Trican net income fall 15% on reduced demand for natural gas in Canada

http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b0507127A

In the article above, it talks about the decrease in demand for a natural gas company, Trican. Trican is a company that provides products, equipments and services used for the exploration and development of oil and natural gas reserves. Trican’s main pumping operations are mainly located in Western Canada, with growing operations in Russia and Latin America. Even though their Russian branch is doing extremely well, having a record of 31% increase in revenue and a 56% increase of net income compared to the last quarter. Unfortunately, Trican experienced a decrease of 15% for their net income in Canada. Trican said that the number of wells drilled also decreased by 21%, also the number of customers trimmed their exploration and development programs in the face of a lower natural gas price and reduced cash flow.

This article relates to the aggregate demand section of chapter 6. Aggregate demand measures the goods and services demanded in the economy at a given overall price level and in a given time period. Its formula is AD = C+I+G + (X-M). For this company, Trican, their main reason of their decrease in demand for natural gas is the C (consumption) and I (investment) of aggregate demand. Their number of customers decreased because they wanted to find lower natural gas prices and the cash flow of the country has reduced. When a country’s cash flow has decreased, it usually means that the amount of money that people are saving more money in their banks. This leads to a slower economic activity for the country, causing businesses to also slow down on the production of the goods and services.

I think that the reason why Russia’s branch of Trican had a big increase in their net income is reflected economy in Russia. It also reflects from the consumers and the business’ investment over there. The higher the demand, the higher the supply will be needed. Since the demand in Canada is low, business are not investing as much.

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070330%5cACQRTT200703300849RTTRADERUSEQUITY_0495.htm&

Canadian GDP Growth Slows More Than Expected In January

In the above article, it says that the Gross Domestic Product (GDP) in Canada was less than what economists expect. They expected that the GDP would increase compared to the previous month, December, but in fact, it went the other way; the GDP in Canada slowed down. Economists already was expecting a modest growth of GDP to 0.2, even though in December it had a growth of 0.4 percent, but the real number for January’s GDP only had a growth of 0.1 percent. The strengths of the GDP increase came from energy, construction, forestry and financial services (mostly because it’s tax season). The weaknesses of the GDP increase mostly came from manufacturing, retail and tourism. Statistic Canada says that the natural gas demand from the USA also increased, causing a 1.5 percent increase for the month of January. On the other hand, manufacturing, especially motor vehicle production dropped 1.0 percent after two months of continuous growth. Another contribution to the GDP growth is financial services, Statistics Canada also say that for the financial services, the payroll employees overall weekly earnings rose to 0.7 percent.

In Chapter 5, it talks about GDP; how GDP is calculated or measured, all the aspects that affects the GDP. One way to measure GDP is by the following formula.

GDP =consumption + investment + government spending + (exports – imports)

In the article, it mainly talks about the consumption and investment of individuals. Consumption measures how much a consumer buys or use products or services from their country, in this case, it’s Canada. Investment defines as the capital of a business. If the economy is good, more people will choose to invest more in their companies. Due to the great business in retail for the Christmas and Year End sales, retails have increased a lot, since most people wait until those months to buy discount clothing, it’s not a surprise that retail decreased for GDP since its demand isn’t as high right after the sales season. Also, since it’s tax season, there is more demand for financial services. Many people hire accountants to do their taxes, causing a big increase of services for financial needs. With this in mind, it’s no wonder that payroll employees had an increase in wages for these months.

Overall, I think that Canada’s economy is doing really well, compared to many other countries in the world. We are ranked one of the top countries in the world to live in. Since our GDP is still improving, it is a good sign to everyone living in Canada.

Chapter 4- Budget slashes Income Tax

Link: http://www.canada.com/theprovince/news/story.html?id=d94976b1-d47d-4264-8a46-3aa2b2ee9b81

Almost all of the BC taxpayers are getting a 10 percent tax slash in their income tax as of February 19,2007. This message was announced by the Finance Minister Carole Taylor through the pledges of Gordon Campbell. Taylor says this new tax reduction is aimed for people who live in British Columbia and have yearly incomes of $100,000 or less than $100,000. This announcement is introduced as a leading of the new budget's housing measure and what Taylor would call the "the most aggressive, ambitious, comprehensive housing initiative in the history of British Columbia. Taylor adds that the key measure involved is the First Time Home Buyers' Program. This program gives an incentive to people are wants to buy their first homes. This project that worth $2 billionaire is started so that it can help British Columbians that are facing housing problems whatever the problem may be. With the new tax cut, BC will have the lowest taxes in all of Canada.

To many people, this is absolutely a good news!!! 10% off taxes, who wouldn’t like that? Think of all that money that you could be keeping to yourselves instead of giving it to the government. You could also be helping the government, even without paying that much tax. There are Canadian bonds where you can lend money to the government, and they will even pay you back interest. However, on the other hand, cutting 10% off taxes will also lead to more complaints on public services. Such as healthcare, education and more. Since less taxes are collected from us, there might be more complaints about the lack of doctors in the hospitals, the long waiting line and lack of service. For education, more teachers may go on strikes and/or schools can’t afford to buy better supplies, technologies and etc…

Actually, since in chapter 4, it talked about the different kind of taxes, the system that we use in Canada is called the marginal tax system, this is a system where, the more you earn, the more tax you have to pay. Another kind of tax system is the regressive tax system, in this system, the higher you earn per year, the less tax you pay. The con about this type of system is that lower income people have to pay even more taxes. It just doesn’t seem fair. I think the best kind of tax system is the progressive tax system. Everything is equal, no matter what your income is, your taxes will still be the same. If 10% is reduced from a progressive system, let’s say, it was originally 30%. Then this would be more significant.

Links: http://www.cbc.ca/canada/story/2007/01/19/tories-environment.html

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070110/ghg_record_070110/20070115/

Chapter 3: Government involvement in renewable energy resources

In this article, it says that the federal government (Conservatives) is putting $1.5 billion into the funding of alternative energy technologies. These alternative energy technologies include: wind, solar, geothermal and other forms of renewable energies. These energy resources generate either have little or zero harmful emissions on earth. Harper said that having a 10-year incentive program (ecoEnergy Renewable Initiative) would be able to fund eligible projects to be constructed over the next 4 years. Also, Harper will offer incentives totaling to $36 million to encourage the use of clean renewable technologies for water heating, space heating and cooling in homes and offices. These incentives are to boost the production of renewable energy by up to 4,000 megawatts per year. As a result, greenhouse gas emissions will reduce sufficiently. Harper assured that this plan to reduce CO2 emission is achievable though it may take a long time.

The task of reducing greenhouse gas emission in Canada is the government’s job. Without funds from the government, businesses cannot afford the cost to research into these alternative energy technologies. In 1997, Canada agreed to sign the Kyoto Protocol (An International Treaty that assigns different targets for the reduction of greenhouse gas emissions to the countries that signed), but until now, Canada has yet to meet the reductions. How come? From 1993 to 2006, when the Liberals were still in power, they never really forcefully made industries reduce CO2 emissions, nor did they take any real action into stopping the cause. In the 2002 parliamentary vote on Kyoto, the Conservatives actually voted against the Protocol but now Harper, the leader of the Conservatives are actually putting money into the funding of alterative energy technology? If the different parties of the government actually worked together into making Canada a better country, instead of going against each other in the parliament, Canada may already meet the Kyoto target and wouldn’t end up as the 3^rd country with the highest CO2 emissions per capita (below Luxembourg and the United States) in 2003.

Overall, even though the government is putting $1.5 billion into the funding of alternative energy technologies, which we will gradually see effects. They still need the support from industries, factories to reduce CO2 emissions and encourage consumers to use energy more efficiently. Hopefully, Canada won’t be listed as one of the top countries for ‘most CO2 emissions per capita’.

Supply & Demand - Scrap Steel

Link: http://www.manufacturing.net/article/CA6389781.html

There is a very high demand for scrap steel these days. China, India and many developing countries are demanding for more scrap steel and the supply just isn't enough. It is estimated that if all technological scrap steel were to be recuperated, the domestic supply will still be too low to meet the demands. In Europe, the crude steel production has increased to 4 percent over the past year but in the scrap steel market, it has increased to 5 percent. People in Turkey expects that the prices of scrap steel will probably increase in December and definitely increase in January when consumers replenish for the winter. The lack of supply of scrap steel worldwide is said to cause domestic collection volumes to fall.

There are many factors that will affect the demand such as the price, tastes and preferences, future expectations and many more. In the case of the scrap steel market, the main reason that demand is increasing is because of the 'Number and characteristics of the Buyers'. This means that as the population increases, the demand for most products increase as well. A demand curve on a graph is shown by the inverse relationship between price and quantity demanded, it is a downward- sloping curve. When the price of an item goes up, the quantity demanded goes down.

In a market such as the scrap steel market, supply is hard to reproduce. Steel is a mineral and it's a non-renewable resource. Once it's used it, it's gone forever. For it to have a high supply, it would only happen if the demand for it wasn't so high. Scrap steel is in demand all over the world, it is used for many things after it's melted. It is used in buildings, automobile parts, roads and much more. If I invested in a scrap steel market, I think that the chances of the price increasing would be very high, since it is in demand worldwide.

Scarcity of Water

Link: ftp://ftp.fao.org/agl/aglw/docs/waterscarcity.pdf

On the second page of the link, it shows an article about " Coping with Water Scarcity: The Issue ". Water is one of the basic needs for people. Without water, people basically can't survive, we won't be able to cook, take a shower, brush our teeth and much more. As the global population increases, the usage of water increases as well. It is predicted that by the year 2015, 1800 million people will be living in countries that will face total scarcity of water. Currently, most of the countries in the Near East and North Africa suffer from minor water scarcity. The main reason is that they use a large amount of water on agricultural land, this results to a decrease in per capita of food production while meeting water needs for domestic, industrial and environmental purposes.

In chapter 1, (pg.3) it tells us the definition of scarcity. When something is scarce, it means that it has a limited supply. Almost everything is scarce, this includes air. Even though we don't need to 'buy' air in our everyday lives, but there are situations when we do need to pay for air. For example when we go scuba diving, we need a air tank to breathe underwater and mountain climbers, they need air tanks too when they are high up in the mountains since the air is scarce up there. Many other things are scarce too, such as time and money. We can't buy more time no matter how rich we are and not everyone are millionaires, so we can't afford to buy everything that we see.

I think that people need to realize that fresh water will be used up eventually and it is gradually getting faster and faster. People don't realize the amount of water they use up, from the moment they wake up to the moment they go to sleep. There are many ways that we can do as individuals to save water. For instance, while brushing our teeth, we don't need to keep the tap water running, only turn it on when you need it. Also, instead of taking one hour showers, maybe just take half an hour, even though this may not seem much, but if you consistently save water day by day, the water saved will go up. If more people are concerned about this issue, we might just be able to save enough fresh water for future generations to come.