Despite a sunny outlook when it comes to oil prices, the number of bankruptcy filings is on the rise in the province, with some expects saying it’s the worst that it’s been in the past 30 years.

Deloitte released a new report on Canadian oil prices on Wednesday and it says, thanks to improvements to transportation capacity, Alberta’s production cuts and increased demand south of the border, prices will increase in 2019.

In the report, Deloitte says mandatory production cuts will reduce production by 325,000 barrels per day until the excess supply finally gets under control. Afterwards, the cuts will drop to 95,000 barrels per day for the rest of the year.

The group says this will have a positive effect on differentials and also help to increase provincial royalty revenues in Alberta and Saskatchewan.

Deloitte says two of Alberta’s initiatives to increase oil capacity, the Enbridge Line 3 expansion and the plan to buy rail cars will also help boost the economy in 2019. Transporting oil by rail is expected to increase exports by 120,000 per day by 2020 and Line 3 will add approximately 370,000 barrels a day.

Marie Kozlowski, an insolvency trustee with Hardie & Kelly Inc., says no matter what happens in the short-term in the oil and gas industry, she’s seen their filing numbers increase every month and doesn’t believe the situation will change anytime soon.

“Generally, it’s unemployment, the failure of small businesses, which is a trickle-down effect from the local economy. EI has run out, packages have run out, really, they have nowhere else to go.”

Others may just have too much debt for them to handle, she says.

“We’ve had some good times and people have accumulated some consumer credit debt and other types of debt, like income tax, that they’ve always thought that they can get around to paying but they hit the wall and they’re not able to pay that.”

Kozlowski says that other issues like divorce also have a huge impact on finances, but the struggling local economy is definitely increasing the number of filings too.

“Even on the corporate side, we’re seeing small businesses going under, painting companies, electrical companies, even small hotels in areas outside of Calgary that are usually fed by the oil and gas industry.”

The situation won’t be getting any better in 2019 and possibly even 2020. Kozlowski says a lot depends on how interests rate through the year.

Craig Alexander, Deloitte’s chief economist, says the Bank of Canada plans to raise the key interest rate at some point.

“The Bank of Canada has been clear that they want to get interests rates back to what they consider to be ‘neutral levels’, which is not stimulating the economy. In other words, raising the interest rates to what is more normal.”

Alexander says the drop in oil prices is going to have a big impact on the Alberta economy over the next while.

“Prior to December, back when I did my September forecast, I expected Alberta was going to be growing by about 2.3 percent in 2019. Because of the drop in oil, it’s probably going to be about 1.3 percent.”

Of course, bankruptcy isn’t the only option for people struggling with financial hard times.

“A lot of people will file what we consider a consumer proposal, an alternative to bankruptcy,” Kozlowski says. “Simply put, it’s a deal that the bankruptcy and insolvency trustee puts together with the creditor to pay a portion of the debt back, over five years at no interest, which is huge.”

Kozlowski says they probably do more consumer proposals than bankruptcies because that’s the first and better option for many people.

According to numbers from Statistics Canada, bankruptcy filings in Alberta rose by nearly nine percent in 2018.

Deloitte forecasts the price of oil is expected to increase in 2019, to $58 USD per barrel for WTI and $50 per barrel for WCS.

(With files from Chris Epp)