CALGARY – The Conference Board of Canada says Alberta will likely face a recession this year due to the plunging price of oil.
The economic 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 recession.
Chief economist Glen Hodgson says even if oil prices rebound to $65 dollars per barrel he forecasts that investment, profits and consumer spending will be down.
However, Alberta Premier Jim Prentice says he disagrees with the Conference Board of Canada’s analysis.
During a news conference in Edmonton Tuesday Prentice said while the province faces difficult times and possible deficits, he doesn’t believe Alberta is headed for a recession.
READ MORE: Premier Jim Prentice talking about the Conference Board of Canada forecast
READ MORE: How the drop in oil prices will impact Canadian economy
READ MORE: Big cuts coming in next Alberta budget
On Tuesday, Suncor Energy Inc. announced it’s cutting $1 billion from it’s capital spending program, as well as ‘sustainable operating expense reductions of $600 million to $800 million’ which will be phased in over two years.
The company also plans to cut 1,000 jobs.
Calgary-based Canadian Natural Resources Limited announced Monday that it will spend 2.4 billion dollars less than expected this year.
Other major producers such as Cenovus and Husky Energy have also recently announced reduced capital budgets.
Energy sector experts say they will have a better indication of how low prices will affect the industry by the beginning of the next drilling season in late summer.
But already, there are indications service companies in the oil patch are hurting.
In the past week, Calgary-based Tenaris Prudential has laid off 150 workers.
The company manufactures tubes that are used in the energy sector.
A union spokesperson says it’s the first layoff of this size for the company since the 2009 recession.
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