It wasn’t supposed to happen like this. In the months and years immediately after the end of the Great Recession, Canada’s economy was the envy of the world. Our banks were safer. Our house prices were higher (and rising!). Global investors couldn’t get enough of Canadian stocks. And people were lined up at Canadian job fairs across Europe and the U.S., hoping for a chance to come and experience Canada’s economic exceptionalism for themselves. Good times.
Good times, it’s now clear, that were too good to last. The speed with which the cracks in Canada’s economy have spread and broken apart is remarkable. Economists have been left scrambling to downgrade their forecasts for GDP growth, the job market has showed troubling signs of deterioration, and exports have continued to slide. When the Bank of Canada cut its overnight lending rate by 25 basis points to 0.75 per cent last week, a move that stunned markets, it was a tacit admission of how bad the outlook for Canada’s economy has become.
There are many reasons why this is happening now, but the key factor that has set everything else in motion is the stunning 60 per cent plunge in the price of oil in just seven months. The oil crash is—to borrow a phrase from Bank of Canada governor Stephen Poloz, which may become a signature of his tenure—“unambiguously negative” for the Canadian economy.
True, there are benefits for certain segments of the economy. Ontario exports are smiling, as are drivers at the gas pumps. But oil’s wild ride has exposed fissures that have been deepening for years, such as Canada’s overreliance on household debt and real estate for growth, as well as imbalances in trade and the labour market.
The factors driving down the price of oil are complex, as are the repercussions, some of which are being felt now. Some may only take recognizable shape years from now.
Because there really is no beginning or end to a story like oil, we have taken a different approach to telling it here. Starting below you will find an A to Z encyclopedia of the oil crash and what it means to the economy—from real estate, the job market and stocks to government finances and the 2015 federal election.
We explore the root causes of the oil collapse, including booming U.S. shale production and Saudi Arabia’s decision to sell cheap oil rather than slash its output. There are stories of real people who have headed west for a better life, and the apprehension they now face about their future. And there’s analysis of key turning points in the development of the oil sands, crucial to understanding what is unfolding in Alberta. Because Alberta’s oil—the world’s third-largest crude reserve—is what sets it apart within Canada. And it makes the province the only place to start this alphabetized survey. Read through from A to Z to discover why Alberta’s fear must now be Canada’s, too.
A is for Alberta, Ali Al-Naimi
B is for: Bakken, banks, barrels, bitumen, boom, Brent crude
C is for: Costs, carbon, celebrity commentary