Oil prices briefly hit $50 a barrel on Thursday for the first time since October 2015. While the price slipped to just below that point, ending the trading day at $49.48, some small businesses in Calgary said the price bump is bumping up their bottom line.
The owner of Purple Perk Coffee said his business has been improving ever since the price of oil started its long, slow climb up from bottoming out around $27 a barrel in January.
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“Last year we saw a panic in everyone’s eyes,” Paul Overholt said. “When oil went above $40 a barrel you saw the confidence come back, today we see a twinkle in those same eyes.”
The price above $50 only lasted for about half an hour on Thursday, before falling again. Still, it has been making steady progress over the last five months, and that’s been reflected in Alberta’s small business confidence.
It gained six points in May to 34.6, according to the Business Barometer index published monthly by the Canadian Federation of Independent Business (CFIB).
But the Alberta results are far below the national average of 58.2, and still several points below the lowest mark from the 2008 recession.
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“Only time will tell if that’s part of a longer-term trend, and certainly we have a long way to go before we can say there’s sunny days, sunny ways ahead,” said Richard Truscott, with the CFIB.
Calgary energy executives said higher prices for six months to a year are what’s really needed, with an average of $60 a barrel for more oilsands projects to make a profit and stop cutbacks in investment and staff.
“I think the reality is, in order to develop upstream we are going to need higher prices long term,” said Al Monaco, president of Enbridge. “But in the immediate short term here, I think it’s been very positive.”
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Some analysts believe disruptions in oilsands production because of the Fort McMurray wildfire are partially responsible for the price climb.
Several major oilsands companies expect to be back at full production by July 1.