Oil prices had a good run for a few years, hovering around US$100 a barrel until prices took a hit in 2014. In January 2016, oil sank to a 12-year low of $28.50, and in recent weeks has sat around $40 a barrel.
“There is simply too much oil in OPEC states and the U.S. that can profitably come back on the market at prices near $60 to expect that we will see a return to $80 or $100 this decade,” said Avery Shenfeld, CIBC Economics’ chief economist, in an email to Global News.
Oil prices are too low to prompt Canada to kick into major production mode, the report states. But over time as reserves somewhat dwindle, oil prices should modestly creep up and the industry will improve in Canada.
“The energy sector will do better ahead than we’ve seen in 2015-16,” said Shenfeld.
“But Canada will still be looking for other sources of economic growth to replace what had been earlier filled by the launch of new oil sands projects earlier in the decade.”
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The oil crash hammered a harsh blow to Alberta in particular, with unemployment rates rising as energy sector jobs disappeared. Alberta food banks have seen a huge increase in demand, while housing markets have softened — Calgary has seen 20 consecutive months of declining home sales.
Time for other industries to thrive
If Canadians in the energy industry are looking for a career change, now might be the time.
“Non-energy exporting industries will be positioned to carry the next leg of the Canadian recovery,” the report states.
This echoes the findings of a Bank of Canada report from late 2015.
“Non-energy exports (NEX) are a key driver of the Canadian economy,” the BoC report said. “About half are currently showing upward momentum.”
The days of an on-par loonie are also behind us, at least for the foreseeable future. Some export categories benefit from a depreciated Canadian dollar, and have seen a boost since the loonie began its decline in 2014.
Furniture and fixtures, medium and heavy trucks, busses and other motor vehicles are noted as having performed exceptionally well.
The same can not be said for those linked to oil.
“However, some categories closely linked to commodity prices have been affected by weak activity and lower prices,” the BoC report states.