March 2011 BC Economic Fundamentals

[Ally]

B.C. shale gas holds promise of new era in resource investment





METRO VANCOUVER - Locked within the shale deposits of northeastern British Columbia lies a natural gas reserve of unparalleled wealth that could push the province into a resource boom unrivalled since the development 50 years ago of the pulp-and-paper industry.




This resource is nothing more than individual, tiny bubbles of hydrocarbon, all that remains of a single organism that lived and died in a primordial sea and was buried in the mud millions of years ago.




But the accumulation of billions of such organisms over time adds up to gas deposits of 250 trillion cubic feet to 1,000 trillion cubic feet, according to the provincial energy ministry.




How much of that is recoverable is a work in progress as companies drill into it. But even at today`s low price for natural gas of $3 per 1,000 cubic feet at the wellhead, those reservoirs could have a value beginning at $750 billion.




Read the full article here.

 

[Ally]

B.C.'s average MLS price up 18% in February: BCREA





METRO VANCOUVER - The average Multiple Listing Service price of a home in British Columbia was up 18 per cent in February compared to the same month last year, according to the B.C. Real Estate Association.







The price surge was largely due to sales in Metro Vancouver, the BCREA said, citing even high price increases in the mostly densely populated region of the province.







In Metro Vancouver the average MLS residential price climbed more than 19 per cent, compared to February 2010.




Read the full article here.

 

[Ally]

B.C. domestic exports rise 21% in January





B.C.`s Ministry of Tourism, Trade and Investment announced today that the province`s January domestic exports exceeded $2.4 billion, an increase of more than $410 million from January 2010.



The announcement follows a Statistics Canada report released yesterday that indicated Canadian domestic exports overall were worth $34.1 billion in January, a 12% increase compared with January 2010. (See `Canada`s trade surplus drops as imports and exports rise ` ` BIV Business Today, March 10.)







B.C.`s forestry products exports led the way with a 21% rise to $691 million. Increases were also noted in exports of energy products, up 10%; industrial goods, up 58%; and agricultural and fishing products, up nearly 11%.





Read the full article here.

 

[Ally]

Chinese investors once again pouring money into Canadian real estate




In Vancouver, real estate is the economy. So for many, news that Chinese investors are once again arriving in droves to buy up property is being cheered.




Real-estate agents haven`t seen anything like it since the mid-1990s, when fears surrounding the Hong Kong handover fuelled the first rush into the local market by Chinese investors. This second charge could be as substantial as the first, which drove up property values by hundreds of thousands of dollars.





Read the full article here.

 

[Ally]

CREA: Vancouver market cushions Canada's home resale dip in February





Canadian home resales dropped in February but a show of strength in the Vancouver market cushioned the fall, data from the Canadian Real Estate Association (CREA) showed on Tuesday.




Overall, 38,699 homes changed hands in February, down 1.6 percent from January, while the national average price jumped 8.8 percent year-over-year to C$365,192 ($368,881).




But because of the strength in the heavily weighted Vancouver area -- where the average home price, at C$790,380, was more than double the national average -- national sales did not fall as much as they could have.




"Note the extent to which Vancouver dominates these figures...the city absolutely stands alone," said Doug Porter, deputy chief economist at BMO Capital Markets.




Read the full article here.

 

[Ally]

Christy Clark faces serious economic issues





As Premier-designate Christy Clark prepares to take office, the government she will soon lead faces a number of significant economic issues.




The first is a somewhat uncertain economic outlook in the wake of the sharp run-up in oil prices triggered by developments in North Africa and the Middle East. The start of the new year saw a strengthening in global production and trade, driven by robust growth in emerging markets and improved economic conditions in the United States. Now, however, many forecasters are reassessing the prospects for 2011. Deutsche Bank estimates the recent oil price spike, if sustained over the year, will shave about half a percentage point from global growth in 2011. At this juncture, it doesn't look like the recent rise in energy and food prices will derail the recovery, but if oil prices continue to escalate all bets are off. Even if it stays at $100 per barrel, oil is bound to weigh on economic activity in the largest markets - the U.S., China, Japan and the E.U., all big importers of energy.




For B.C., the unsettled global economy emphasizes the wisdom of prudent budgeting at home. The budget presented last month by Finance Minister Colin Hansen is built around cautious assumptions, including a projected rate of economic growth for 2011 that is below the private sector consensus. Hansen's budget also features a modest forecast allowance and "contingency" allocation designed to give Cabinet greater assurance of meeting the government's target of a $925 million deficit for 2011-12.




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[Ally]

Soaring jobless rate seen as a sign of optimism




Metro Vancouver's unemployment rate spiked to 9.2 per cent last month but one economist says the big increase doesn't mean the region is slipping back into recession.










The Metro jobless rate is up 2.3 percentage points from 6.9 per cent in November and the overall B.C. rate is up to 8.8 per cent in January from 7.0 per cent in November, according to Statistics Canada.










Helmut Pastrick of Central 1 Credit Union said the jump looks alarming.










But he takes it as an upbeat sign thousands of unemployed people who had stopped looking for work ` and weren't captured by older statistics ` are now resuming their job hunt because they're more confident there's work to be found.



Read the full article here.

 

[Ally]

Global opportunities across the Pacific





In the 19th century, young men in North America who wanted to seek their fortunes were advised to go west. In the 21st century, those who are already in western Canada are advised to keep looking west, where Canada`s best opportunities to participate in the global economy lie across the Pacific Ocean. However, opportunities only become reality for the prepared. To benefit from growth in the trans-Pacific trade that is so important to Canada`s present and future wellbeing, western Canada must have the infrastructure and capacity in place to receive, move and dispatch goods in growing volumes. Otherwise, our growth may be limited not by lack of supply or demand, but by the lack of capacity at its ports and elsewhere to handle the flow, as illustrated in Brazil.







Fortunately, federal and provincial leaders in Canada have taken steps to remove this potential limitation. The Asia Pacific Gateway and Corridor Initiative (APGCI), now at the midpoint of its lifecycle, is a connected series of major projects to improve both port and inland goods moving capacity in western Canada.







First, we should note that the benefits will not be limited to Canada`s Pacific ports. This is because the APGCI deals not only with gateways (ports and related facilities) but also with hubs (inland distribution centres such as Edmonton and Regina). The results of this increased trade volume will be spread not only throughout western Canada but to the rest of Canada and the United States.





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[Ally]

Encana buys into Kitimat LNG project






CALGARY ` Canada`s proposed first liquefied natural gas export terminal at Kitimat, B.C., has a Canadian partner again ` Calgary-based Encana Corp., the biggest gas producer in the country.




The company announced Friday it will buy a 30 per cent stake in the $4.2-billion plant and pipeline project from American partners Apache Canada Ltd. and EOG Resources Canada Inc. to enable it to market the trillions of cubic feet of natural gas it expects to produce in northeastern B.C. to the lucrative Asian LNG market.




`Encana is a natural partner with Apache and EOG for the Kitimat project,` said Janine McArdle, president of Kitimat LNG and a senior Apache vice-president, in a news release.




Read the full article here.

 

[Ally]

Natural gas the next 'green hope'



My March 7 column pointing out how much sense it makes, from a supply security and ethical superiority standpoint, for the United States to import oil from Canada`s oil sands rather than from unstable Middle Eastern and tyrant-led North African countries, drew this reader response: `Canada should be encouraging both countries to detox and pursue the very energy alternatives casually dismissed by Morgan.`





So what are those `casually dismissed` alternatives? Remember hydrogen? It has been more than a decade since the prospect of autos powered by hydrogen fuel cells sent shares of Ballard Power to stratospheric levels, only to collapse when the great `hydrogen highway` turned out to be the road to nowhere. Basic laws of physics were lost amid the hype. First, there`s no way of storing hydrogen at ambient temperatures, so if your car sits for a few hours, the hydrogen seeps away. Second, there are no natural hydrogen resources. It must be manufactured from a fossil-fuel based petrochemical process or through a costly electricity-intensive electrolysis process.





The next `green hope` to replace oil was biofuels, ethanol blended with gasoline, and vegetable oil blended with diesel (biodiesel). But even initially enthusiastic environmental groups have realized the folly of trying to farm our way off oil.





Read the full article here.

 

[Ally]

Retail sales in B.C. see biggest decline among provinces in January





OTTAWA ` January retail sales in British Columbia showed the biggest year-over-year decline among all provinces, Statistics Canada reported today.







Sales in January were down 1.3 per cent compared to the same month last year, the federal data-gathering agency said.







That compares with a national average increase of 3.5 per cent.







Sales in all other western provinces increased year-over-year, with Alberta showing a 5.5-per-cent gain.




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[Ally]

Mercedes expands in Canada as part of e-car push




Mercedes-Benz Canada Inc. is expanding its Canadian operations as part of its larger push in to the next generation of clean, zero-emission electric cars by setting up its own production of `fuel cell stacks` in a new facility slated for Burnaby, B.C.




While the German auto maker is not releasing details about its capital investment in the new site or the exact number of new jobs being created, it is billing the move as a significant milestone toward its goal of selling pollution-free vehicles.





Read the full article here.

 

[Ally]

How much do Canadians make?



Ever wonder how much your neighbour makes? You may be surprised to learn that they probably earn less than you think.





One of the measures in this past week`s federal budget highlighted this fact by showing just how many seniors have very little income. The budget announced an enhancement to the Guaranteed Income Supplement such that seniors with little or no income other than Old Age Security and the GIS will receive additional annual benefits of up to $600 for single seniors and $840 for couples.





To qualify for the full supplement, single recipients would have to an annual income (excluding Old Age Security and GIS) of $2,000 or less and couples would have to earn under $4,000 annually.





Read the full article here.

 

[Ally]

Japan may drive demand for B.C. forest products: Scotiabank





VANCOUVER - The devastating earthquake and tsunami that hit Japan March 11 may increase demand for B.C. lumber and natural gas, a Scotiabank report says.




`Re-construction in Japan will boost demand and prices for lumber, OSB and plywood, especially from Canada`s West Coast, steel and metals over the next six-to-twelve months,` said Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank.




Demand for imported liquified natural gas and crude oil will also increase because of damage to nuclear power plants in Japan, which could boost projects such as Kitimat LNG for the Asia/Pacific market, the release states




Read the full article here.

 

[Ally]

Timber line reaches new height with wood condos





METRO VANCOUVER - A new three-building condominium project in Richmond is taking wood to the max ` maximum height, that is.




Taking advantage of building code changes introduced in 2009, the Remy project on Cambie west of No. 4 Road is one of the first developments in B.C. to go more than four storeys high using wood, rather than concrete.




It`s a new concept in B.C., where the building code was changed in 2009 to permit six storeys of wood frame construction as part of the B.C. government`s wood-first initiative. As well, the 2009 Wood First Act requires wood to be considered as the primary building material in all new publicly funded buildings.




Read the full article here.

 

[Ally]

Teck says coal production down as prices rising





Vancouver-based Teck Resources Ltd. has reduced its expectations for 2011 coal production just as contract prices for steelmaking coal are set to hit record highs.




The company said Wednesday that it has cut its coal production forecast by about one million tonnes to 23.5-to-24.5 million tonnes for the whole year due to a continuing strike at its Elkview mine and avalanche-related interruptions to shipments out of the East Kootenays over the winter.




The company announced the downgrade of its production levels just as contract prices for the kind of steelmaking coal Teck produces are about to reach the range of $330 US per tonne starting April 1, a record for Vancouver, versus $225 in the previous quarter, according to Patricia Mohr, vice-president of industry and commodity research at Scotiabank Economics.




Read the full article here.

 

[Ally]

B.C. plywood mills fielding queries from Japanese officials





VANCOUVER - British Columbia plywood and OSB mills are seeing a big jump in product inquiries from buyers in disaster-struck Japan, wood market analysts said Monday.




Jerry Van Leewen, vice-president of International Wood Markets newsletter, said it could take a year before B.C.`s lumber producers see a noticeable increase in demand for the high grade lumber that Japan traditionally uses for wood frame construction.




That`s because officials directing Japan`s recovery after a devastating 9.0 magnitude earthquake and subsequent tsunami on March 11 still have an almost overwhelming number of tasks to work through before northern coastal towns hit hardest by the quake can begin to rebuild.




Read the full article here.

 

[Ally]

BC Hydro's planned rate hike on hold - for now




VANCOUVER - On Monday, a B.C. Utilities Commission panel suspended a planned rate increase of nearly 10 per cent for BC Hydro customers that was to take effect April 1.







Documents posted on the BCUC website say that the utility's requested 9.73-per-cent annual increase "may well be too high."







"Although the approved rate increase is on an interim and refundable basis, the Commission Panel does not believe that this fact justifies ordering a rate increase which is likely to be wrong, and which is not based on the best information available," the documents state.







BCUC, the regulator responsible for reviewing and approving rates, initially approved the increase on March 14, but reconsidered when BC Hydro admitted that a government review would result in a lower increase, the documents show.




Read the full article here.

 

[Ally]

B.C. to continue 'fracking' for gas, despite bans elsewhere





VANCOUVER - British Columbia has no worries about the controversial use of hydraulic fracturing in natural gas production, even though other governments have recently instituted moratoriums on the process, Energy and Mines Minister Rich Coleman said Tuesday.




Earlier this month Quebec halted the use of so-called `fracking` technology, which involves pumping large volumes of water, sand and chemicals into shale gas deposits to fracture the rock and force the gas into collection pipes. Several U.S. states, including New York, and France have also halted the use of fracking over concerns that not enough is known about the long-term effects of the extraction method.




A number of jurisdictions have worried that the method may lead to the contamination of groundwater supplies and there have been periodic complaints from neighbours, including allegations of gas seeping from domestic water taps.




Read the full article here.