Crude Oil vs. Canadian Dollar
Posted in Commentary on October 28th, 2008 by Sacha PeterAlthough the price of oil has dropped by about 60% from its peak, this is in US dollars. When you index it to Canadian dollars, the drop is closer to 45%:
The net result should be about 90-95 cent gasoline at the pumps.
The real question is what happens to Alberta. What is going to happen to the tar sands is that capital project allocation is going to plummet next year – current projects will be completed and mined, but further development is going to stop.
In the long (3 years+) run, oil will eventually climb back up as it is a very convenient source of energy. But until then, a lot of investors in energy stocks are going to be feeling a lot of pain when these companies are forced to scale back operations.
How would currency fluctuations affect housing prices? For example, a house valued at 100,000 CAD (I wish!) suddenly becomes much more cheap for someone with assets in USD. Having said that, most of the market for Canadian houses (presumably) has their assets in CAD, so should this have much upwards pressure on prices?
While I’m on that topic, to what extent do you think that CMHC loan insurance causes house prices to go up (i.e., to what extent do you think it has the opposite effect of what it’s supposed to do, make house ownership more accessible)?