ALBERTA OIL’S YEAR IN REVIEW
Twelve months of historic low energy prices, record unemployment in the oil patch and the most expensive natural disaster in Canadian history. Here’s to 2016, the Worst. Year. Ever.
In Canada and around the world, 2016 will go down as one of the toughest years on record for the energy industry and its dependent economies. These are the stories that mattered most in a year we’ d all like to forget
THE YEAR 2016 WILL GO DOWN AS NOTHING SHORT OF A SAVAGE STRESS TEST OF THE CANADIAN ENERGY SECTOR.
A year when cheap oil undercut the national economy and underwrote a rise in petty crime; when the office towers of Calgary emptied faster than the savings accounts of tens of thousands of laid-off energy workers, and unemployment hit double-digits in Alberta. And throughout it all came the warning that the worst was yet to come— that although we were entering an ocean of uncertainty, we could still be certain that our ship was going down.
All the economic indicators at the beginning of 2016 were bad. In the realm of climate and energy policy—both federal and foreign—the picture was equally troubling for a Canadian energy sector that hadn’t caught an honest break since the summer of 2014, when the collapse in energy markets began. In short, it was not an auspicious start to the year. And before the promise of a spring renewal could even rear its head, things in Alberta went from bad to worse to—quite literally—on fire.
Yet here we are. Up from the ash of early 2016’s energy market immolation emerged a second half—a late-stage step towards recovery. A barrel of West Texas Intermediate, which began the year selling for US$36 and by February was trading at a low of US$26, had by October nearly doubled its value from eight months prior and was fetching just over US$51. Natural gas prices charted roughly the same Lazarus-like rise, jumping from US$2.33 per MMBtu on the NYMEX at the start of January to fully one dollar higher by mid-October. Still, many of the gains made in 2016 have proven shortlived. And while we have come far from the market’s cold winter bottom in February, the real test of its resiliency—and ours—won’t come before the new year.