Photo by Suncor Energy
“Political instability in Africa has brought Alberta’s oil and gas industry roaring back to pre-recession levels,” experts say.The price of oil instantly started to move to values around $100 US a barrel, in contrast to its slow increase through recent months. Many energy companies increased their output to meet the growing demand, which was confirmed by analysts with BMO Capital Markets.
There is a possibility that the approximately $105 oil price that we experienced on Friday is not sustainable: “There’s a ‘fear premium’ or geo-political premium built into that price, but we don’t foresee dropping down to the level where these projects don’t make sense,” said Mike Mazar, analyst with BMO Capital Markets.
The effect on the wider Canadian economy is going to be positive as well. Progress is expected in employment, housing and consumer spending as a result of this development.
However, some problems might arise in terms of meeting the radically increased demand, which “ramped up so quickly in the winter that most of the industry is struggling with having enough people and struggling to put all the rigs that we want into the field,” according to Ken Mullen, president and CEO of Savanna Energy Services Corp., a Calgary-based oil and gas drilling company.