After nearly two years of sliding oil prices and skepticism about the short-term future of the industry, people in the energy sector finally have reason for hope.
The price of oil surpassed $50 per barrel earlier this month for the first time in 2016, giving some measure of optimism that the struggles of the past two years might finally be over.
And while the price eventually retreated back to below $50 within a few days, it was still much better than the $27 per barrel price that we saw early this year.
We have already started to see some positive results from the price increase, as there have been a few drilling rigs in the southeast. It’s not going to conjure up flashbacks to the days of 2008 or 2011, but the activity is a step in the right direction.
And there are signs of investor confidence in the oil patch once again.
At the same time, we can’t be giddy with the developments of the last few weeks. There is still a long way to go in the recovery.
Nobody is predicting a continued surge in the price of oil. It might have already reached its short-term plateau point; if it hasn’t, it will likely reach that point soon.
A plateau of $50 per barrel is a lot better than the bottom-out point we witnessed during the winter, but we will need the price of oil to be a lot higher if the southeast oil patch is to thrive.
There is also the lingering issue of transporting the oil to market. We need the Energy East Pipeline to proceed. Saskatchewan Premier Brad Wall was in eastern Canada this week, promoting Energy East’s benefits to the governments in Ontario, Quebec and New Brunswick.
We need the leaders in these provinces to understand that if Energy East proceeds, they stand to benefit. A healthy, robust energy sector is in the best interest of everyone in Canada, and not just the people of B.C., Alberta, Saskatchewan and western Manitoba.
If Canadian oil is able to reach more markets, then the glut of oil in pipelines will diminish, oil companies will get a better price for their oil, and governments will reap more revenues from resources. It’s a win for everyone.
Instead, Saskatchewan’s premier has to venture off to eastern Canada to explain all of this to people who seemingly don’t understand the first thing about the energy sector.
The last two years have not been kind to the energy sector in North America. The industry has faced repeated challenges. They have adjusted, endured and suffered during a price plunge. People have lost their jobs, and companies have closed.
But the industry is still standing. And while they’re a long way off from the glory days, at least they have some reasons for hope.
