The notion that Saskatchewan's eight-year boom may be coming to end is a disturbing to people who have faced all too many economic ups and downs.
But before we start dwelling on this too much, let us take into account a couple things:
We can't say for certain that our run of economic good fortunate is over and it may be a little while before we can, and;
Even if it is over, we should remember that we've survived worst downturns. In fact, the new mantra in next-year country might very well be that these are short-term blips for a province whose natural resources are so vast and valued that we won't be down for long.
To suspect that we have stepped into Saskatchewan's latest economic quagmire requires us to look past a few signs that suggest the economy is still strong. We seem headed for a bumper crop in many parts of the province that should be in the bins long before fall frosts and rains, always one of the first key indicators of good economic fortune in Saskatchewan.
And job creation, construction activity and population growth also suggest this is a province that continues to benefit from its prosperity.
That said, critical numbers that dictate how well our budget is doing suggest we aren't doing very well.
The first-quarter report for the 2012-13 budget offered the foreboding news of a quarter-billion-dollar drop in resource revenues, largely driven by falling oil revenue ($159 million less) and oil/gas land sales ($92-million less).
While one might think falling oil prices are temporary economic glitch somewhat dictated by world economic conditions, far more unnerving is the news that Rio de Janeiro-based mining company Vale SA is postponing a $3-billion potash project near Kronau.
Economic Development Minister Bill Boyd downplayed this as "one company with some challenges" and that the overall potash industry has a rosy future. There is some credence to this explanation.
The industry magazine, Potash and Phosphate acknowledges the Vale postponement and the PotashCorp's temporary halting of production at Lanigan will not great in the short-term. But when it comes to the medium- and long-term prospects for potash, things continue to look rather rosy.
For example, even the recent drought in United States means an increase in prices. In turn, farmers will want to take advantage of these high prices next spring by growing as much crop as they can. That will result in even more potash sales next year.
Of course, such notions are often better in theory than they in practically. This is the lesson we should have learned from 2009 when the previous year's economic boom was supposed to have resulted in skyrocketing prices. Angered by the prospects of North American companies gouging them, the Chinese simply stopped buying Canadian potash. And now China is more aggressively looking for its own source of potash.
But with an ever-growing middle class in China and India there are more people who can pay for quality western food, requiring more Saskatchewan potash to feed them. Coupled with the likelihood that the world will want our oil and gas in the future, things still look pretty good for Saskatchewan's two economic drivers in the coming years.
So is Saskatchewan's great, eight-year boom really over? Yes? No? Maybe, but it could also just be a one-year blip. Certainly, we do have newfound budget problems largely revolving around lower oil prices and less potash development/production than anticipated. But what also seems obvious is that long-term demand for Saskatchewan oil and potash will mean any economic downturn shouldn't last for long. Even if his boom may be over a new one might be right around the corner.
