As hurricane after hurricane slams through the southern States and Central America, many Saskatchewanites are taking a moment to be thankful that the worst weather we deal with is bone chilling blizzards and the odd tornado here and there. That said however, although it doesn't affect us in any life or lifestyle threatening way like it does to those being repeatedly hammered by the storms, a hurricane does have a small affect on the southeastern corner of our province.
Gas prices in the the region jumped, as refineries were knocked out of commission by Harvey and supply routes and methods were cut off. Now, the last few days have seen said prices begin a decline once again as the recovery and restoration begins. However, Warren Waldegger of Fire Sky Energy believes that the overall effect of the severe weather may end up being insignificant for our portion of the world.
"I don't know that we've seen a lot of impact, and time will tell with some of that. You've probably seen the change of the price at the pump, and some of the gasoline movements more than oil movements."
"We are seeing some increased inventories in the United States, and I think that a lot of that is just due to Gulf coast traffic. They haven't been able to move crude in the normal course of business down there with all the hurricanes. It'll take a few weeks, or months maybe, to even sort that out and get it moving normally."
As for the oil sector itself in the southeast, Waldegger noted that the Can-U.S dollar exchange has had an effect, in addition to hesitancy from companies to reach out and invest.
That said, what would it take for the industry to pick up, dust itself off and start moving?
"Producers are trying to live with thin cash flow, and that's a big change from where it was a few years ago. It's going to take new investor dollars, basically investor and banking confidence in the industry, and that probably just comes with pricing."
"The further we get away from the January and February of 2016, when oil was down around 30 dollars per barrel, I think the better off the industry is," Waldegger said.
"We're still at a place where the industry is trying to survive, it's not thriving. So pricing is probably the only thing that will help that."
Looking back at the past few months, Waldegger observed that the sector's lot has not improved, nor has it gotten much worse.
"50 dollars is a bit of a psychological barrier, so it feels good that we're sort of flirting with that range right now. However, a year ago at 45 dollars a barrel and a 75 cent dollar, you were probably bringing in as much cash flow as you are today at 50."
Gazing ahead at the next few months, he noted that, "the crystal ball has been a bit foggy for the past few years."
"It's hard to tell. The inventories have come down in the States, and that's something that investors look at. With OPEC sitting at the table, discussing and prolonging cuts, that's a positive that had left the industry for awhile. Those things are starting to have an impact, and I think we are starting to see a little more of a bullish outlook in terms of where we could be in the next year or so.
"Therese' nobody suggesting that there will be massive changes, but we're hoping to stay with a little bit of a positive trend here and stay within the 50's. I think, psychologically, its a better place for the industry.