OTTAWA - Pre-tax profits in Canada's oil business are expected to rise to $8.4 billion this year from $1.7 billion in 2009, the Conference Board of Canada said in a report Thursday.

"Global consumption has rebounded almost to pre-recession levels. As a result, prices have nearly doubled from their lows of 2009, boosting the industry's profitability,'' economist Todd Crawford wrote in the report

Production in the oil extraction industry is expected to advance 4.1 per cent in 2010, thanks largely to higher oilsands output.

The large drop in prices in 2009, which sent oil into the low $30-mark in the early part of the year, contributed to a 90 per cent drop in profits that year. But a rapid curtailment in costs, which fell 20 per cent, helped keep the industry profitable, the board said.

"Because activity in the industry is expected to rise in the next few years, Canadian oil companies can expect competition for materials and labour to be fierce,'' Crawford said.

"As a result, keeping costs under control will once again be a priority for Canadian companies.''

Although costs are rising in 2010, they will be outpaced by revenue growth, the board said.

The board's assumptions are based on a ``status quo'' regulatory regime. The government of Alberta has changed royalty rates several times in recent years.

Source: Canada.com

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