oil price drop, coming cutbacks, Fort MacMurray

The recent oil price drop has many thinking about the coming cutbacks in Fort MacMurray, an oil boom town in Alberta, Canada. Past downturns in oil prices have caused problems in the area, but the city has continued to grow at a rapid pace. This time around a number of analysts are predicting that the oil price drop is not temporary though, and prices may stay depressed for some time to come. Most of the roughly 75,000 people who reside in and near Fort MacMurray depend on the nearby oilsands and the energy industry for employment. It costs more to produce oil from the oilsands than more traditional methods, so the drop in prices has a higher impact. This is also true for shadow workers, a population of around 60,000 who live and work in camps in the area.

It could take several months for the full effect of the oil price drop and coming cutbacks to be seen in Fort MacMurray because many of the employees are contract workers who move from one project to the next. Some are already starting to feel the chill of coming cutbacks. Shane Boersma, manager of the Driving Force which supplies trucks on a lease basis to those in the energy industry, told the media “I can’t say business as usual. We haven’t had so much a lot of returns of vehicles from our current customers but we’re seeing that there aren’t as many orders put in as you would normally see.” Wood Buffalo Brewing Company Steven Sachse said “We notice it in terms of our sales right now. There’s not as many business meetings happening. The biggest fear right now is how long it’s going to last. We can definitely weather the storm. We go down to business basics and ensure our costs don’t exceed our revenues.”