads in most other countries, too. One consequence of high oil prices will be a shift to low-energy organic practices, Mr. Tal said, and a move to local production to cut transportation costs.
That jibes with the views of former CIBC chief economist Jeff Rubin, whose new book, Why Your World is About to Get a Whole Lot Smaller, suggests that high oil prices will reverse some of the forces of globalization because long-distance trade will be less practical.
The North American automotive industry seems to be in the dumps, but how is the sector in other countries?
In some emerging markets, the car business is going gangbusters. In China, for example, the number of vehicle sales jumped 37 per cent in April. Annualized sales in that country are now at 6.2 million.
There are now far more cars sold in Brazil, India and China as a whole than are sold in the United States, according to a recent Bank of Nova Scotia report. As recently as 2007, the United States outsold these three markets by more than eight million units.
Sales in Europe also improved sharply in April, although car purchases there are still down significantly from the levels of the past few years. Governments in several European countries now offer incentives to replace older vehicles, which has helped boost the business.
I saw that India's stock market was halted last week when price gains tripped the 'circuit breakers' on the Bombay Stock Exchange. What increase would trip the Toronto Stock Exchange breakers?
The TSX (and U.S. markets) do not have circuit breakers that trip on gains; they only kick in if downward movements hit a certain level.
The TSX's downward circuit breakers are linked to the New York Stock Exchange and movements in the Dow Jones industrial average. Currently, if the Dow drops 700 points, a short halt will take place on both exchanges.
Longer halts kick in at 1,450- and 2,150-point drops. The only time the Canadian market has its own circuit-breaker levels is on days when U.S. markets are closed and trading continues here.
On those days, the TSX breaker levels are 850 points for a short halt, and 1,650 and 2,500 points for longer halts.
