Why gas prices could fuel Canadian economic downturn

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The price of gas is at its lowest since April 2009.

Prices dropped another 2 cents a litre overnight to an average of 87.9 cents in the GTA. That follows a slide in world oil prices from more than $100 dollars a barrel in June, to less than $46.

That’s having an impact on Alberta’s entire oil industry. Marvin Ryder of the DeGroote School of Business spoke to CHCH with his take on the impact.

“Why is this a bad thing? I know consumers think this is a great thing. It’s about the companies out there. No one cries big crocodile tears for petroleum companies. But this has been such a dramatic shift in such a short period of time that the logical response as you’re suggesting is layoffs. And it’s not just Suncor: Shell has announced, Conoco Phillips have announced. Every major oil exploration and production company has announced layoffs.”

“Another company that has, is a company called Sivio. You’ve never heard of them but they provide temporary housing for employees in places like Fort McMurray. They’re saying given these layoffs those people are going to move away.”

“We’re laying off a thousand people who provide a service to them. The day of those great Tim Hortons jobs where people got paid $1,000 if they stayed for 6 weeks and got paid $20 an hour just to shovel coffee, those days are gone.”

“Alberta’s really facing a real bust if you will in their economy this year. Not necessarily quite as bad for us but expect to hear more of this for the first half of the year.”

Alberta premier Jim Prentice says sliding oil prices will lead to a $6 or $7 billion budget shortfall in the next year for the province and then another five billion a year over the next two years.

Additional video: Marvin Ryder of the DeGroote School of Business joins Annette Hamm on News Now Midday to discuss the implications of lower oil prices.

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