Canada’s oil industry is expected to be back in the black this year thanks to higher oil prices and more production after registering three years of losses.
But the Conference Board of Canada says the recovery will be modest and ongoing pipeline capacity problems will likely continue to result in Western Canada’s oil production selling for discount prices.
Michael Burt, director of industrial economic trends, says the oil industry will register pre-tax profits of about $1.4 billion this year after a string of losses since prices crashed in 2014.
He says the profits are partly the result of efficiencies in the use of labour that are expected to continue to limit hiring. The industry is expected to create just 2,150 new jobs over the next five years.
Total crude production in Canada is forecast to rise by an average annual rate of 3.4 per cent between 2018 and 2022, with most of it coming from the Alberta oilsands.
Industry revenues are forecast to increase by about eight per cent in 2018.
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“We’re talking about a shift back to being in the black for industry but margins are still quite thin,” Burt said.
“So it’s obviously good news but for the industry it’s not a level of profitability that they would like to see to earn a sufficient return on their capital.”