Alberta businesses see silver lining as oil prices rise and sun shines on the Stampede
As the lights went out and the music started blasting at Calgary’s Home and Away sports bar last weekend, owner James Martin felt something he hadn’t felt for a long time: the hope.
The bar was maybe 60 to 70 percent full, nothing to do with the pre-pandemic days when a big game or corporate Christmas party would result in a full house. But since Alberta lifted all COVID-19 restrictions on July 1, Martin has seen a slow but steady increase in the number of customers.
The July 9 kickoff of the 10-day Calgary Stampede, just a five-minute walk away, provided an extra boost as patrons wearing cowboy boots search for a drink.
“We had a dance floor of people singing songs on Saturday night and it was awesome,” Martin said. “It just made me feel super positive.”
Martin isn’t the only business owner in Alberta to feel a glimmer of light these days, at the end of what has been a long tunnel. Like everywhere else in Canada, Alberta’s business community has spent the past 16 months grappling with COVID-19-related public health restrictions and mandatory shutdown orders.
But in Alberta, the effects of the pandemic were magnified by the collapse in oil prices last year.
Beyond the pandemic
The province’s economy shrank 8.2% in 2020, according to Statistics Canada, making it the hardest-hit province in the country. The recovery has been slow – while the Canadian unemployment rate fell from 8.2% to 7.8% in June, Alberta’s unemployment rate fell from 8.7% to 9.3%.
The province is still short of about 50,000 jobs from where it was at the start of the pandemic.
“It’s been tough for a little while now, and obviously the last year and a half has been even tougher,” said Ben Gerwing, president of the Alberta Boot Company, an iconic Calgary store that specializes in made western boots. in hand and fitted politicians, celebrities. and even royalty.
Gerwing said business has been tough for seven years, since the 2015 oil crash plunged the province into two years of recession. It was easier to sell premium cowboy boots in 2014, when oil was over US $ 100 a barrel and exuberant corporate Stampede parties were the norm.
“If you’re in Calgary, or Alberta for that matter, even if you’re not in the oil and gas industry, you are in the oil and gas industry,” he said.
This is where Gerwing, like Martin, sees signs of hope.
Rising oil prices
It’s not just the rollout of vaccinations and the lifting of public health restrictions that companies are celebrating, or the fact that a mildly moderate version of the Stampede took place this year.
The event, which generated $ 227 million in Calgary in 2019 according to a report by the Conference Board of Canada, was canceled due to COVID-19 in 2020 but is taking place this year with some modifications and about half of attendance. normal.
What companies are also watching is the price of oil, which has taken off as economies around the world reopen and travel begins to pick up.
On Tuesday, the benchmark West Texas Intermediate crude price closed at US $ 75.25 per barrel, down from $ 30 in April 2020 and approaching a high not seen since 2014.
Roger Tang, managing director of Deltastream Energy Corp., a private Calgary-based oil and gas exploration company, said the mood in the oil industry was still cautious, but many companies were starting to ramp up production.
“A lot of people are starting to talk about drilling more wells,” Tang said. “If that happens, well service companies will also benefit – from being in a depressed market for the past seven years and having to lay people off, now looking to hire them back.”
GDP and jobs
A report released earlier this month by CIBC Capital Markets predicted that Alberta will lead the country in economic growth this year, with real GDP growth forecast of 7.9%. That same report predicted the province’s unemployment rate to be 8.5% in 2021, still high from 6.9% in 2019.
Alberta’s energy sector will take time to recover from seven years of cost reductions, and long-term expansion of the sector remains constrained by a continuing shortage of pipeline capacity. It will also take time for small businesses to recover from the devastating impact of COVID-19, but Tang said he believes many of Calgary are feeling sunnier than they have been in some time.
“I think all of these factors coincide,” he said. “Better industry, better economic outlook, Stampede week – which is Calgary’s highlight every year and last year we didn’t have – I think all of these things certainly make a lot of people happy.
At Calaway Park, a family-friendly amusement park on the outskirts of town, morale is high, said general manager Bob Williams.
International visitors are yet to return and the on-site campground is only 60 to 80 percent full, but Williams said visitor spending on everything from concessions to games was up from last year, and he’s optimistic about the future.
“I’ve been saluting the release the last few nights and people are happy. We’re seeing a very different mood this year than it was last year,” said Williams.
“It just seems like there’s a bit more jump in their step this year than what we’ve seen.”