We’ve been dangerously smug.
Our American friends are buried in debt, our European allies are gasping for financial air.
Cash-rich China, still buying up our oil industry without blinking an eye, is facing an economic slowdown.
Our cousins down east are finding jobs harder and harder to come by.
But we Albertans have laughed off economic hardship.
We have been immune to the world-wide economic misery of the past four years.
Thanks to our beautiful, sticky, bullet-proof oil.
Oil pouring out of the oilsands, oil miraculously flowing from once-dry oil wells thanks to new technology.
While everything else seemed to fall in value these past few years, oil held up.
Oil, refined into gasoline and diesel, remained the world's energy of choice for transportation.
Oil has stayed on either side of $100 a barrel for several years now.
Brace yourselves.
The party, muted as it is, may soon be over.
Oil has dropped recently from that $100 benchmark down to its latest price of $88, after falling under $80 at the end of June.
Hundreds of energy analysts, using mountains of data, are issuing contradictory conclusions about the price of oil over the next few years.
Forecasting is never easy. Particularly when it’s about the future.
But let’s use a little common sense.
There’s a monster recession out there. When times are tough, human beings slow down spending and consumption.
Despite steady world population growth, despite the emerging global middle-class, global demand for oil is barely holding its own.
Oil prices have been decent, so world-wide exploration is on a tear. Practically every week, new discoveries have been announced, in Africa, off-shore around the world, even in our own Northwest Territories.
New technology is breathing life into old wells, new technology is cleaning up the pollution and CO2 emissions that once vilified fossil fuels.
In the USA, demand is flat to declining, while the supply is dramatically growing thanks to oil-extraction innovation.
The International Energy Association's 2011 World Energy Outlook isn't bullish in its long-term predictions. It says oil demand will only grow by 14%, to 99 million barrels a day by 2035, thanks to competition from other energy sources and conservation measures.
The supply of oil is dramatically growing. Demand is lagging.
Another reputable world oil supply study entitled Oil: The Next Revolution, suggests the world will have a major oil glut by 2020.
We’re already seeing the signs of production exceeding demand.
Oil company CEOs in Calgary are sweating bullets over decisions that must be made now, but could make or lose billions in the future. That’s why they are paid the big bucks.
Suncor has already announced the likelihood of a slowdown in its oil sand expansion schedule.
The oilpatch slows down, Alberta slows down.
The Alberta government might find itself a few billion short due to energy royalties. Dreams of budgetary surpluses by 2014 may go down the tubes. Austerity and deficits may be the order of the day.
Maybe it won’t be so bad.
Leading Canadian energy economist Peter Tertzakian of ARC Financial figures North American oil prices will stabilize in the $80 to $90 a barrel zone, where, with financial discipline, Alberta energy companies can still turn a reasonable profit without the price spikes that lead to a build-at-all-costs mentality.
Finance Minister Doug Horner reminds us of last year’s scenario. “At the end of the first quarter, the (year-end) deficit was projected out at $1.3 billion. By the second quarter, oil prices dipped and the projected deficit shot up to $3.25 billion. By the third quarter, prices had recovered and the deficit was going to be $1.3 billion. By the end of the (fiscal) year, the actual deficit was $21 million.”
But maybe it will be a shocker.
Horner has memories of $35 oil in the past; empty hotels, anxious banks, unions turning to government, unsellable houses and the growing jobless. “Truly it’s a domino effect,” he says.
So, even though oil gets “greener” by the day, even though the world has more reserves than ever imagined, even though its value as the lowest-cost transportation fuel is undisputed, demand for the stuff could drop to a point where our economy, our wonderful standard of living, begins to seriously falter.
Quite possibly in this calendar year.