a more sustainable and domestically oriented expansion. similarly, india, which saw annual gdp growth near 9 per cent from 2005 to 2010, has also moderated since 2012. while it ’ s true that these cooling growth rates have had an impact on prices, we shouldn ’ t forget that emerging markets are still an important source of demand. indeed, since the start of the decade, the chinese economy, now the world ’ s second - largest, has more than doubled in size when measured in current dollars. in terms of supply, we ’ ve also seen responses that are putting downward pressure on prices for metals and some energy goods. for example, the iron ore supply continues to expand despite lower prices, thanks to the impact of multi - year investments made when prices were higher. these investments led to expanded capacity in low - cost areas such as australia and brazil. now let me say a few words about oil prices. this topic is obviously of great importance here in alberta because of its impact on employment and the overall economy. but it ’ s also important for canada as a whole, given the implications for national income and interprovincial trade, as well as the industry ’ s sizable influence on business investment. why did oil prices fall so much? the main reason is that supply rose sharply, thanks primarily to technological advances in oil extraction everywhere. this includes the oil sands, tight oil and the bakken deposits. consider in particular the technological progress that enabled producers to tap tight oil reserves. output from the united states alone, which essentially didn ’ t exist before 2008, reached 4. 2 million barrels per day last year. that increase is roughly equivalent to all the oil that canada produces in a year. given the dramatic drop in prices over the past year, the bank has spent a lot of time speaking with business leaders to try to gauge precisely how they will react. at the start of the year, oil companies were saying that they intended to cut investment by about 30 per cent. prices didn ’ t recover as much as was forecast at the time, so companies subsequently told us that they would cut their investment intentions by about 40 per cent. currently, based on discussions i ’ ve had over the past couple of weeks, many firms are still revising their longer - term expectations for oil prices. the bank will continue to assess what the impact may be on their investment spending. what this means for the evolution of oil prices is very hard to say. the bank ’ s usual practice is to assume for

our projection that oil prices will remain stable and use our economic models to test alternative scenarios. i know many companies do the same. but that can be risky : bis central bankers ’ speeches because the vast majority of oil transactions are financial, rather than between producers and users, prices tend to be more volatile than the underlying fundamentals. before i move on, let me emphasize a point. lower prices for base metals and oil today do not mean that long - term investments, which may take years to complete and last for decades, were somehow a mistake. without those investments, we would never have been able to capitalize on the higher prices, which boosted canada ’ s aggregate income. what matters for a given investment is how prices evolve over the life of the project, which is impossible to know when long - term investment decisions must be made. from the end of 2008 to the end of 2010, the price of copper tripled, while oil and nickel prices more than doubled. if you believe in market forces, these movements represented a clear signal to invest and expand output. those who were able to recognize the opportunity, make adjustments and exploit the higher prices were rewarded, and the increased income brought important benefits to canada ’ s economy. alternative scenarios and the need for flexibility now let me spend some time talking about the future. the price cycle i ’ ve sketched out may appear to be fairly predictable. but history has repeatedly shown that new technologies can quickly upend assumptions about future demand and supply. for example, back in the 1970s, there were predictions that the world would run out of copper by the end of the century. the people who made that forecast did not foresee that copper wire, long a staple of communications infrastructure, would be replaced by fibre - optic cable, with its glass threads made from silica. this technology helped reduce the demand for copper, in essence extending its supply. similarly, digital photography had a dramatic impact on the photo - processing industry. twenty years ago, the idea that everyone would carry around telephones that were also good - quality cameras was ridiculous. people took pictures with cameras that were loaded with film and took the film to a developer. the processing consumed a lot of silver. back then, if you didn ’ t anticipate the emergence of digital photography, you might have expected this source of demand would continue indefinitely. instead, according to the washingtonbased silver institute, the use of silver in photography peaked in 1999 and has fallen by almost 80 per cent