I know it’s Christmas time and we’re supposed to be very happy and optimistic right now. I understand that. Definitely not trying to be a downer.
However, I’ve been reading with great concern about the state of the economy, particularly in Alberta, and the platitudes that provincial and federal politicians are feeding us regarding oil patch recovery and the end to a recession that seems like it’s been going on since 2008. Which it has.
The recent provincial budget continues to be a concern to me; the fact we went the entire summer without a budget was alarming. It suggests those people we elected to run our government don’t really know what they are doing, otherwise, why delay the budget? The opposition Wildrose Alliance must feel the same way. They released some interesting data from the federal government’s Parliamentary Budget Officer that strongly suggests the price of a barrel of oil will not get any higher than $55 U.S. by 2018, not a projection of $72 as suggested by the NDP government of Alberta. That’s a difference of about $17. Estimating every $3 on the price of a barrel of oil equals a $500 million difference, by 2018 Albertans are going to be eating another roughly $3 billion shortfall. On top of the problems we have now, such as a 6.5 per cent unemployment rate in Alberta announced in September. Even if you buy the NDP’s $72 a barrel estimate, the provincial government has about 100 school projects on the “to do” list. How they’re going to do that, I have no idea.
And if you thought last winter was lean, this one will apparently be worse. According to a report released this week from the Canadian Association of Oilwell Drilling Contractors (CAODC) 2016 could be the worst year Alberta’s oil patch has had since the early 80’s meltdown.
The energy industry, according to the CAODC report, has been spooked by the NDP’s royalty review combined with low oil prices and a shortage of spine among elected officials when it comes to pipeline projects. According to the report, The CAODC’s forecast suggests there will be a 58 per cent decrease in wells drilled from 2014 to 2016 and see almost 30,000 labour jobs shed.
Mark Scholz, president of the CAODC, told Global News Wednesday, “The active rig count in Western Canada today is at the same level as we experienced in 1983, one of the worst periods in our industry’s history.”
South of the border, U.S. president Barack Obama made the decision everyone in North America knew was coming: TransCanada’s Keystone XL pipeline to the Gulf of Mexico has been nixed, probably permanently. Whether the pipeline was good or bad for the economy was moot; Hollywood celebrities decided it was bad for the environment and Obama wouldn’t dream of opposing the environmental lobby with an American election coming up next year. On Wednesday, Nov. 18 TransCanada’s employees started receiving layoff notices.
As many of us have friends and family deeply connected to the oil and gas industry, it’s looking like many people we know are going to be living careful lives for the foreseeable future.
Stu Salkeld is the new editor of The Leduc/Wetaskiwin Pipestone Flyer and writes a regular column for the paper.