The price of oil has dropped by more than $20 in recent months and is at its lowest in more than a year. The price for West Texas Intermediate when the markets opened Monday was just above the $50 USD mark.
“It’s costing the government lost billions in royalty revenue and taxes,” said Dan Cugnet, Chair of Valleyview Petroleums Ltd. “Definitely hurting companies, but the lost revenue is a significant portion of federal and provincial budgets, which is what pays for the civil service, schools, teachers, hospitals, nurses and highways.”
“If you’re not willing to do that in any of these, then anyone in these sectors shouldn’t complain and might as well accept that you’re probably not getting a raise in the next five to ten years or any significant infrastructure built in your community,” he said.
To bring it closer to home, this means fewer jobs and less money for existing companies.
“Which means less sponsorship dollars, support for arts and culture, less money spent in the community with all people suffering,” Cugnet explained. “It means less advertising dollars spent if businesses aren’t strong and vibrant.”
“It affects everyone whether they think it does or not. All people, all sectors, all families,” he added.
It’s not a rosy picture, said Cugnet. The losses right now total $50-$100 million per day depending on the differential day-to-day.
“Think of what $50 million a day could do in this country,” he said. “A community like Weyburn would have a hospital paid for. An indigenous community in the North could probably use an extra $50 million for their infrastructure. I know plenty of highways in Sask that a $50 million dollar injection would be great for.”
“The Feds are costing us all that money a day,” said Cugnet. “It is unforgivable in my mind.”
Cugnet said if anyone wonders why they’re not making more money or getting raises more often in the oil sector, they should send a letter to the Federal Liberal Party or the Prime Minister’s Office demanding that pipeline construction commence.
In terms of reasons for the decline, experts are pointing to a myriad of factors. They are citing an oversupply issue in the United States, along with lowered demand from China, as being a key factor. Additionally, U.S. president Donald Trump has been calling for even lower prices of oil in recent weeks.
There could be light at the end of the tunnel, however. While some analysts are predicting the price could drop even closer to $40 USD a barrel, or possibly below the threshold, there are many who are calling for West Texas Intermediate to rebound in 2019, with the price averaging out to roughly $65. How this will impact Weyburn, and southeast Saskatchewan remains to be seen.