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ing and ocean shipping companies to the
motoring public, have benefited from
lower prices that have cut their costs up
to 75% (for some ocean shipping), as have
those who use petroleum products in
manufacturing and those in the petrochem
sector. Even fertilizer manufacturers are
benefiting. Mining occurs in the oil sands
also and companies are keeping a keen eye
on oil prices.
"There's no yes or no answer," said
Brendan Marshall, Senior Director of
Economic Affairs for the Mining Association
of Canada. "For oil sands mines, the price
drop is a negative for profitability" that has
caused many firms to downsize their capi-
tal budgets and staff, and evaluate future
extraction plans. "But in hard rock mining,
oil is a principal input. If a miner has access
to the electricity grid or natural gas, they
still use diesel for vehicles, so there is some
cost saving as a result."
Marshall also said since mining compa-
nies are major users of rail, truck and air
transport, fuel is a major cost and, where
there is competition, the price of fuel
drops and the savings are passed on.
The mining industry, which has suf-
fered its own fluctuations in recent years,
remains optimistic about the future. "No
one has a crystal ball but we've seen it go
low in the past and we've weathered the
storm," Marshall said, noting overseas
demand remains strong and Canada is
well placed to meet those needs, leading to
optimism for the long term.
"This isn't something new. Miners are
accustomed to it and we'll be ready to take
advantage of the next up-cycle," he said.
Ultimately, the short-term future of the
industry is anyone's guess. "Thus far, the
negatives from the oil crash – reduced
investment, job loss and revenue loss –
have been greater than the positives for the
energy consumer," Lawrence concluded.
"That said, oil demand…has risen. In
April, oil reported a 25% gain, the largest
six-month gain in six years, and some stor-
age reduction has taken place at Cushing,
Oklahoma. But it remains to be seen when
production will decline month by month
and when the global supply and demand
balance will tighten."
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