05 June 2010

Oil’s down, budget pucker factor up …again

When you project an average price of oil at US$83 and forecast a billion dollar budget shortfall on that basis, having oil at US$71-ish must make the old sphincter twitch a notch tighter than it used to be.

Heaven only knows what other economic news does.

Kinda makes all that effort spent on poll goosing seem…well…a tad bit…silly.



Ursula said...

Private-sector employment growth in the United States, Canada’s most important export market, slowed dramatically in May, with almost all of 431,000 new jobs linked to a surge in hiring of temporary federal workers to conduct the 2010 census. Nothing like a little skewing of the numbers to instil consumer confidence .Newfoundlanders should know all about that .

George said...

...and they're saying a lot about the possibility that we're entering a "double-dip recession" that will bring a whole lot more trouble with it!

Anyong said...

Ya both are correct on that one. Just give it another year.

Ed Hollett said...

Could be a double-dip, George or it could be a long slow recovery with a series of small downturns along the way.

George said...

Out of curiosity, does anyone happen to know where the government got the estimate of $83 US a barrel that they used to come up wth their budget estimates?
Whoever it was, I would love to look at their methodology.

Ed Hollett said...

It likely came from their overseas consultant, the same ones who forecast for them before.

As I recall, the ranges talked about publicly around the globe went from 60s to mid 80s with the one the prov gov used being near the top.

If memory serves, this is the first time they have forecast a high oil. Usually they lowballed. Unfortunately, they are so far in hock that if they lowballed this time, they'd likely frighten the crap out of everyone with a deficit of nearly 1.5 to 2.0 billion (on cash) and something like another half a bilklion accrual (as in last year).

They needed to make it look like things were getting better so they avoided cuts, continued to spend beyond their mans and then high-balled the budget numbers.

Everyone should notice that last December's oil revenue forecast was basically OTL on production levels, at least.