N.L. is betting big on expensive oil. Politicians say the wager will pay off
Newfoundland and Labrador released its financial forecast for the coming fiscal year, but while the price of oil has been volatile, two ministers are confident in its future.
The province is projecting a $372-million deficit this coming year to address affordability issues and tariff concerns and rising health-care costs.
In Wednesday's budget, the Department of Finance announced that it expects Brent crude oil prices to average $73.90 US per barrel in 2025. The province also projects that offshore royalties will account for 15 per cent of the province's projected revenue for 2025-26.
As of April 9, Brent crude oil was pegged at $60.38 US per barrel, well under that projection.
Finance Minister Siobhan Coady said the government used 11 different forecasters, who are independent of the government, to reach that dollar figure.
"It's an evolving, moving, escalating and declining kind of graph," Coady told reporters on Wednesday.
Newfoundland and Labrador could also be in a situation where oil prices decline or increase throughout the year, she added.
"We'll be monitoring, obviously, this very closely and we may need to make changes to what we do," she said.
Coady said shifting prices might mean the department has to make adjustments in the fall fiscal update, "Because we'll know then what's happened, what the impacts have been. And where the global uncertainties are at that point," she said.
In 2024, crude oil production hit 76.5 million barrels, up from 2023. The government expects oil production to increase in the year ahead, citing the restart of the SeaRose FPSO in March.
In its budget documents, the province says it doesn't expect to be hit with U.S. tariffs, and predicted the impact to Newfoundland and Labrador's oil sector will be minimal.
More to lose
Tthe Hebron project hit a milestone that kicked in higher royalties last summer, with the money paid out to the province rising from 5 per cent to 26. 5 per cent.
But with the recent volatility of oil prices, the province could stand to lose more money.
Coady said the price of oil versus the strength of the dollar "can cancel each other out."
"Let's see where the year fleshes out between those two," she said. "Again, we're in a period of global volatility."
This year's budget earmarked $90 million, divided up over three years, to encourage oil exploration. That money would kick in next year.
It was a move welcomed by Energy N.L. CEO Charlene Johnson.
"This is a great investment into attracting companies here, and we really think it will do what it needs to do," she said.
Energy Minister Andrew Parsons expressed confidence when he said that the current political instability due to the U.S. trade war and volatile oil prices would not affect offshore exploration.
"I've only been here five years and I've seen it go top to bottom, bottom to top. This stuff happens all the time," he said.
It can be a "challenge" because of the province's reliance on high prices, he said, but he said there will be future projects.
"This is even more volatile than normal, but just in my time here we saw 2020 [and] had to get really involved," he said.
He said the oil sector is better positioned than it was when the COVID-19 pandemic hit.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
National Post
an hour ago
- National Post
Security and defence high on the agenda as Mark Carney attends EU and NATO summits
Article content At the NATO summit, Carney will take part in bilateral meetings with other leaders. The summit agenda includes a social dinner hosted by the king and queen of the Netherlands and a two-and-a-half-hour meeting of the North Atlantic Council. Article content NATO allies are expected to debate a plan to hike alliance members' defence spending target to five per cent of national GDP. NATO data shows that in 2024, none of its 32 members spent that much. Article content The Canadian government official who briefed reporters on background says the spending target and its timeline are still up for discussion, though some allies have indicated they would prefer a seven-year timeline while others favour a decade. Article content Canada hasn't hit a five-per-cent defence spending threshold since the 1950s and hasn't reached the two per cent mark since the late 1980s. Article content NATO says that, based on its estimate of which expenditures count toward the target, Canada spent $41 billion in 2024 on defence, or 1.37 per cent of GDP. That's more than twice what it spent in 2014, when the two per cent target was first set; that year, Canada spent $20.1 billion, or 1.01 per cent of GDP, on defence. Article content Article content In 2014, only three NATO members achieved the two per cent target — the U.S., the U.K., and Greece. In 2025, all members are expected to hit it. Article content Any agreement to adopt a new spending benchmark must be ratified by all 32 NATO member states. Article content Former Canadian ambassador to NATO Kerry Buck told The Canadian Press the condensed agenda is likely meant to 'avoid public rifts among allies,' describing Trump as an 'uncertainty engine.' Article content 'The national security environment has really, really shifted,' Buck said, adding allies next door to Russia face the greatest threats. 'There is a high risk that the U.S. would undercut NATO at a time where all allies are increasingly vulnerable.' Article content Trump has suggested the U.S. might abandon its mutual defence commitment to the alliance if member countries don't ramp up defence spending. Article content 'Whatever we can do to get through this NATO summit with few public rifts between the U.S. and other allies on anything, and satisfy a very long-standing U.S. demand to rebalance defence spending, that will be good for Canada because NATO's good for Canada,' Buck said. Article content Carney has already made two trips to Europe this year — the first to London and Paris to meet with European allies and the second to Rome to attend the inaugural mass of Pope Leo XIV. Article content
Winnipeg Free Press
a day ago
- Winnipeg Free Press
Rejecting Trump's rhetoric, Maine's governor heads to Maritimes to build ties
HALIFAX – Maine's governor is heading to the Maritimes next week with hopes a charm offensive will slow the rapid drop in Canadian tourist visits to her state. In a release issued Friday, Janet Mills says she's aware the historically close relationship between New England and its northern neighbours has been challenged by U.S. president Donald Trump's tariffs and his rhetoric about Canada becoming the 51st state. According to U.S. federal border crossing data released Friday, 85,000 fewer Canadians entered Maine in May than in the same month a year ago, a drop of about 27 per cent. The governor says she will spend three days meeting with premiers, appearing in local media and visiting businesses in hope of sending a message that Maritimers remain 'welcome in Maine' despite Trump's trade policies. On Monday, the governor will stop in Saint John, N.B., where she intends to visit businesses with links to Maine and she then will travel to Fredericton to hold talks with New Brunswick Premier Susan Holt. On Wednesday, Mills will meet with Nova Scotia Premier Tim Houston in Halifax and tour a marine technology centre. Last month, the governor unveiled new, bilingual signs welcoming Canadian visitors, which are being placed in windows around the state. On June 13, in her weekly radio address, Mills said she wants to ensure the 'historic friendship and deeply intertwined economies last for generations to come.' 'It's not just our economies – we are connected so deeply by mutual economic advantages and on centuries-old familial, cuisine, language, and cultural bonds that far supersede politics,' she told her listeners, reminding them that Canada is the United States' closest and most important trading partner. The Democratic Party member said Trump's 'roller coaster tariffs' are unsettling business in her state and 'making our Canadian neighbors feel unwelcome in the United States.' In 2024, nearly 800,000 Canadian visitors spent approximately US$498 million in Maine, according to the state's Office of Tourism. Overall, the data showed Maine welcomed 14.8 million visitors, who spent more than US$9.2 billion, supporting 115,900 jobs and generating US$5.4 billion in wages. This report by The Canadian Press was first published June 21, 2025.
Canada News.Net
a day ago
- Canada News.Net
May sees sharp retail decline in US following pre-tariff buying spree
WASHINGTON, D.C.: Retail sales dropped sharply in May as consumer spending slowed after a strong start to the year, primarily due to concerns over President Donald Trump's looming tariffs on nearly all imports. The Commerce Department reported a 0.9 percent decline in overall retail sales—including stores and restaurants—marking a deeper drop than April's 0.1 percent dip and reversing March's substantial 1.5 percent gain. A major factor in the decline was a significant pullback in auto sales. In March, many consumers rushed to purchase vehicles ahead of the expected 25 percent tariff on imported cars. As a result, auto sales plunged by 3.5 percent in May. Even excluding autos, retail sales still fell by 0.3 percent. Despite the downturn, some underlying economic indicators remain stable. Inflation is easing, unemployment is low, and a narrower sales measure—excluding cars, gas, and restaurants—actually increased by 0.4 percent, suggesting consumers are still spending selectively on discretionary items. Economists caution against reading the May dip as a sign of broad weakness. Retail sales make up about a third of consumer spending, while the rest comes from services like healthcare, education, and housing. Many analysts still expect modest growth in consumer spending during the April-to-June quarter. Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, said that while consumers are showing more caution, they haven't stopped spending altogether. She noted that, even amid uncertainty about tariffs, underlying demand remains resilient. Still, some sectors were hit hard. Home and garden store sales dropped 2.7 percent, while grocery, electronics, and appliance store revenues also declined. Restaurant and bar sales—a barometer of consumer confidence—fell 0.9 percent in May after rising in April. In contrast, online retailers saw a 0.9 percent increase in sales, clothing stores rose 0.8 percent, and furniture outlets gained 1.2 percent. Falling gas prices contributed to a 2 percent revenue drop at gas stations, offering some relief at the pump but also reflecting lower fuel demand. Businesses reliant on imported goods are increasingly impacted. Paul Cosaro, CEO of Picnic Time, said retail orders are down 40 percent compared to last summer, as tariff-related price uncertainty causes retailers to hold back. His company sources 80 percent of its products from China and has seen tariff costs triple—from about US$330,000 last year to $1 million this year—forcing a hiring freeze. Rising prices are reshaping consumers' shopping habits. Pennsylvania mother of three Liza Gresko said she now buys in bulk, chooses generic brands, and relies more on thrift stores to stretch her budget. Retailers are also adjusting, launching back-to-school promotions earlier to encourage spending before potential price hikes hit harder. While inflation remains manageable for now, companies like Walmart and Lululemon are already raising prices, signaling more challenging times may lie ahead.
