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Oil sands benefitting Canada, CIBC report says

Published by Steve Coleman on March 28, 2012

It pays to be an energy producer, says a new CIBC World Markets Inc. report.

While Canadians will feel minor discomfort from a spike in energy prices, it's nothing compared to the migraine other parts of the world are expected to feel.

Compared to the European Union, the United States and Japan, Canada has a much lower reliance on crude oil to keep the country's economic wheels turning.

"By some measures, the grief borne by the eurozone and UK has been most severe during the latest oil price run-up, with the cost in euros and sterling now exceeding the 2008 peak," says a report penned by CIBC's Emanuella Enenajor. "But the economic drag from costly oil stems from the recent change in prices, rather than the change relative to some arbitrary benchmark in the past.

"By that measure, Japan has been at an acute disadvantage, given the recent depreciation of its currency. Costlier crude oil particularly hits nations that rely heavily on petroleum for energy consumption."

The EU and US use 37 per cent and 38 per cent, respectively, in the overall mix of energy used. Japan is at the high end with 43 per cent, while Canadians rely on oil for 31 per cent of the nation's total energy needs.

Canadians also have a higher-than-normal reliance on electricity with renewable energy sources like hydroelectricity supplying 30 per cent of the total energy used.

While other countries are paying higher prices for crude oil, Canada benefits as one of the countries selling it. Foreign currency comes into the country, instead of Canadians spending their money on foreign resources.

Japan relies on imports for about 80 per cent of its energy needs. In the US, it's about one-quarter.

The full report can be read at the following link.

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