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Thursday, June 25, 2009

Economic recovery for Alberta a year away: Canada West Foundation

Alberta's economy was hit by a rare combination of negative factors, but recovery is on the horizon, according to a new report from the Canada West Foundation.

"A Rough Patch: Alberta Economic Profile and Forecast," written by Senior Economist Jacques Marcil, says that while oil prices have begun to recover, lower employment, reduced investment and a still-struggling global economy mean that the news is more bad than good. According to Marcil, this downturn is an anomaly in Alberta's history: the combination of low energy prices and global recession.

“Alberta is being hit harder than in previous recessions,” says Marcil. “In past economic slowdowns, either the energy industry kept Alberta growing while the national economy was struggling, or the energy industry took a hit while the national economy stayed the same. The one-two punch of global recession and plunging energy prices mean that Alberta will be hit worse than the rest of Canada this year.”

Economists currently predict that the United States, the largest market for the Alberta energy industry, will begin to recover in 2010. While it is not known how dynamic this recovery would be, if it does take place it will be an important first step towards economic recovery in Alberta.

“Many signs point to a rebound in energy prices, which will be of great benefit to Albertans,” says Marcil. “However, last year's contraction, the first since 1986, came as a bit of a shock to them.”
You can download the Canada West Foundation report here.

This report follows in the heels of a Calgary Economic Development (CED) State of the Economy report for the first half of 2009, which concludes that Calgary is in a recession that will last well into 2010.

Both reports stress the importance of Alberta energy sector as the primary driver of economic activity in the province.

Posted by Matthew Johnston

Posted by westernstandard on June 25, 2009 | Permalink


Economists currently predict that the United States, the largest market for the Alberta energy industry, will begin to recover in 2010.
Posted by Matthew Johnston

That is provided that the US doesn't pass the Clean Energy and Security Act 2009. If they do pass this legislation the levies imposed on Alberta energy will be so onerous that it wouldn't be cost effective to continue producing for sale to the US. The future is for clean, renewable energy. Like The Royal Tyrrell Museum Alberta is the home of dinosaurs.

Posted by: The Stig | 2009-06-25 1:53:58 PM

A point that many people forget about is the Alberta -OPEC relationship. OPEC is largely controlled by Saudi Arabia. This article should be read by everybody in the Alberta government and oil industry before they do any business with Saudi Arabia.


Posted by: The Stig | 2009-06-25 9:04:32 PM

Um just a quick observation. Oil prices have moved from around $35USD to today's close of $70USD. Part of the move is currency driven but the balance is due to supply/demand fundamentals. China is hoarding but will require inceasing energy from fossil fuels. Prices will likely stay in the $60 to $75 range for hte foreseeable future. Alberta will be fine should this happen. This report must have been written when oil was plunging back in November. It is seriously out of date.

Posted by: B | 2009-06-25 10:57:38 PM

...wait till August comes. Not sure, but something's coming down the pipe. Excuse the pun.

Posted by: tomax7 | 2009-06-26 3:55:14 AM

"The future is for clean, renewable energy."

Long term, probably.

But short term, if the US passes that bill, oil prices will go even higher than the last cycle. Alberta will still sell its oil, but for a much higher price.

Even worse, if the bill passes, consumers will get hit badly. There will be less investments in clean energy because the pool of savings will be diminished. Unintended consequence of a clean energy bill: no clean energy.

Posted by: Charles | 2009-06-26 5:19:06 AM

Charles, I think you are right. Ironically, the best way to stimulate investment in "clean" fuels is to let the price of oil reflect the demands of the market. Also ironically, the very same people that demand government intervention to stimulate "clean" fuels, also demand price controls on gasoline.

Posted by: TM | 2009-06-26 11:01:02 AM

Did the Canada West Foundation see the crash coming?

Yep. I thought so.

So how can they claim that it is ending?

Posted by: epsilon | 2009-06-26 2:14:57 PM

So how can they claim that it is ending?
~epsilon | 2009-06-26 2:14:57 PM

They probably have inside information that Ed Stelmach is stepping down.

Posted by: Speller | 2009-06-27 3:28:57 PM

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