02 March 2020

Oil, Premiers, and Coming Soon #nlpoli

Impact of Hebron flat royalty at prices below US$50
click to go to 2015 post
West Texas Intermediate and Brent crude were both trading below US$50 last week.

Oil from the Newfoundland and Labrador offshore sells for Brent prices.  

If it is down, then government makes less.  Bit of an offset potentially in the exchange rate but they key thing is that when oil is worth less, the government makes less.

WTI price is important because it affects payment of a super-royalty on some projects that have already hit pay-out. 

With oil prices lower across the board,  the provincial government takes in less money.  Month-to-month that might not be a lot but over time it can add up. 

Watch out for the impact of lower oil revenues on the 2019 fiscal year, just coming to an end on 31 March.

... and...

Watch out for the forecast for oil prices in the 2020 budget.  

The provincial government already forecast a deficit next year of about $800 million (accrual).  That’s about 50% higher than the forecast deficit in 2019, once you take out the accounting for the Hibernia royalty transfer deal that keeps getting called the Atlantic Accord.


Since 1996,  we have cycled through an extraordinary number of Premiers.  The next one will be the ninth in 24 years.

One every 32 months, roughly speaking.

One every two and two thirds years.

In the first 46 years of Confederation, there were five Premiers of Newfoundland and Labrador.


One every 110 months or one every nine years.

That’s gobsmacking given the political rhetoric about how all-important leaders are supposed to be in provincial politics. 

In the decade since the Twitchy-Shouldered Wonderb'y high-tailed it in 2010,  we have had  - stop counting on your fingers - five premiers including the one due along in a couple of months.

One every *two* years.

And that’s even more amazing when you consider that there haven’t been wild changes of policy direction in the post 1996 period to go with that rapid turn-over in leaders.  Basically, we are still on the same track we’ve been on since 2003 or so. 

No sign of changing, either.  The Gang of Seven of who triggered Dwight's departure were not one of them concerned that government policy was headed in the wrong direction. 


So their new favourite leader is pretty much guaranteed to be a man of continuity with only the most superficial changes imaginable. 

Makes you think about a bunch of things, doesn’t it?

So think as things unfold over the next few days and weeks.  

We’ll be coming back to this theme of continuity and change it in the weeks ahead.

Coming Soon:  Patreon and The BondCast

As a last number to note,  we’ll be launching a Patreon space in a short while to give you a chance to become a financial supporter of SRBP.  A bit of cash flow would allow for a refresh of the look of the blog but the biggest thing will be the addition of some new content as part of the 15th anniversary of SRBP.  The most significant change will be a podcast to give some life and depth to the ideas we’ve been exploring here over the past decade and a half.   That will need a bit of cash to produce properly.

The first episode is already in production and without giving anything away, let's just say it will knock your socks off.

Get used to that.  And if you have been enjoying SRBP sicne the beginning or if you are a recent follower,  then now's your chance to become a patron.