July 4, 2019

On Thursday, while U.S. markets were closed, Toronto was up 0.1%.

AutoCanada was down 1.9%. After the close it announced it has hired a new CFO who will start on August 12. The person hired has significant experience as CFO of a number of public companies. This is good news for the company. But meanwhile Canadian June auto sales were announced and it was another bad month with a year-over-year decline of 7.2%.

The Financial Post today ran a story about Natural Gas producers facing bankruptcy as a glut of Natural gas in Alberta has prices under $1.00 and back at around 1990 levels. Apparently the (supposedly) free market government in Alberta wants to prevent the bankruptcies. The whole thing is a bit scary for the Alberta economy. The story indicated that the government hopes to see LNG plants and pipelines. But there was zero mention of how the industry managed to apparently over invest creating the glut of gas over and above the available demand. Perhaps in part it was just due to lower cost fracking operations. If so, then the higher cost producers need to be allowed to go bankrupt. That’s how (even relatively) free markets work. And there was no mention of how the Alberta and Federal government have probably failed in the area of pipeline tolls and pipeline approvals. Success, they say, has a thousand parents. Failure is an orphan.

It seems that natural gas production is a low profit industry. That’s not surprising. Most commodity businesses are low profit. Only the low-cost producers tend to make good profits. For some reason though the industry still attracts investment.

Perhaps Alberta should start touting the low cost gas to attract industry and residents. We heat our homes here very very cheaply.

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