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Page added on October 19, 2014
Oil’s crash threatens to derail booming Alberta
“The biggest negative impact is the cutback in production in the three oil rich provinces, Alberta, Newfoundland and Saskatchewan,” Guatieri said. “Which means their economies will take a bigger hit than the national economy.”
Those economies have been economic leaders over last couple of years, said Guatieri, with Alberta and Saskatchewan pumping out jobs and instilling much-needed confidence in Canada’s economy for consumers to go out and spend.
Oil’s plunge, sparked by recession fears in Europe and China, is now shaking that foundation.
“There is reason to be concerned that some people in the oil industry will lose their jobs if oil prices hit $80,” Guatieri said, “or fall further.”
“Consumer spending has been quite strong in Alberta in particular, while growth has been strong. But that will take a hit,” the BMO economist said.
9 Comments on "Oil’s crash threatens to derail booming Alberta"
shortonoil on Sun, 19th Oct 2014 12:36 pm
As we have been saying our model indicates that we have reached, or are very close to the maximum price of petroleum that the economy can support.
This was originally brought to our attention by Gail Tverberg at:
http://ourfiniteworld.com/
and we have used the Etp model to substantiate her determination.
Our model also shows that production costs are also increasing. Prices are capped, and production costs are presently increasing an average of $11.00 per barrel per year. As a consequences high cost producers will be shut-in first. These include bitumen, ultra deep water, high sulfur extra heavy, and shale.
It is not surprising that Alberta with its heavy dependance on bitumen mining will be feeling some of the first squeeze. Companies dependent on deep water production, and extra heavy producers like Venezuela will soon be showing serious declines.
http://www.thehillsgroup.org/
Beery on Sun, 19th Oct 2014 2:22 pm
But wait. There’s not supposed to be any situation that can stop the flow. Okay, let’s not panic. If higher prices aren’t forthcoming and lower prices aren’t getting people to buy like there’s no tomorrow, what we need is technology that can extract the oil at even cheaper rates. Yeah, that’s it. Not a problem.
markisha on Sun, 19th Oct 2014 2:56 pm
I think we forget one thing. Dollar can be printed by will. This have been done right now and everything is possible
shortonoil on Sun, 19th Oct 2014 3:30 pm
Printing does not rejuvenate the economy. It didn’t work in Japan, it didn’t work in Zimbabwe, it hasn’t worked here. All printing can do is move money, via printed currency, from one segment of the economy to another. It does not create wealth, that is oil, because what the central banks print is currency, not money. We are going broke in monetary terms, not currency terms.
Perk Earl on Sun, 19th Oct 2014 6:53 pm
This is just another stage in a series of events towards the end of the oil age. High oil price kept declining as affordability declined in lockstep with declining EROEI, and now we will shift into a new period of lower non-conventional oil production. Then at some future point in time we will only be tapping into conventional sources and that’s when the pain of knowing the need for economic growth will not be met. That the complexity that was achieved with cheap energy must at some point give way to localized simplicity.
Northwest Resident on Sun, 19th Oct 2014 8:00 pm
Perk Earl — That is pretty much what I’ve been thinking too — what we have with the declining oil prices and recent stock market shake-up is just another stage downward. It really doesn’t matter if oil prices pick back up for a while at some point in time, or if the frackers manage to keep their debt-machine rolling for another year or two, or even if the stock market roars back to new highs. We’ll be back to right where we are now again, only lower, with an up and down roller coaster ride heading into the end of the oil age taking us ever lower until we eventually hit bottom and the ride is over. I tend to think that oil prices aren’t going back up, and the Saudi’s seem to be telegraphing that they don’t expect rising oil prices for the next year or two as well. I just wonder what the next step down will look and feel like, and I’m sure we won’t have to wait long to find out.
Kenz300 on Sun, 19th Oct 2014 10:14 pm
Oil prices may decline in the short term but long term they are going up. The demand from China and India and their billion plus populations will continue to grow.
A decline in oil prices now will help give the global economy a much needed shot in the arm and help to reduce some of the damage from the Great Recession. Money that would have been spent on gas and oil will now be spent through out the economy.
People need to be smart enough to realize that this is temporary and that energy efficiency is still their friend. The less energy you use the less you will pay no matter what the price is.
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New Biofuels Facility Converts Plant Waste To Ethanol, Is 90 Percent Cleaner Than Gasoline
http://www.huffingtonpost.com/2014/10/17/biofuels-plant-waste-ethanol_n_6001670.html
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How Fossil Fuel Interests Attack Renewable Energy
http://www.renewableenergyworld.com/rea/news/article/2014/05/how-fossil-fuel-interests-attack-renewable-energy
markisha on Mon, 20th Oct 2014 1:25 am
Short I agree with you , but fed doesn’t because they see only short term interest.In the short run printing can do the job. Weaken the Russian economy and keep war machine running , and God knows what else they can see from their perspective , but I am sure they are wrong
Perk Earl on Mon, 20th Oct 2014 1:34 am
“I just wonder what the next step down will look and feel like, and I’m sure we won’t have to wait long to find out.”
Good question. If we hit another deep recession, it seems very likely we will not see bitumen, LTO, or other expensive non-conventional again. Oil price will just keep spiraling down keeping non-c mothballed.
One of the arguments made is undeveloped countries like China & India will pick up the slack where we leave off, meaning they will buy all the extra oil. I would suspect very strongly that can only go so far because both rely on exports to developed countries. If the US follows the EU into recession, that leaves China with much slower growth and unlikely in a position to raise oil prices much.
For people that don’t get it, it’s going to be really tough. They will probably protest at some point, saying use bitumen, use LTO! People in the know will have to let them know those sources are no longer economical.