Resource World Magazine

58 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 5 F rom the boardrooms to the bars, the discus- sion these days centres around the falling price of oil and its potential impact on the industry that has meant so much to the economies of Western Canada, particularly Alberta. There's much to fret about, with crude oil prices dropping below US $46/bbl a barrel and Saudi Arabian experts – and remember it's Saudi Arabia that refuses to reduce its output to shore up international oil prices but instead is allowing prices to drop to levels that will curb US shale development – predicting that the world will never see $100 oil again. That has caused many companies to pull in their horns and forego, at least for the time being, planned drilling proj- ects. Oilpatch camps have been closed and there's considerable speculation about just how low the price could go and whether or not the unheard of $30 oil could shatter Alberta's oilsands – and the economy along with it. Recently, the Conference Board of Canada even suggested Alberta could face a recession is oil prices remain low. "Going forward, the province is certain to suffer, especially on the employment front, from the drop in oil prices – and it is likely to slip into recession," Daniel Fields, an economist at the not-for-profit research organization, said in a recent report. That wouldn't be good news for Albertans who, at $27,000 per person have the highest level of consumer debt in Canada. But the Royal Bank of Canada (RBC) has said there's little danger at present of them defaulting on car loans or other outstanding credit as a result of oil's collapse and the economic consequences that holds for the province. The bank, one of the biggest lenders in the country, has nearly a quarter of its Canadian loans held by Albertans, from homeowners with mortgages to big oil firms who've borrowed to expand energy projects. Many provincial governments and Ottawa have benefited from high energy prices. But none are as reliant as Alberta which relies on oil royal- ties for about a quarter of its revenues. Estimates show that the Alberta government is missing out on about $1.2 billion because of cheaper oil – and that was when oil dropped from $105 to $85, never mind the $46 it's trading at today. Alberta's budget estimates were based on $97 oil, but they weren't the only ones. Saskatchewan the impact of lower oil prices Low oiL pRiCes have negative and positive ConsequenCes by Bruce Lantz John Stevens Mark Scholz OIL & g A s

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