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When the historic benchmark was breached in June 2005, Calgarians, already riding high on the strength of natural gas prices, eagerly awaited the oil boom — including the new roads, wage hikes and lavish Stampede parties that would come with it.
Fast-forward nearly 13 years and it’s a different story.
“The return to $ 60 oil is probably not as exciting as it was before — especially given that we came down from much higher priced oil,” said author David Finch, an expert on the history of the oilsands.
“We wish it would go to $ 110 again like it was five years ago, but that’s probably not going to happen.”
OPEC production cuts have helped matters, soaking up an oil glut that’s weighed on prices. A strengthening U.S. economy is also pushing up demand while unrest in the Middle East has bolstered prices more recently.
Still, the enthusiasm seems measured.
“We like to see a higher price because it is a major commodity in Alberta and it was the single reason … that Alberta was thrown into a recession.
Indeed, the so-called differential between benchmark Canadian and U.S. oil has widened to its biggest gap in years, with a barrel of Canadian crude trading Thursday for roughly $ 25 less than its American counterpart due to transportation bottlenecks and an abundance of Canadian oil.
Another reason for guarded optimism is it’s unclear how long oil will linger around $ 60. Sustained high prices could quickly spur U.S. shale oil production and dampen prices once more.
But even if prices soar to the lofty heights of the past, some workers wonder if it will deliver another hiring frenzy, like back in the mid-2000s when it seemed like everyone was moving to Fort McMurray to work in the oilsands.
Yet, there was good news Friday as December job numbers showed Alberta employment increased by 26,000 positions, mostly in full-time work. The unemployment rate fell by 0.4 percentage points to 6.9 per cent, though that’s still higher than the national average of 5.7 per cent.
And there are other positives.
Jackie Forrest, director of research at Calgary-based ARC Energy Research Institute, said in a commentary this week there’s an “exciting renaissance happening in the Canadian oil and gas business.”
She noted several developments that bode well, including drilling techniques that are making Canadian shale gas and tight oil plays “highly” competitive, new innovation-led efficiencies and continued oilsands growth.
And, despite the cancellation of the Energy East pipeline project in 2017, Forrest says there are still plenty of options for transporting Canadian oil.
“Over the past several years, debottlenecking older pipes has already added more new takeaway capacity than the entire Keystone XL project proposes to ship,” Forrest wrote.
Despite the positive signs, talk of another boom still seems far away — and perhaps that’s for the best, Hirsch said.
The economist would like to see prices around $ 55 US per barrel for the next three years. That price, he said, would be good enough to keep companies profitable, growing and investing, but still require a sharp eye on labour costs and wage inflation, which can be a drag on other sectors of the economy.
Meanwhile, Calgarians can perhaps breathe a little easier with oil at $ 60, even if the champagne stays in the bottle.
“Going forward, we can start to build again.”