Oil forecast warns higher crude prices may be coming soon
Enbridge refocusing itself as ‘pipeline, and utility’ business
Enbridge Inc. is getting early vindication for its divestiture campaign, calculated to refocus North America’s biggest pipeline operator on — pipelines.
Enbridge’s $4.3-billion sale last week of its Canadian natural gas gathering and processing operation to Toronto investor Brookfield Asset Management Inc. brought to $7.5 billion the total value of Enbridge divestitures this year.
That’s more than double the $3 billion the Calgary-based Enbridge was hoping to raise from asset sales, and speaks to the price recovery in Western Canadian oil and gas assets.
Vindication for Enbridge’s strategy of reinventing itself as a “pure play regulated pipeline and utility” business, as described last week by Enbridge CEO Al Monaco, comes in the form of the U.S. buying record amounts of Athabasca crude last week to make up for diminished U.S. imports from politically troubled Venezuela and Libya.
And last week, the prominent U.S. securities research firm Sanford C. Bernstein & Co. issued a startling report warning that chronic underinvest- ment by the global oil industry in developing new reserves – a natural result of the oil and gas price slump of the past several years – has left the industry ill-equipped to cope with surging demand in Asia over the next two decades.
The demographics point to an additional one billion or so people in the world’s fastest-growing economic region hiking demand for oil for cars, air travel, truck-transport cargo and plastics.
The Sanford forecasts augur well for Athabasca producers and for Enbridge, though perhaps not for consumers.
Sanford experts warn that we could be in store for another “super-spike” in crude prices even more pronounced than that of 2008, when the world price soared to a record $147 per barrel (U.S.).
The clock is ticking for Bombardier The West’s makers of commercial airliners see a clear and present danger from emerging rivals in Russia, Japan and China, notably a robust Commercial Aircraft Corp. of China.
That accounts for last week’s announced tie-up of the commercial aircraft operations of Brazil’s Embraer SA with those of Boeing Co.
Adding urgency to that deal, under discussion for many years, was the 2017 surrender by Bombardier Inc. of control of its mid-range C-Series airliner to Airbus SE.
These latest deals strengthen the duopoly of Boeing and Airbus, providing each firm a wider range of offerings; access to lower-cost production, notably in Brazil; and a deeper pool of engineering talent.
The latest alliances cast in relief the comparatively diminutive status of Bombardier and France’s Dassault Aviation SA. Dassault’s legendary Mirage and Rafale fighters make it an ideal “tuck-in” acquisition for defence contractors Airbus and Boeing.
Beechcraft and Cessna, Bombardier rivals in business aircraft, have the backing of $18.7-billion (sales) Textron Inc. That could keep them safe from the consolidation wave unless Textron decides they’re more valuable as assets of a “pure-play” plane maker.
The pressure intensifies on Bombardier to focus on its strengths, chief among them rail transportation, in which Bombardier is the world’s leader.
Otherwise, Bombardier is at risk of also-ran status in commercial aircraft, where it’s now pitted against rivals of much greater strength in R&D, marketing, distribution, aftermarket services and cash reserves.
Bombardier would be wise to consider shoring up its finances by selling its aviation businesses into the consolidation wave, or find itself weakened sufficiently to become takeover bait for rail-equipment rivals Siemens AG of Germany and Alstom SA of France.
Another dumb-as-a-brick Trump initiative Donald Trump will be hectoring U.S. allies again at this week’s annual summit of NATO leaders, scheduled for July 11-12 at the Brussels headquarters of the North Atlantic Treaty Organization.
This time the U.S. president will be demanding NATO members, including Canada, hike their defence budgets to 2 per cent of GDP. But Trump will get nowhere with his demands.
1. Trump is obviously using this fake issue as a device to extract trade concessions from NATO members, which happen to be among America’s biggest trading partners.
And the military equipment they would buy with bigger defence budgets would largely be sourced from the U.S., as with Norway’s recent receipt of Boeing P-8 surveillance aircraft and Lockheed Martin F-35 fighters.
Trump in Brussels is effectively on an economic trade mission, not a collective security one.
2. Outside of NATO, the organization’s members have been putting the lives of their nationals on the line, bearing the brunt of the North African refugee crisis (Italy), the ouster of Libyan strongman Moammar Gadhafi (France and Britain), peacekeeping missions in Africa (Canada, France and the U.K.), and other contributions not measured in dollars (Canada’s training of Syrian rebel fighters, for instance).
3. Six years remain for NATO members to meet their 2014 pledge to hike military spending to at least 2 per cent of GDP by 2024.
4. NATO members are already on track to reach that goal, and the U.K., Greece, Estonia and Poland have already achieved it.
If he’s not careful, Trump’s belligerence will simply spur European Union (EU) support for French President Emmanuel Macron’s proposed EU co-ordinated military strategy, an initiative that would diminish U.S. military influence in Europe.