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    How does the low cost of oil impact Alberta’s economy?

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    Alberta’s energy resources are the backbone of the province’s economy, with oil and gas making up the majority of its energy production.

    So, when oil and gas prices are high, the economy grows and more jobs are created. However, when oil and gas prices suddenly fall, the economy shrinks and jobs disappear...

    So, when oil and gas prices are high, the economy grows and more jobs are created. However, when oil and gas prices suddenly fall, the economy shrinks and jobs disappear.

    Alberta has lost about 35,000 energy jobs since the price of oil fell dramatically in mid-2014. When oil and gas prices are high, Alberta’s energy producers pay a lot of money for machines, manpower and technology to get as much of the resources out of the ground as possible to supply the market. A stronger economy also uses more energy than a weaker one, further driving up the need for more resources and raising the costs associated with them. But when oil and gas prices are low, the opposite is true. 

    Due to the higher costs of extracting oil from Alberta’s oil sands regions – Athabasca, Peace River and Cold Lake – when global oil prices are too low, it becomes uneconomical for some projects to produce oil. However, the need for Alberta’s energy never stops and oil and gas production continues albeit at a slower pace, with fewer workers and with tighter profit margins for companies.

    When a downturn like this happens, rather than produce as much oil and gas as possible for the market, energy companies focus instead on developing new technologies designed to produce energy as efficiently and cost-effectively as possible. This has led to a recent shift in the oil and gas industry, away from large-scale extraction projects – such as oil sands mines – and toward lower-cost, higher-efficiency projects like steam-assisted gravity drainage in the oil sands and horizontal drilling in Alberta’s gas fields.

    Source:

    albertacanada.com

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