Alberta boom or bust!
 

Rumour flying around that Alberta is ready for a financial meltdown.
Experienced this in 80's seemed to go flat overnight.
People could not sell their homes paid more than worth.
No jobs especially in construction.
Many headed for their home provinces after Unemployment benefits ran out and savings....a bad time for many hopefully not again!

Re: Alberta boom or bust!
 

Well, the Albertan boom has been funded by $100+ oil prices, so it's time for a bit of a slowdown. However, unless we see a real economic depression around the world the price will probably be back at that level in 3-4 years... in the medium term oil supply is getting harder and more expensive to increase and transitioning to alternate fuels will take many years.

Re: Alberta boom or bust!
 

Resource-based economies tend to be subject to boom and bust cycles.

The possibility of another bust in Alberta is something that has been mentioned on this forum with some regularity. At least that has been the case since I joined. Indeed, having experienced that bust in the eighties myself, I've been one of the voices that has cautioned new posters about the unstable nature of resource-based economies.

The Alberta economy already has softened a bit, compared with the heady heights it reached in the summer of 2007. I've recently been suggesting to BE members who are headed to Calgary that they might consider renting initially rather than buying.

But, with that having been said, I agree with Mark G's assessment. I consider an economic meltdown to be unlikely in the medium term.
x

Re: Alberta boom or bust!
 

There are currently adverts running on local radio in Aberdeen (Scotland) asking for people to relocate to Alberta to work in the oil sands!!! That suggests there must be an abundance of work for skilled personnel locally.

The oil price today is higher than when a lot of projects were sanctioned. The $100 barrell is a relatively recent phenomenom. Alberta has been benefitting from the oil industry for a few decades now.

Re: Alberta boom or bust!
 

I was thinking that, but it's easier to justify large investments when the price of oil is going up and credit is cheap than when the price is dropping and credit is expensive. I doubt we'll see many current projects closed down, if any, but new ones are likely to be delayed for a year or five.

Re: Alberta boom or bust!
 

The Alberta Oil boom took off when the oil price shot over the $50 mark so the doom mongers harping on about the death of the Alberta Oil industry are probably way off the mark. New projects may be shelved in the short term but there is a bucket load of engineering work to be done optimizing the production operation. I'd hazard a guess that perhaps $5 per barrel could be shaved off the cost to produce the oil in Alberta which amounts to big bucks saved.

Most of the Middle East countries are over stating their reserves, so longer term, Alberta oil is going to be way more important to the world economy. As I recall the existing reserves are enough to keep North America going for over 100 years and there is probably the same again in Saskatchewan.

Re: Alberta boom or bust!
 

I do hope you are right.
Way things are going in eastern Canada you may have a flood of Canadians taking the existing jobs.
I dont know if you remember a former Alberta premier Ralph Kline calling us from Ontario bums and scum cheeky bugger.
He was happy for us to fill Alberta's coffers maybe we will help again.:)

Re: Alberta boom or bust!
 

Northsound or Radio Scotland

i came from a subsea background in Abz to onshore pipelines in Cowtown; warm bodies on seats is a terminolgy i've heard used here a few times , things have been affected within the industry - few projects shelved etc , but think no great cause for alarm presently ; some people thrive on the doom n gloom scenario, makes for interesting water cooler chat ; 'were you here in 81......'

Re: Alberta boom or bust!
 

A drop from a July high of $147 down to $53 is bound to rattle a few cages

the reality is that nobody knows which direction it will go (and that whats causing the fear mongering)

Re: Alberta boom or bust!
 

Well right now it's $49.62 for West Texas, so for the moment it's still headed down.

Re: Alberta boom or bust!
 

Alberta's surplus is down to 2 billion this year- far less than expected but still more than their budget.

I think they calculated their budget at something like $82.

Next year may be tougher as this year their surplus has been partly generated by those high oil prices earlier. BUt more porjects are coming on stream

Who knows. But I reckon its no worse than any other place from this perspective. I mean how many governments in teh Uk have been in surplus?

Gryphea

Re: Alberta boom or bust!
 

PS

oil price is in US dollars. This was at parity during high prices. No longer so some drop in oil price (say 10%) is afforded by exchange rate.

Gryphea

Re: Alberta boom or bust!
 

The boom isn't bust, it's just on hold.

This graph sums it up, sharp spikes are always followed by a correction;

http://tonto.eia.doe.gov/dnav/pet/hist/wtotworldw.htm

It takes years of lead time to build a megaproject, with oil companies not investing/putting on hold new projects and existing wells in production decline the prices will come back up. Maybe not $150/barrell for quite some time but certianly back up above current levels to where the boom resumes.

The Alberta Government has no debt, this year any other province would be delighted to have a $1 billion surplus. In the next couple years if oil stays flat it will be a bit painful though. I would suspect less painful than the UK/US economies with crippling government/personal debt and Gordon Brown and the helm.

That said, my crystal ball is a bit foggy and I could be totally wrong and the Alberta economy could tank.

Re: Alberta boom or bust!
 

It was Northsound. Also advertising heavily are Perth based employers.

A lot of the big engineering projects wont be online for a few years yet so the operators wont be overly concerned by the price of the day. Moreover, Shell, Imperial etc traditionally require little debt financing so hopefully the 'credit crunch' wont have a hugely adverse effect.

You're spot on about the water cooler chat. You'd think people in Aberdeen were living on the breadline these days despite wages continiung to rise week on week (thanks to TAQA).

Re: Alberta boom or bust!
 

They'll be a hold-off while the boom-time construction and oil-field wages level out..... then costs will once again be viable for new projects....

No comapny is gonna push ahead while construction costs are at $100+/barrel levels.....

As long as the oil price stays above $50...... bugger! :blink: