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I would like to respond to comments made by Brian Jones in his July 27 column (“Premier masters inconsistency”).

In his opinion piece, Mr. Jones asserts that “Oil prices have been dropping for a few months. The per-barrel price of oil declined about $20 since April.” He suggests that this should be a reason for not proceeding with the Muskrat Falls hydroelectric development.

To suggest that Muskrat Falls should be stopped because oil prices have declined for a few months is shortsighted and ignores the trend of the past decade or so.

I think a brief review of that trend warranted.

Shortly after Hibernia began producing oil in the late 1990s, Brent Crude was selling for as low as $12 or $13 per barrel. By late 2003, when this Progressive Conservative government first came to power, the price had risen to approximately $29.

By the end of 2004 and 2006, the price per barrel had increased to $40 and $60 respectively.

Early in 2008, oil had climbed to just under $144 per barrel. Then the short term, global recession hit and it fell dramatically to roughly $40.

Shortly after, the price again increased to more than $91 per barrel at the end of 2010 and it averaged $111 per barrel in 2011. As I write this, oil has risen again to almost $113.

Oil prices always have been and always will be volatile. Looking at the trend though, shows that one thing is clear: oil gets more expensive with time.

That is an indisputable fact that has been stated by me and Premier Kathy Dunderdale on numerous occasions. Evidence of this can be seen when residents compare their fuel and heating bills today versus five years ago.

Of course, everybody has the right to offer an opinion. However, I believe that opinion should be well informed and supported by accurate data.

I suspect Mr. Jones is not really interested in seeing Newfoundland and Labrador reach its true potential by moving forward with large-scale energy developments that are clearly in the best interest of the province.

Perhaps he would rather see the province slip back to times when the economy was not as solid as it is today, when outmigration was occurring at unprecedented levels, when Newfoundland and Labrador was dependent on equalization payments to pay its bills.

Simply put, Newfoundland and Labrador is a better province than it was in 2003. Our economy is strong and our fiscal shape has never been better. More people are working right now than at any other point in our history. Our infrastructure is much improved and our tax regime is more competitive. There has never been a better time to develop a project such as Muskrat Falls.


Tom Marshall

Minister of Finance and

president of Treasury Board

Organizations: Treasury Board

Geographic location: Muskrat Falls, Newfoundland and Labrador

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Recent comments

  • Minister Marshall needs to clearly explain matters and answer questions surrounding the Muskrat Falls Project more precisely.
    August 12, 2012 - 16:43

    I would like for Minister Marshall to tell Newfoundlanders and Labradorians how the Muskrat Fall Project, at a cost of more than $6 Billion dollars for just 850 mega watts of electricity is going to be a good deal for the ordinary tax payer and energy consumer of our province? Twenty five percent of the energy from the project is promised to Emera of Nova Scotia, the rest it seems is going to be utilized as cheap energy for the proposed Iron Ore mines of Labrador. So if nobody, other than the captured hydro consumers of our province, pays the equivalent of what it costs to produce the energy, how in the name of God Minister Marshall is it going to be the great deal you and your political cohorts profess it to be? Then there is the unknown factor of the dreaded touted "cost overruns" which frightens the Hell out of most of us because we all know the cronyism that surrounds such statements, we see, at the moment, the Anti-Corruption committee in Quebec fighting that Evil War in the Construction Industry there and we know some of the details of what it has uncovered. We, as Newfoundlanders and Labradorians want this Project audited every step of the way and we want our Minister Marshall to answer our questions.

  • Maurice E. Adams
    August 12, 2012 - 15:02

    Perhaps Minister Marshall should consider ("The coming oil boom,..."), Globe and Mail, August 9, 2012........... It says "Until (2015)... the oil market will be highly volatile (and) ...prone to extreme movements in opposite directions,...after 2015,... a glut of oil,... which could lead to a fall, or even a collapse, in prices..........A final conclusion to draw from the next oil revolution is...This is yet another reminder that what ... expert consensus assure us to be true very often isn’t. It was obvious that efficient markets worked and financial deregulation would stimulate economic growth, until the financial crisis and the subsequent international economic recession. It was equally apparent that we were running out of oil – until we weren’t." See, and

  • William Daniels
    August 12, 2012 - 02:19

    This letter smacks of desparation.

  • David
    August 11, 2012 - 16:16

    Perhaps Tom marshall should stick to a consistent train of thought when he talks a bout the price of oil. If the price of oil is "volatile" (which it most certianly is in the short to medium term), then any long-run "trend" isn't much relevant for a one-, two- or even five-year budget, is it? To be blunt, it's downright stupid to look at the far right hand tail of the oil price distribution curve, that bit representing pretty much the highest price oil has ever been in it's entire 75 year history as a traded commodity on Earth, and use that as the basic assumption for the orgy of short-term cheque-writing capacity for a province. That is pure, incredible, godforsaken stupidity.

  • Winston Adams
    August 11, 2012 - 12:24

    Marshall says it's an indisputable fact that oil prices go up over time. We can can the same thing about house prices. And we can also say that it's an indisputable fact that oil and house prices go down over time. So the fact is that they both go up and down. The long, long term trend is up . But over what time frame? The American bankers thought housing would continue going up. Which way has it gone since 2008? And what did it do to the economy there and worldwide? High oil prices are essential for Marshall"s budget and for the MF project. His budget is already in trouble by hundreds of millions of dollars because he overestimated oil prices. And lower or flat oil prices are detrimental for Muskrat falls, as expenses for the Holyrood oil consumption would fail to esculate as forecast. So Jones is right. So flat oil prices, cheap gas prices for generating electricity in the USA, low local electricity demand increase, the ability to reduce demand at a cost of 4 cents per kwh by energy efficiency, are just some reasons why this is not the best of times to sanction MF. It suggests an approach of extreme caution instead of spinning the reality . Marshall appears to have learned nothing from his budget mistakes.

  • Newfoundlanders and Labradorians want some very important issues addressed by Minister Marshall
    August 11, 2012 - 11:18

    Certainly the "best interest" of the average Newfoundlander and Labradorian is not to have every cent of revenue coming into the province's Treasury tied up in developing the Muskrat Falls Project, while allowing the existing infrastructure to fall down around our ankles and not being able to build any new infrastructure because there is no money available. (That is an issue that Minister Marshall needs to address). Also another issue that needs to be addressed is that since, Newfoundland and Labrador, has the largest aging demographic in Canada who are and, will be in the future, living on fixed pension incomes, not indexed to inflation, how is that demographic going to keep up with rising electrical rates in order to satisfy the needs of the shareholders of Nalcor, and the cost over-runs of the development of the Muskrat Falls Project that are going to cost Billions of dollars with no paying customers in sight other than the ratepayers of the province of Newfoundland and Labrador. Yes we know the proposed Mining developments are in waiting for the energy, but they apparently don't want to pay the kilowatt hour rate that the Project will cost. How are we going to be able to keep the mortgage on the Muskrat Falls Project going and besides pay for the infrastructure that will be needed to keep our province viable?

  • Winston
    August 11, 2012 - 10:18

    Marshall says that oil prices went from 60 dollars in 2006 to 113 dollars at present which is on average about 10 percent a year. Maurice says over the last 6 years on average the price climbed 3/10 of 1 percent per year. Who is spinning this the most? Can you each clarify?

    • Cyril Adams
      August 13, 2012 - 08:19

      The average price in 2011 was about $110/bl, in 2005 it was around $55/bl (rounding to nearest $5). That's about a 12% increase per year.

  • Maurice E. Adams
    August 11, 2012 - 08:59

    Muskrat Falls --- Stable rates??? ..... In the decade between 2030 and 2040, Nalcor's Muskrat Falls rate of increase in its electricity rates is FOUR (4) TIMES HIGHER than in the decade between 2020 and 2030. ......... In the next decade between 2040 and 2050, Muskrat Falls rate of increase in electricity rates is EIGHT (8) TIMES HIGHER than in the decade between 2020 and 2030........ Keep in mind also that in the later years (decades) the debt servicing and operating costs ALONE for Muskrat Falls (for our children and grand children) are more than FOUR TIMES HIGHER THAN in the early years (from about $50 million a year to more than $200 million a year) --- the money has to come from somewhere --- island ratepayers. Is that the kind of "rate stabilization" you want to leave your children and grand children --- so that mining companies in Labrador can have much-less-than-cost power paid for by island ratepayers? See

  • Maurice E. Adams
    August 11, 2012 - 08:16

    Oil prices have increased over the last 6-years at an average rate that is SIX (6) TIMES LESS THAN (3/10th of 1% annually) Nalcor's TAKE OR PAY, LOCKED-IN 2% "compound" ANNUAL INCREASE......... It seems Minister Marshall is confusing the best interest of Nalcor (and mining companies) with the best interest of voters.