NORTH AMERICA
U.S. households have saved hundreds of dollars on gasoline and heating oil. That’s money they can spend in other areas of the economy. Businesses such as airlines that burn large amounts of fuel have reaped savings in the billions. But energy-company profits have plunged, as have their stocks. Layoffs and spending cuts by oil drillers have offset some of the boost from steady consumer spending. Meanwhile, states such as Alaska and North Dakota need to plug big budget gaps. The Energy Department expects a decline in U.S. oil production, but says oil will only average $38 this year.
For new mines in Alberta, Canada’s oil sands to cover costs, oil needs to be $85 to $95 a barrel, according to IHS Global Insight. Western Cana- dian Select oil sands crude recently traded around $15. Canadian oil companies have slashed budgets, laid off tens of thousands of workers and cut dividends. A Bank of Canada report says companies see dramatic change for the global industry, with weaker companies restructuring or exiting the oil business, while healthier companies buy distressed assets. Canada’s dollar is down 20 percent versus its U.S. counterpart. Prices for imported groceries have risen and Canadians are reconsidering a U.S. vacation.
Mexico is better insulated nowadays from an oil collapse. Oil accounts for 20 percent on national revenue, compared with 40 percent up until 2012. However, the country has postponed or canceled some oil projects, and delayed auctions for deep water exploration and production oil contracts, as part of its historic energy reform.