CANADIAN PROFITS SHOW BIG JUMP FOR 1990

Canadian petroleum industry profits jumped 81% to $2.4 billion in 1990 from $1.3 billion in 1989, a federal agency reports. The Petroleum Monitoring Agency said a major factor in the boost was the Persian Gulf war, which doubled Canadian crude oil prices. PMA Director Peter Blitt said the profit increase should not be taken as evidence of price gouging. "You have to view it in terms of rates of return," he said. "The rate of return on capital employed was 5.1%. It's not a very impressive

July 29, 1991

2 min read

Canadian petroleum industry profits jumped 81% to $2.4 billion in 1990 from $1.3 billion in 1989, a federal agency reports.

The Petroleum Monitoring Agency said a major factor in the boost was the Persian Gulf war, which doubled Canadian crude oil prices.

PMA Director Peter Blitt said the profit increase should not be taken as evidence of price gouging.

"You have to view it in terms of rates of return," he said.

"The rate of return on capital employed was 5.1%. It's not a very impressive return. Other nonfinancial industries did better than petroleum."

PMA also said preliminary data for first quarter 1991 show a substantial decline in profits for the industry.

The Canadian Petroleum Association said it expects the rate of return on exploration and production operations to fall to less than 4% this year from 4.8% in 1990.

CPA also reported a continuing decline in crude oil reserves and a marginal decline in natural gas reserves.

A study found that Canadian crude oil reserves declined by 6.7% in 1990 to 4.4 billion bbl, with 27% of production replaced by new reserves. It said remaining reserves of light crude have declined 16% in the past 5 years to 3.8 billion bbl from 4.5 billion bbl.

Canadian natural gas reserves declined less than 1% in 1990 to an estimated 71.7 tcf. A decline in Alberta production was offset by increases in production in British Columbia and Saskatchewan.