The Energy Information Administration which predicts the price of crude oil (and other energy sources) for the American Government is forecasting the price of Brent crude to stay just under the $100 mark for the next six months to a year.
This is more bad news for the Newfoundland and Labrador government which has become increasing reliant on oil revenues to operate it’s hospitals, schools and other expenditures.
The Newfoundland and Labrador Government has been notorious for it’s inability to accurately forecast oil prices. In the past, the miss projections resulted in huge windfalls!
This year however, the province’s economists budgeted for oil to average $124 a barrel. Revenue for the province would be down a three quarters of a billion dollars if the current trend holds. For every dollar oil goes below $124 a barrel, there is $20-million less going into the province’s coffers!
Throw in the fact that Hibernia is about to take a month shutdown, that the Terra Nova is in Marystown for refit and the White Rose is also on refit, this has been one heck of a tough year for the provincial government.
Brent Crude is trading at $104 today! That is down twenty dollars a barrel from government’s estimates.
You do the math!
This summer's reduced production and lower oil prices serves as a harbinger of the future, if more oil production does not come on stream.
Hebron, which was scheduled for first oil in late 2017, took over thirty years to develop.
Folks who follow these things have been offering reality checks for quite some time!