These are stories Report on Business is following Monday, April 14, 2014.
By my count, it took me about 18 seconds to pump $20.60 worth of gas into my tank this morning. (I wanted to stop at $20, but it was going too fast.)
So you might want to think twice before you fill up today unless you really need it. Or unless you think the price is going even higher than the $1.379 I paid in downtown Toronto.
Regardless, you can imagine my shock given that I’d last pumped gas a few days ago, when it was far, far lower. Today, according to reports, prices ranges across Canada from about $1.20 to over $1.45 in Vancouver.
The guy at the gas station told me the price, which climbed 3 per cent in Canada last month, has been rising for several days and was actually a tiny bit higher earlier, so I guess I should be thankful for small mercies.
That didn’t help much, actually.
While several things factor into pump prices, this comes as oil prices spike, to above $104 (U.S.) a barrel this morning for the American benchmark, amid rising global tensions, notably in Ukraine and Libya, where the interim prime minister has quit. Last month, it averaged just shy of $101.
There's more: Chief economist Douglas Porter of BMO Nesbitt Burns noted today that the U.S. benchmark, West Texas Intermediate, is up by more than 5 per cent, or better than $5 a barrel, since the beginning of this year. Add in the 3-per-cent dip in the Canadian dollar, and oil prices are now up by more than 8 per cent.
"On top of that underlying strength in crude costs, wholesale and retail gasoline tend to show seasonal strength int he spring as we head toward prime driving season, and this year has been no different," Mr. Porter said, citing the fact that pump prices have now surged by almost 10 per cent this year when expressed in U.S.-dollar terms.
And, according to BMO and others, we can expect more, at least in the short-term.
"Looking ahead, the near-term outlook largely depends on whether the global economy sparks back up, as many expect," Mr. Porter said.
"If that does indeed unfold, we could see even more near-term strength in pump prices. Looking further down the line, we expect oil prices to simmer down later this year, and the normal seasonal pattern should take some steam out of gasoline prices in the second half of the year."
Bank of Nova Scotia’s Patricia Mohr, one of Canada’s leading commodities analysts, also cited that fact that certain pipeline projects linking the Cushing, Okla., hub to Texas refineries have been completed, thus cutting Cushing inventories and helping to push up oil prices.
“This has relieved downward pressure on WTI oil prices,” she said. “Refineries reflect higher feedstock costs in their wholesale gasoline prices.”
Chief economist Avery Shenfeld of CIBC World Markets agreed that we could be in for more pain, also citing the rise in Brent crude, the overseas benchmark, which “tends to track most closely” to prices at the pump, and the jump in U.S. wholesale gas prices.
“Add in the weaker Canadian dollar, and it’s no surprise that we are paying more than at the same point last year,” Mr. Shenfeld said.
“The week-to-week movements also capture some seasonality, although on that score, we're still not into the peak driving season. As a result, the worst may be yet to come for drivers if oil prices hold up.”
Nathan Janzen of Royal Bank of Canada said RBC expects gas prices to rise in the short term, given the poor winter’s impact on oil prices, but then to settle down as production returns to normal.
- Carrie Tait: Rising prices for natural gas put pressure on oil sands producers
- Barrie McKenna: Bank of Canada's rate policies in 'uncharted waters'
- Kevin Carmichael: IMF to Canada: Stand guard against economic weakness
- David Parkinson in ROB Insight (for subscribers): Inflation comes to Canada (and that's good)
The Heartbleed hack
About 900 social insurance numbers were stolen from the computers of the Canada Revenue Agency given the troubles related to the Heartbleed bug.
The RCMP is now investigating the breach, the CRA said in a statement released today after a six-day closure of its web filing services, The Globe and Mail's Tu Thanh Ha reports.
The breach occurred during a six-hour window.
"Regrettably, the CRA has been notified by the government of Canada's lead security agencies of a malicious breach of taxpayer data that occurred over a six-hour period," the CRA said.
"Based on our analysis to date, Social Insurance Numbers (SIN) of approximately 900 taxpayers were removed from CRA systems by someone exploiting the Heartbleed vulnerability. We are currently going through the painstaking process of analyzing other fragments of data, some that may relate to businesses, that were also removed."
- Tu Thanh Ha: Personal data stolen from CRA website using Heartbleed bug
- BlackBerry says Heartblled fix need for BBM on iOS, Android
Prices flat amid proposed new rules
Canada’s housing market has hit something of a landmark.
Home prices across the country were flat in March compared to February, according to the Teranet-National Bank house price index released today, marking the first time in 15 years of such record-keeping that values didn’t rise in the month of March, recessions not included.
Having said that, prices were still up 4.6 per cent from a year earlier, and, as always, Canada’s various regions fared differently.
“The story varied widely from east to west,” today’s report said.
“In all five metropolitan markets west of Ontario, prices were up from the month before: Calgary (1.4 per cent), Vancouver (0.6 per cent), Edmonton and Victoria (0.4 per cent) and Winnipeg (0.2 per cent),” it added.
“Prices were also up in Halifax (0.8 per cent), but after important declines in each of the three preceding months. Prices were stable
in Toronto and Quebec City. They declined in Montreal (1.8 per cent), Hamilton (0.7 per cent) and Ottawa-Gatineau (0.6 per cent).”
As The Globe and Mail’s Tara Perkins reports, the report came as Canada’s bank regulator released a long awaited set of proposed guidelines for the country’s three mortgage insurers.
The new guidelines spell out the practices that the Office of the Superintendent of Financial Institutions wants to see from the country’s three mortgage insurers, Canada Mortgage and Housing Corp., Genworth MI Canada and Canada Guaranty.
Many of the new guidelines essentially tell mortgage insurers that they are responsible for ensuring that the banks are being careful when they underwrite mortgages.
But OSFI also made it clear that it wants the mortgage insurers themselves, not the banks, deciding which mortgages ultimately are insured.
Citigroup tops estimates
Citigroup Inc. shares climbed today after the U.S. banking giant posted better-than-expected first-quarter results.
Topping analysts’ estimates, Citigroup posted a profit of $3.9-billion (U.S.) or $1.23 a share, compared to $3.8-billion, also $1.23, a year earlier.
“Despite a quarter that was difficult for our company, we delivered strong results,” said chief executive officer Michael Corbat.
“Both our consumer and institutional businesses performed well and we grew both loans and deposits while holding the line on our expenses.”
TransGlobe Energy Corp. says a deal to be acquired by Caracal Energy Inc. is off, The Globe and Mail's Bertrand Marotte reports.
Calgary-based TransGlobe said today it will reintroduce the quarterly dividend of 5 cents (U.S.) per share that had been suspended last month and will also pay out a special dividend of 10 cents to shareholders after Caracal terminated the March 15th agreement to buy TransGlobe for almost $700-million (Canadian) in stock.
Caracal, which operates in Chad, wanted TransGlobe to expand its oil and gas holdings into Egypt.
Caracal advised TransGlobe that it has received a friendly cash takeover offer from global commmodities giant Glencore Xstrata PLC and that the bid “constituted a ‘superior proposal’ under the terms of the Arrangement Agreement (between Caracal and TransGlobe),” said TransGlobe.
Trade to pick up
Global trade flows are expected to rebound this year and next, but 2014 will still be below normal.
According to a fresh report today from the World Trade Organization, global exporters and importers can expect to see an increase of 4.7 per cent this year, more than double last year’s 2.1 per cent but less than a 20-year average of 5.3 per cent.
Global trade is projected to hit that 5.3-per-cent mark in 2015, however.
“It's clear that trade is going to improve as the world economy improves,” said Roberto Azevêdo, the group’s director-general.
“But I know that just waiting for an automatic increase in trade will not be enough for WTO members,” he added in a statement.
“We can actively support trade growth by updating the rules and reaching new trade agreements. The deal in Bali last December illustrates this.”
Streetwise (for subscribers)
ROB Insight (for subscribers)
- RCMP charge Alberta company over illegal shipment to Iran
- GM to replace heads of communications and HR in executive shakeup
- Cash-strapped Italy selling Venetian lagoon island via online auction
- Encana unit to sell U.S. LNG assets to Stabilis Energy
- U.S. retail sales post biggest gain in one-and-a-half years
- Faster Wi-Fi on flights leads to battle in the sky