redneckboy

This is now a global problem that is just starting to hit Alberta, if oil prices stay low it will be painful, for just how long is the question.

Just take a look at this link to see how bad the problem still is in the US.

http://www.realtytrac.com/MapSearch/FreeSearch.aspx?

Just type the name of any city or any zipcode in the US for houses under the hammer. I typed in seattle and zip 52803 where I did my second degree at uni and my jaw dropped.

If your house had dropped by 50% in value would you want to go shopping for big ticket consumer items? Probably not, consumers reduce spending (which was largely financed by cheap credit and rising property prices on the back of cheap credit) , people lose jobs, houses get repossed and the cycle gets worse. If you have a couple houses on your street empty that the bank owns and can't shift how much is your home worth? Do you want to take a holiday, probably not. Do you want to pay a mortgage on house that is worth 30% less than your mortage, probably not (I think they call it jingle mail)

We all whinge when the americans use 25% of the worlds resources but we whinge louder when the stop. (better the noise of prosperity than the silence of poverty)

If 'merikans stop buying stuff, factories in china don't need to make so much stuff, they lay off workers and don't need as many shipping containers, we don't need as many port workers and we don't need as many cars, as many airlines and nobody needs as much oil.

Then if you package up all that bad debt with good debt, spread to every corner around the world as AAA bonds and call it a safe investment, we all get to share the love and banks around the world stop lending to each other because the don't trust each others exposure to risk of bad debt. Then you can't get a mortgage to buy a house in middle england or get an overdraft to keep your stuggling business afloat and the cycle of consumerism collapses around the world and the oil price drops further.

The drop in oil was late in the game so alberta is playing catch up with the world recession and it will likely get worse. However, just like high oil prices are a cure for high oil prices, low oil prices can also be a cure for low oil prices.

I have a few american friends from uni and one of them is the poster child for the US credit crisis. 12 yrs after graduating he still owes his student loans. However, he has (had) a monster house in san Diego and big SUV (used to). As his house went up in value through the last 10-12yrs he remortged and bought an apartment building in LA for a rental (10 or so units I think). That went up in value as well, about 4-5 yrs ago he called me and said he was up in the range of $500,000 in profit. I remember saying something along the lines of that's lottery money, take it and run, pay off your house and your student loans and live happily ever after.

But no he didn't, he remortgaed, bought an apartment building in Texas (15 or so units) as well and a monster 30ft motor home on tick.

Fast forward 2008 and he's stuffed and I don't think i need to hash out the grim details.

Take a long look at all the foreclosurers in every part of the US (and soon to be Britain as well I'd imagine) and can someone explain to me how we are going to get out of this mess?

Oil will eventually recover to drive the Alberta economy again as its a diminishing resourse but for how long will it be down in price? I have a lot of questions but few answers.

I'm no economist, I'm just a simple country boy but it seems to me we are all a bit stuffed for the next few years.and 2009 will be long and painful.

Yogi-Bear

Hi Redneck,

Sad story about your friend. The Uk has some huge closures at the moment - manufacturing, banks, large stores, they estimate that from the 20th Dec to the 1st Jan 09 some 2,000 people a DAY will lose their jobs!

As you say "Where will it all end?" I think as money and people lose their jobs in 09 and things become seriously tight. Crime, theft, will go through the roof - this has already been leaked from No:10 in the UK via an e-mail.

2006 was the peak here, and really things could only go one way from then on - "down" I think your friend was probably making sooooooooo much money that he couldn't see sensible judgement. He was on a money making rollercoaster which has now dipped, and is going to struggle to get up that hill! If at all....

Tough times ahead

Y

scrubbedexpat091

http://www.bcstats.gov.bc.ca/pubs/lfs/lfsdata.pdf

It was 5.1 in October and 4.9 in November but still up from 4.2 a year ago.

I think the decline might be from seasonal employment, my company is seasonal and we hire several hundred for Christmas, but come Boxing Day the jobs end.

November is when Christmas hiring starts in many areas, but come January all those jobs are gone.

jimf

Oil $40 a barrel or so now. Opec may do something drastic? On the other hand other analysts forcast $25 if China goes down?

http://news.bbc.co.uk/1/hi/business/7770562.stm

How does the market look for engineering disciplines and companies outside of immediate involvement in the oil sands? I'm thinking of the sorts of companies on the ENR list below.

http://enr.construction.com/people/t...esign_1-50.asp

jancal

This might help!

http://www.theglobeandmail.com/servl...ry/energy/home

DaveLovesDee

First of all I'd like o redirect the OP's comment on Ottawa not helping Alberta with their job losses.

Take it up with one of the Alberta MP's, some guy named Stephen Harper. Oh yeah, he's the Prime Minister, so he's to blame along with the rest of Parliament for the problem.

As has already been said, Alberta isn't the only Province with problems, we all have. Alberta has done better than most over the last 10 years because of the oil boom, though what will happen when the oilsands run out eventually (and they will).

Even B.C. is having problems with the construction industry right now yet they still have to get vancouver ready for the 2010 Olympics in 2yrs.

Ontario has lost a lot of jobs in the Auto sector too.

The industrialised world is either in, or going to have a recession, even China. It's going to hurt everyone.

agr

Difficulty of extraction should ensure that the oil sands are among the last reserves in the world to run out. By then, there may be bigger problems to worry about.

But of greater concern to Alberta may be the scenario where the oil economy gets more and more volatile, then alternative energy takes hold while no-one's looking, and oil demand collapses.

DaveLovesDee

Difficulty of extraction = How much more is it going to cost to get the same amount of oil.

I don't think the oil companies are going to let alternative energy get in their way now any more than they did in the last 30 years.

agr

And last year Ford, GM and Chrysler would not let smaller, more efficient vehicles get in their way. Look at them now...

JET747

Very true. At the end of the day Oil is not only about petrol or diesel. If you look at all the derivatives that we have in todays world out of OIL based petrochemicals - from plastics, lubrications, fuels, even some food additives.

Oil will continue to play a big part in todays and tomorrows world.

Let's face it, most cars on earth and not going to change overnihgt, neither are aircraft or ships. We still are going to rely on plastics although at a reduced rate. But most of all we want and need electicity which means either go into Nuclear in a big way or still use coal oil and gas.

I am sure there are a few characters on this forum who would live in a cave with candles and furs - while the majority of people want todays lifestyle and pleasures. All we can do within the Industry is try to make more efficient processes and until there is a credible alternative to Oil (wind is not one of them!!) then the Alberta Oil Sands will stay an important global source of future oil - like it or not.

JET

MikeUK

Don't bet on it
When big companies like Nestle are looking at sustainable sources then things can change rapidly, if anybody gets really going on Bio-polymers the food boys will be all over it and they're big users
Nobody wants their product linked to highly variable commodities like oil so they’re going to do everything they can to un-link or get linked into a recycle/reuse system and reduce the dependency
And the higher the cost or volatility gets the more people are prepared to spend on find alternatives
We’re looking at Bio-reactors to produce electricity something that would have been unheard of a few years ago

agr

And this is my point: it's the ongoing volatility of oil prices that will accelerate alternative energy technology, not just a high oil price.

JET747

Lots of experiments and alternatives have been thought of and tested over the years. Fission is what they really want - self sustaining energy. However - Until these alternatives ARE proven on a major scale then we have what we have got, and it may take decades to prove these.

If the oil sands were developed more and there was more upgrading facilities -North America could sustain itself and not depend on the OPEC cartels who control it.

JET

agr

And this has been the prevailing wisdom for some time. But extreme, long-term volatility in oil markets might just change the game. (BTW, I think you mean nuclear fusion - fission already works).
If OPEC really had control, would there be volatility?

MikeUK

Well certainly in cities like Denver over the last couple of year there has been a noticeable massive investment in solar arrays along side many buildings and highways
Wind farms are going up pretty fast too in other areas
When Canadian tire sells small wind turbines and solar arrays I think its time to admit the change has started
Geo thermal is now mainstream and viable (if not cheap yet) for the domestic and industrial user
We’ve moved on from the centralized big fix to lots of small distributed fixes