Thank you, Mr. Chairman, and good morning, everyone. I appreciate the opportunity to appear before you today. My name is Steve Reynish and I'm with Suncor Energy.
As I'm sure you know, Suncor is one of Canada's leading integrated energy companies, employing thousands of Canadians from coast to coast. Our operations include oil sands development and upgrading in northern Alberta as well as conventional and offshore oil production. We own and operate refineries in Edmonton, Sarnia, and Montreal, as well as a lubricants plant in Mississauga. We are also active in renewable energy with interests in seven wind farms, and we operate Canada's largest ethanol plant in Sarnia. Many Canadians know us as “Canada's gas station” through our 1,500 Petro-Canada locations.
I think the first point I'd like to make is fairly obvious to everyone in the room. The world has changed significantly, with oil prices having dropped something like $50 per barrel over the last number of months. I see this morning that WTI is trading again under $50 a barrel. There's no doubt that this will have an impact on the industry and the Canadian economy. For Suncor, every $10 change in the price of oil per barrel equates to over a billion dollars in cash flow.
At Suncor, we've been preparing for this downturn in prices, and what we see is a return of volatility to these markets. We think we are positioned reasonably well thanks to a clear strategy. The fundamentals of that strategy are simple: optimize our base business, pursue profitable growth, return cash to shareholders, and be an industry leader in sustainability. This strategy is underpinned by a commitment to capital discipline.
We've been taking a hard look at our costs for the past couple of years, and these lower prices have caused us to accelerate those efforts. We've reduced our capital budget for this year by a billion dollars, and we're looking for $600 million to $800 million in operating budget savings over the next two years. I think you may have seen that we've also announced a reduction in our workforce of a thousand positions. Let me emphasize that these reductions were made in a way as not to jeopardize safety or environmental performance.
Others in our industry with higher debt or limited cashflow may not be in the same financial position. Their situation highlights the very real effects of the downturn on the Canadian economy. Let me just run through a few examples of that.
With respect to the oil supply-demand balance, lower prices will stimulate demand for energy—and we've seen this particularly already in the U.S.—but producers' cashflow obviously will be negatively affected, forcing cost reductions.
On the employment side, declining revenues will also limit our ability to sustain a stable labour force. Our strategy, however, remains to look for local labour first, then regionally, then nationally, and then only as a last resort do we look internationally. The current environment has allowed us to source closer to home, and we are reducing or eliminating higher cost fly-in, fly-out labour to our operations. Significantly, lower prices have rationalized the most expensive labour option for us, which is temporary foreign workers.
In terms of capital investment, companies are shelving projects in light of the new price environment. That of course impacts engineering, construction, and the operation of projects. The declining Canadian dollar softens the blow somewhat for Canadian operators but does not completely offset the decline in oil prices. For us at Suncor, a lower dollar is a double-edged sword. Our earnings are in Canadian currency but our debt is largely denominated in U.S. dollars.
Regarding the supply chain, lower prices also impact spending in other sectors including transportation, manufacturing, hospitality, tourism, and high tech. I think in Canada's case that list is a long one. Of course, depressed oil prices also result in lower taxes and royalties.
Overcoming this challenge will require a sustained effort for all of us. For us in industry, it means focusing on reliable, safe operations, and reducing costs. For contractors and suppliers, we are looking for them to help us find creative ways of reducing costs. For government, we think it means ensuring a strong, cohesive policy framework is in place to facilitate future development. We're particularly interested in any potential cumulative effects of taxes and regulations.
I'll leave it there. Thank you, Mr. Chair.