Grim.
That’s a very apt word for how things are going in the oilpatch these days. From the guy who got shafted on his last paycheque because his employer shut down, to the macro-level with thousands of out of jobs, things are looking grim in the oilpatch these days.
I have lost track of how many businesses I have spoken to who have laid off more than half of their staff from peak levels 18 months ago. One man I spoke to last week in Oxbow had 30 people on his payroll in April 2015. He’s down to eight now.
Another man I first met five years ago is in the process of shutting down the Derrick Motor Hotel in Estevan. The hotel, and more significantly, its bar, have long been a fixture in the community. On February 13, 23 people will be out of a job.
The impact is being felt across the country. Of those 22 let go in Oxbow, eight or so were from Eastern Canada. They’ve all gone home now, pink slips in hand.
Before Christmas I spoke to two large trucking companies which had both taken part in the Service Canada Workshare program. But that program only lasts about three-quarters of a year, and have now run out. It kept a lot of their workers on payroll to that point. I don’t know what has taken place since, but I doubt it’s happy news.
The National Post just ran a story about Alberta oilfield workers saying, “I’m done” and looking for other work.
For most of my career as editor of Pipeline News there have been two common threads in almost every story: the shortage of housing, and the shortage of workers. The worker shortage was directly tied to the lack of someplace to stay.
During that time, Estevan built a Motel 6, Best Western, Microtel, ATCO Lodge, Civeo Lodge, Suburban Extended Stay Hotel and Western Star Signature Hotel. The foundation for a Holiday Inn had also been poured, but wisely, has not been built.
Driving past all these hotels now, most of the parking lots are nearly empty in the evenings ,save the newest one – Western Star.
There is no shortage of rentals on the market now. I saw a Global News SUV in town the other day. Their subsequent piece, available on their website, was well done. Let’s just say you can have your pick of apartments these days.
The impacts are going to be felt in the broader economy. We have a provincial election coming up. I wonder if government union contracts, some of which are long overdue, will become an issue. I foresee a period of zero, zero and one per cent salary increases for these workers, some of whom might regret having taken their time in getting a contract signed.
Oil and gas used to account for $1.9 billion of the provincial budget, roughly 40ish per cent of the total expenditures on health in a year. How much revenue do you think they’re going to be getting for royalties on heavy oil, when the effective price is floating around $13 a barrel? Not very much. No party is going to be able to promise much unless it wants to go heavily into deficit and debt, and we don’t want that.
If you haven’t felt the impact of $28 oil yet, trust me, you will.
