Written by: Aymen Sherwani – Grade 10
“2015 is going to be even better than 2014!” Oh, how completely and utterly wrong were we! In light of the New Year, Canada has been facing very rough economic downturn, rumors of an impending recession becoming the talk amongst everyone lately. Thousands of Canadian citizens are now unemployed due to the fact that budget cuts are made within the oil sands projects as Saudi Arabia lowers oil prices down to $45/barrel for benchmark crude.
Just last week, Suncor had let go over 1000 employees, cutting over $1 billion in spending. However, if you think that’s extreme, oil sands extraction in Fort McMurray has also been slowed down by 9.03%, 2000 workers being sent home. Even Schlumberger, the world’s largest oil service company, has laid off over 9,000 Canadians to subsidize manufacturing costs to compete against the Saudis.
But is Canada the only nation suffering under the hands of this sudden Saudi Arabian power play? On the contrary. Almost ― no, all oil producing nations, such as Algeria, Russia, Venezuela and Nigeria, are suffering economically since the Arabs offered this irresistible deal. Speaking of Russia, which was a previous supplier of oil to the European Union, has had the ruble drop over 40% recently, as the South Stream pipeline project was terminated, partially due to the Crimean conflict. Now, as the majority of the EU purchases inexpensive, yet clean, oil from Saudi Arabia, Russia’s economy is in shambles.
However, who can really blame the Arabs for taking away thousands of jobs, slowly bringing nations’ currencies to their knees, and making politicians across the globe depressed? (Hint: Everyone) Regardless of their brutal degree of self-interest, I believe Saudi Arabia chose to lower oil prices at the perfect time, not only taking the US, which used to buy oil from Alberta in gargantuan amounts, but also the EU with full force. In reality, the oil in the Middle East is cleaner and easier to extract in terms of environmental friendliness, unlike Alberta where we are less environmentally friendly and invest more to clean and extract oil sands.
“Going forward, the province is certain to suffer, especially on the employment front, from the drop in oil prices — and it is likely to slip into recession,” Daniel Fields, an economist at the not-for-profit research organization, said in a recent report. Our premier has also advised the province of Alberta to spend on tight budgets, and prepare for the worst of what’s to come. Will this be the death of Alberta’s only major industry, or will this recession go away quicker than we expected?
Many Canadians, along with myself, are wondering when the luck of Saudi Arabia will run out. When will the oil they are selling in tripling amounts every day deplete? Economists predict if the demand for Arabian oil continues at this rate, the oil wells may run dry in a few decades. However, if that happens, we, as global consumers in the oil industry would need to find a new source to power… basically everything. In attempt to get out of the power play which Saudi Arabia has put the western world in, scientists are working towards technology less dependent on oil, such as the solar powered car.
Things may look grim now, but unless scientists discover solutions to our oil dependency, the western world’s economic prosperity will fall.