Saskatchewan to lead nation for economic growth: RBC
Historically high commodity prices will push Saskatchewan to a leading growth position amongst Canadian provinces this year, according to RBC economist Paul Ferley.
Speaking to a group of RBC clients in Saskatoon on Friday, Ferley noted that a “wide range of commodities” are experiencing higher prices. He’s predicting that uranium, potash, wheat and oil production will push Saskatchewan’s economy forward by 3.5 percent in 2008, and 3.25 percent in 2009, compared to national growth rates of 1.5 percent and 2.5% respectively.
The Saskatchewan economy was the subject of much speculation in 2007, but ultimately underperformed on the most bullish predictions, which had forecast real GDP growth between 4 and 4.8 percent. Saskatchewan’s real GDP growth came in at 2.8 percent, just slightly above the national average. However, Saskatchewan’s nominal GDP growth through 2007 was exceptionally strong at 11.4 percent, topping all provinces except Newfoundland and Labrador. Real GDP measures changes in production, while nominal GDP measures the actual dollar value of the economy. You might say that we worked 2.8% harder, but earned 11.4% more.
Read the Saskatoon Star Phoenix story by Wendy Gillis here.
Read also: Saskatchewan Economy Underperforms on Expectations
Read also: The Rest of the Economic Growth Story
Read also: Saskatchewan Could Become an Embarrassment of Riches: RBC
See a Google map displaying the boundaries of Saskatoon real estate “areas” here
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Norm Fisher
Royal LePage Saskatoon Real Estate
13 comments so far. We'd love to hear your thoughts.
May 8th, 2009 at 1:15 PM
Norm you’re publishing forecasts? Isn’t that what we criticize the media for doing? Publishing positive economic forecasts and ignoring warnings to the contrary. National Bank thinks oil is going to drop big time. Where’s that posting? http://www.canada.com/edmontonjournal/news/business/story.html?id=2ef09ba6-f351-4f80-8067-ff13fce390c3
it was brought up by bloggers on a previous post.
May 8th, 2009 at 1:15 PM
Dan,
We?
When did I ever criticize the media for publishing forecasts? Give me a break!
If you look through the archives you’ll see that I’ve published many forecasts, both positive and negative towards real estate. I’ve also followed up with reports on forecasts which have fallen short.
May 8th, 2009 at 1:16 PM
I think “we” criticize the media applies to the multiple people on this sight who often feel the media reports on only pro “boom” topics. Don’t think “we” needs to mean you. I agree, this positive forecast comes pretty close after that National Bank one claiming big drop in oil prices. So kind of publishing one of the two big bank predictions. Just happens to be the positive one. I really don’t think either are that exciting, maybe better to stick as a comment on weekly update post?
May 8th, 2009 at 1:16 PM
Jim,
I have often written about the Saskatchewan economy in the broader context and I will continue to touch on economic forecasts and results (both positive and negative) as they come available, but I have no intention of becoming a commodities blog. I will not be providing updates on the price of oil, whether up, down or sideways. As always, you can feel free to add any comment which you feel is relevant and noteworthy.
May 8th, 2009 at 1:17 PM
Oil at $75 or $80 in the next 12 months is impossible.
Oil at $90-$110 is totally possible.
Either way, those prices mean very good news for saskatchewan.
The long term trend is that Oil will increase, thats just a given.
May 8th, 2009 at 1:17 PM
Norm has always been one of the most honest commentators. Now that people are hoping the market will crash and don’t feel to value his opinion, they should maybe stop reading his blog or commenting. Thank you Norm for your hard work!
May 8th, 2009 at 1:17 PM
Fan,
Blush.
Thanks. I appreciate the support. I also understand why some would like to see a correction take place, pronto! If you’ve been renting in this market, watching property values sky-rocket, good economic forecasts aren’t particularly comforted. May in fact feel threatening.
May 8th, 2009 at 1:18 PM
More bullish news from a Bakken oil producer:
CALGARY, June 16 /CNW/ – Crescent Point Energy Trust (“Crescent Point” or the “Trust”) (TSX: CPG-UN.TO) is pleased to announce a $200 million increase to its 2008 capital spending plans, increasing total capital expenditures to $425 million, a 5 percent upward revision to 2008 production guidance, and a 15 percent increase in the Trust’s distribution. Increases in capital spending, production, cash flow and distribution are due to significant growth in Crescent Point’s southeast Saskatchewan Bakken resource play, continued better than expected drilling and production results in its core areas, and higher than anticipated commodity prices.
ACCELERATED 2008 CAPITAL BUDGET
Crescent Point continues to execute its business plan of creating sustainable value added growth in reserves, production and cash flow through management’s integrated strategy of acquiring, exploiting and developing high quality, long life, light oil and natural gas properties in western Canada.
To capitalize on the increasing size and productivity of the Bakken resource play, Crescent Point is upwardly revising its 2008 capital expenditures budget by 89 percent from $225 million to $425 million. The vast majority of the increase will accelerate development of the Bakken resource play, which will further extend the Trust’s dominance in the play and capitalize on record high oil prices.
In total, the Trust will spend approximately $255 million in 2008 on drilling and completions activities, which will add production at a rate of approximately $25,000 per boe. Crescent Point will drill up to 174 (139.7 net) wells, including 110 (93.4 net) Bakken horizontal wells, up from previous plans of 140 (105.7 net) and 79 (65.5 net), respectively. The Trust will also fracture stimulate up to 130 (114.4 net) Bakken horizontal wells. Crescent Point currently has 150 Bakken horizontal wells in inventory awaiting fracture stimulation. With significant increases in both drilling and fracture stimulations, Crescent Point now expects to exit 2008 with production greater than 37,500 boe/d.
BUILDING FOR THE FUTURE
A large portion of Crescent Point’s 2008 budget will be directed towards facilities and infrastructure, as the Trust positions itself for further growth in the Bakken resource play in the coming years. The Trust’s budget for land, facilities and seismic has been increased to $170 million from $45 million. The majority will be spent in the Bakken resource play, including the acquisition of additional undeveloped Bakken land, as the Trust continues to consolidate the area. Approximately $80 million is planned on facilities, directed mostly at the long term strategic infrastructure development of the Viewfield Bakken resource play. Facilities projects in the budget include the Viewfield gas plant expansion from 6 mmcf/d to 15 mmcf/d, strategic battery consolidations, and gathering lines construction, all contributing to area efficiencies and maximizing product value as the Bakken resource play expands and develops. Crescent Point expects to further expand the Viewfield gas plant to 30 mmcf/d in mid 2009.
May 8th, 2009 at 1:18 PM
Dan, are you one of those “Peak Oil” believers? A reader of The Long Emergency by James Kunstler perhaps?
I had never heard of this guy before until I read this Tyee article (Vancouver leftist website) http://thetyee.ca/Entertainment/2008/04/04/EndOfSuburbia/
The way the author worships at the altar of all things “Peak Oil” is a bit scary. The paranoia exhibited, etc. amazing…
When I read stuff like that I recall I radio interview I heard on CBC in the early 70s during that “oil crisis”. Someone, wish I could remember who – an American I believe, was asked about his take on the oil crisis, the long lineups for gas in some states, the possibility of higher gas prices, the fear gripping the world. His answer?
“I’m going to buy the biggest, most fuel inefficient car I can find, a Cadillac with fins, I’m gonna fill that baby with gas a go on a long, long road trip.”
It was American bravado to be sure … but 35 years later who had the more sane opinion? The chicken littles or the guy in the Cadillac? Who had more fun?
May 8th, 2009 at 1:18 PM
Ron, Bakken is NO WHERE near Saskatoon. Is there an Estevan or Regina real estate blog, or Calgary oil company blog somewhere you’d like to post on? Might actually encourage young people to LEAVE Saskatoon, to get oil wages in south Saskatchewan, like they left over the last few decades to get high wages in Alberta
A week ago, some oil in east Saskatchewan was even being managed by a Winnipeg oil company of all places.
Key points:
This oil good for Saskatchewan as a whole, Shaunovon as much as Saskatoon
Corporate will never be in Saskatoon, regional likely in Regina, which already has some oil/gas company HQ there
May 8th, 2009 at 1:19 PM
I wonder with the federal Liberal’s and Green Party’s respective Carbon Tax proposals, and these policies becoming increasingly popular world wide, if we’ll see a negative effect on the Saskatchewan economy?
As well, taxes on electricity generated by coal or natural gas would specifically target our power bills, as SaskPower relies heavily on coal in particular. Just another way the cost of living in Saskatchewan seems to be sky rocketing as of late.
Of course, from an environmental perspective, beneficial, as encourages better insulation, decreased hot water use, better utilization of public transit etc. Still, our economy, with oil being a big component, and our reliance on coal for power, could take a big hit.
May 8th, 2009 at 1:20 PM
Not sure how we’re supposed to catch Alberta, they keep outgrowing us in pretty much everything.
They have no debt.
They had a $4.6 billion surplus this year.
Alberta is widening the gap on Saskatchewan.
Alberta pays more, and other than Calgary/Fort Mac, is actually already a cheaper place to live than Saskatoon.
May 8th, 2009 at 1:20 PM
Don’t forget that especially for professionals, Alberta is widening the already substantial wage gap on Saskatchewan.
E.g. Doctors, Engineers, Technicians, etc.
At least Saskatchewan is over paying its nurses, so we’ll have a lot of those! Just no doctors.
And inadequate engineers and technologists to design and implement economic growth!!