How Are Low Oil Prices Affecting Canada's Oil Industry?

From one of the biggest producers on the planet to one of the hardest hit countries in the wake of the global oil price crash, Canada has been on an economic rollercoaster.

So how are plummeting oil prices affecting the Great White North’s oil industry?

Unemployment spikes

Since the downturn kicked off in mid-2014, the Canadian Association of Petroleum Producers estimates that over 40,000 jobs have been lost as a direct result, with close to 100,000 jobs in total. In January, Canada’s unemployment rate hit a two-year high, as employers laid off additional jobs in response to the oil slump. Alberta is bearing the brunt of the downturn, with the commodity shock triggering the loss of 10,000 jobs in January. This dragged the province’s jobless rate down to 7.4%, the highest recorded figure in 20 years. As the epicentre of Canada’s oil and gas industry, economists maintain that it’s no surprise that Alberta has been hit the hardest.

Carol Howes, vice-president of communications for industry human resources and safety association Enform comments that the outlook isn’t looking bright.

“The trend is that the layoffs will continue,” she stated following the release of the Petroleum Labour Market Information report. “As recently as a few months ago the expectation was the layoffs would start to subside and turn around in the new year, or later in the new year, but that doesn’t appear to be happening.”

A slump in GDP

In 2015 Canada’s economy slipped into a recession, and while growth soon resumed its GDP was the slowest of all G7 nations. As a result, the Canadian dollar plummeted to the lowest value seen in over a decade.

A banking downturn

Another major concern is Canada’s banks being exposed to the ferocity of the slump. According to the Wall Street Journal, analysts are becoming increasingly concerned over vulnerability to bad energy debt.

The silver lining

The oil price crash has had destructive consequences, however there the economic thunderstorm isn’t without a silver lining. As a result of the low Canadian dollar, economists assert that tourism could jump and energy investments could spike.

Despite an off colour economy, Canada’s oil producers must still comply with industry legislations. For more information on the latest adjustments in process and laboratory vapour pressure testing, ‘Vapour Pressure Testing of Gasoline and Crude Oil - Regulatory Changes and Resulting Possibilities’ is a must read article.

Image via Flickr Creative Commons. Photo credits: Samuel Auguste