07 October 2008

The return of The Can-Opener

Memorial University economist Wade Locke is back in the news and, not surprisingly he is saying things the provincial government will love.

Like his view of oil prices and the chances for a budget surplus bigger than the one forecast:

"The price of oil has already averaged in excess of $110, $115 per barrel for the year so far, so even if the prices were to fall down to $10 per barrel, they would still meet their budget projections of $87 a barrel," Locke told CBC News on Monday.

"So the forecasts in the budget should still be fine. They should have a budget surplus even bigger than they what they had forecast."

Perhaps Wade would like to actually, you know, read the budget estimates and see what the budget says about oil averaging 87 bucks a barrel and surpluses.

Wade also believes that the world has changed fundamentally - high demand and no new supply - such that oil will sell above US$90 a barrel way out into the future.  In the short-term, - up to two years, according to Locke - they might dip but the long-term price will be high, higher and highest. Asked if he thought oil prices would go to  ten bucks a barrel, Locke gave an emphatic "no". 

Like we haven't heard that one being forecast before, based on the change in market fundamentals yada yada yada. There's likely tape somewhere of an economist telling us that there was absolutely no way oil would fall to $10 a barrel again;  that would be right before it went to 12 and then eight bucks.

Uh huh.

Even the Lower Churchill will go ahead, completely unscathed by the tightening of world capital markets. No problems there at all.  The future is bright, as Locke says.

Maybe someone should fire off a proposal to Trevor for some government cash to build a shades factory.  Not Raybans or anything pedestrian but some unique NewfoundlandLabrador brand of sunglasses to keep the unique sun out of our unique as we go around under this amazing bubble of economic protection that evidently surrounds us. 

Other places are falling victim to the global crisis but not here.

Economics is truly a dismal science. Aside from stating the obvious - that things will be unsettled in the next year or two - the rest of what Locke said was ultimately about as useful as something we'd get from Aline Chretien's confidant and her psychic alliance. No shame in that:  none of us can predict the future with any accuracy.  When we do get close it is often due more to blind luck than any insight or foresight.

Maybe to give a sense of Locke's analysis in the past though, perhaps we'll go back to his view of the Atlantic Accord when Danny was in full fight and Wade's view after the deal was inked.

Wee bit different.

But hey, at least we now know who Danny Williams turns to for economic advice and has been probably turning to for advice for some time.

Turns out it wasn't Sarah Palin after all.