Update: Canadian Energy Export Cliffdiving in Q4

As discussed previously here, Canada's trade surplus is taking a beating as energy prices and demand plummet. By my quick calculations, total energy product exports in Q4 came in at $25.6B vs $35.5B in Q3 - a drop of 28% quarter over quarter. I don't expect this will get much better in Q1 2009.

Energy Export Cliff Diving?

During oil's run to $150, Canada enjoyed enormous receipts from energy product exports. These receipts reached about $35 billion in Q2 and Q3 2008 and since Canada is a net exporter of energy, energy receipts greatly helped our overall trade surplus.

So what happens now that oil has fallen to $40? A (very) simple model of the elasticity of energy exports with respect to a one quarter lag of the price of crude oil (I know we export more than oil, but I already told you the model was simple) suggests that energy exports are about to fall off a cliff.


Look out below!