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  • Prices will bounce back before too long. The reason there is so much oil out there now is because the US is doing a lot of oil shale production and they don't need to buy as much foreign oil. How it w

  • but they aren't flexing their muscle's. Normally they flex their muscles by cutting production to increase prices. They are basically admitting that they can't do that any more because it wouldn't inc

  • Interesting article on this topic from the "Globe and Mail" (whatever that is):   http://www.theglobeandmail.com/globe-debate/a-textbook-example-of-competition/article21834658/  

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comment_99268

Fraser. The volume on oil stocks doesn't appear to be sending any telling signals, indicating capitulation. In fact, the EIA oil inventory report shows a significant increase as opposed to a consensus decrease. That indicator might suggest that your theory is valid on this dive in prices is based on fundamentals, supply, rather than traders doing what traders do.

So, is the federal tax value per litre of gas a fixed cent rate or a percentage rate?

according to this http://retail.petro-canada.ca/en/fuelsavings/2139.aspx 10 cents to the feds, 14 to the province, a flat tax regardless of price. Naturally, gst floats.

With the TSX falling below 14K on pretty pedestrian volume, I wouldn't be surprised to see it test support at 12 or 11.5 in the next few months.

So GST generated in dollars from gasoline sales should drop, right? The Federal budget could be affected.

What did everyone miss in May when oil prices were flying? Did the supply and demand issues just materialize? Is the very rapid rise in the U.S. Dollar influencing the oil price, unduly?

Hadn't really though about the gst impact as much as the royalties received by the govt. Either way its bad for the budget.

I guess a couple things happened. No one bothered to think "hey we just got access to a billion barrels of something, will that affect the price. That combined with the slowdown in Asia, the stalling in Europe and OPEC willing to wait everyone else out to retain market share created a bit of a perfect storm.

The market is funny in how it will react incredibly quickly to some things on its own, and other things seem to stew until a catalyst triggers something.

comment_99315

Something to keep in mind is that oil production isn't just a switch you can flip and lower production. In many cases the lead up time to actually getting the stuff produced is lengthy enough it will take months to start and stop. So give it 6 months to a year and see what kind of equilibrium point is reached before we panic too much. 

 

One of the big problems is that oil companies are run by panicky idiots in a lot of cases and they like to make all sorts of bad decisions. If not for that I'd actually think a bit of a dip in the price of oil could be a good thing for Alberta. Cool down the economy just a little bit. 

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