The plunging price of oil is having an impact on the economy and the Conference Board of Canada says Alberta will likely face a recession this year.
The economics think tank says Alberta’s latest employment and new housing start numbers are holding steady but if oil prices stay low, the province will slip into a recession.
“It's going to be very hard for Alberta to avoid a recession this year. Even if the oil prices bounce back to say 65 dollars, that's going to take a lot of steam out of investment, profitability and also consumption in the province of Alberta,” said Glen Hodgson, Senior Vice-President and Chief Economist, the Conference Board of Canada.
When prices plummeted during the last recession, engineering investment in Alberta dropped, almost 30,000 jobs in Alberta’s mining sector disappeared and housing starts fell by 75 percent.
Canadian Natural Resources Limited, an oil company headquartered in Bankers Hall, just announced it will spend $2 B less in 2015.
The company is the latest Calgary firm to announce budget cuts and major producers like Cenovus, Husky, and MEG Energy also recently announced reduced capital budgets.
So far, those who work in Alberta’s oil patch have retained their jobs but many are waiting for the other shoe to drop.
"Talking to my friends, coworkers, everybody is worried about what's going to happen in the future, the next couple months which is critical. I guess, it's not just how much the oil price is, it's basically when will be the bottom?” said Robin Mao who works in the energy sector.
Experts in the oil sector say they will have a better indication of the impact of low prices by the beginning of the next drilling season in late summer.
