Winter of discontent
Doyle is even more inflammatory in 2016
In the first month of the year, I tend to make controversial forecasts on what may happen over the ensuing 12 months. Last year I made a few wild suggestions, including oil at under $45 per barrel; fairly ridiculous at the time.
Let me be even more inflammatory in 2016. I see nothing to prevent oil from plunging toward $20 per barrel; prices inconceivable since 2001. This is largely driven by factors that can no longer be controlled as the entire market mechanics are in disarray.
As the oil industry regains its collective footing, the impacts will be: dislocation and business exits from the gasoline retail market, shale industry and exploration in the US collapse, the Canadian dollar pushed to below 60 cents and profound complications to provincial government’s budgeting - including PEI’s.
The unintended consequences of the publics’ attention to oil pricing will result in increased disruption and alternate technology adoption. This is already occurring and within the next twelve months a number of viable auto manufacturers will unveil affordable non-combustion engines; including Renault/ Nissan, Tesla, Google, Apple. This quiet disruption will undermine the entire auto ecosystem from retailers to gasoline distribution to service centers.
The changes in energy pricing will have structural consequences here at home on PEI. We can expect social upheaval in family composition; a slowing economy will greatly pronounce addiction issues and crimes of desperation, increasing food costs will reduce discretionary spending and rationalize many local businesses, and a lack of significant construction projects will challenge trades and spin off investment.
From challenge is spawn opportunity, and I remain excited about the opportunities created in the aftermath of the present meltdown. From a pending stock market correction, (I suspect we are only seeing initial ripples of a bigger fundamental market slide), to new industries and displacement in traditional sectors. The next several years will be the period of entrepreneurship enlightenment.
If you are seeking employment, you will need to reinvent your skills or adapt to entrepreneurial opportunities. The PEI labour market will not align well to a new economy. Critical to diversifying our economy will be the attraction of new residents with different experiences and skills, as well as the capital and acumen to take risks transforming to a new economy. There is little to suggest the Canadian dollar will rebound anywhere close to the US economy, this will recreate the environment for export development, for those positioned to take advantage of the dollar discount.
2016 will be the year of disruption and opportunity. A period I have been waiting for and we will have several years to adapt to new and unimagined opportunities.