Unlike the rest of central Alberta, Ponoka year to date sales are up compared to last year. Sales across central Alberta started out slow but rising oil prices to just over US$50 per barrel for West Texas Crude in the spring gave consumer confidence and we experienced a busy spring market. When the price of oil recently dropped below US$50 on its way to the current level around $42, consumer confidence was affected and will likely show up in August’s sales results. Inventories levels in Ponoka are about where they were a year ago and are high enough to favour buyers.
The good news for central alberta is, the light at the end of the tunnel is still on. An August 3rd article in the Financial Post quotes Martin King, vice-president of institutional research at First Energy Capital Corp in Calgary. The gist of the article is that large reductions in capital expenditures in the world energy industry will have a direct impact on the long term supply of oil going forward. Since the price of oil is driven by the relationship between supply and demand, lower capital investment means lower production that will lessen supply and bring prices back to a more equitable level.
Their prediction is US$60 average in 2017 and US76.50 through 2019. US$60 currently translates to about $78 Canadian which is likely enough to keep our energy industry working. Alberta will survive this latest downturn just like all the others before it.