I recall during the first year of my history degree circa 1996 that there were 5 main areas of history. A few chuckled as the teaching assistant wrote the acronym S.P.E.R.M. on the board. Along with the subject of my first undergraduate paper of my degree, this is one of the few things I recall from back then with any degree of clarity. "S" for Social, "P" for Political, "E" for Economic, "R" for Religious and "M" for Military. I'd have to say my strongest areas were political and military. Indeed that first paper I wrote, on the Spanish Armada of 1588, proved to be a good indicator of my future focus on things political and military. Social history for me wasn't much of an interest but as it turned out, it grew on me and if I can tot my own horn, one of my best papers was a social history senior undergrad course. I don't recall the exact thesis but it focused on the concept of the extended family units (zadrugi) of what is now part modern Serbia. Religious history came up when it melded in to political or social aspects of a given topic I happened to be reading up on. So now that brings us to the last area of history, economic.
Economic history was never really a focus for me. Other than a reference to the Great Depression or a paragraph or two on why, say Nazi Germany only fell further and further behind the Allies in the Second World War, this wasn't an area I felt comfortable delving in to with any degree of comfort or knowledge. In my defense, hey....there are FIVE main area here. I suppose I can only focus on so many of them. I do find myself wishing I had taken at least one economics course but c'est la vie.
I bring this trip down memory lane up as a segue into our present situation here with the price of oil taking a bit of a beating. I've had a few people ask me how I'm doing, what I think will happen and so forth but I must admit I'm not an expert. I can however, by way of compensation relate what I've found out so far and how this has effected me.
This is my first big downturn here. I missed the first big drop in 2008 when I was living in Nunavut. I have to say that compared to Nunavut, I thought prices here were pretty reasonable on most goods. I'm not a big consumer of "stuff" but it wasn't until I started hearing other people comment about high prices here and I had been to Edmonton a few times that I began to realize this. I DID know that houses were expensive here and have to laugh when I recall a radio spot I heard when I first moved here for some town homes...."Affordable family housing starting at 469K". Granted, I did check out one of these units and they ARE nice. I suppose the "affordable" part is in the eye of the beholder. That was almost 5 years ago now. Oil was recovering from its 2008 drop with market prices rising those prices actually don't look as insane now. Ah, perspective.
So anyway, I did buy a house here eventually. A first time home owner and it happens to be in the Fort McMurray market. I'm not sure how many people fit in to that category but we must be a select group I would think. No, I'm not rich. I don't have a pool of bitumen lying under my house that I can tap in to (and I wouldn't own it any way even if there was one). I'm a market's worst nightmare and I think that's helped. ME at least. I just don't buy a lot of "stuff". I don't really need it.
Anyhow, while I've tended to be good with a budget, it would be nice to have a bit more of an economics background just to navigate my brain through the latest economic turmoil. Lots of people buy houses. I just happened to turn it in to an extreme sport by getting in to one of the craziest markets in the country in a community whose economic base is centred around one commodity But the men with the white coats haven't shown up on my door step so there you go. So far, so good though.
So here is some of the "stuff" that's been floating around in my brain lately. Most of the hard info comes from random conversations with the higher ups at work and other people I know, living either in camp or in town here. Any errors, mistakes or wild delusions are of course, my own. As I site here typing this a barrel of West Texas Intermediate sits at $48.69US/barrel. It costs Suncor, where I work, a little over $37 to produce a barrel of oil. I can't recall the amount exactly but have been told it lies between $37-$38. Obviously, they aren't making as much if it were over $100 as in the past but they can still make a profit. (Checking the price of oil has become more a regular daily habit as of late than collecting the mail.)
Concerning for sure but I'm not in a full on panic. Suncor is big boys in the oil sand game and has been here awhile. I've been told that because of their size and diversity they are in a much better position to withstand the beating oil is taking than some of the smaller players on both sides of the border. Suncor here produces a lot of diesel here as well (it isn't just ALL oil) and the fact that it supplies other sites with diesel for all their heavy equipment along with the high price of diesel, means that they can, to a certain extent, make up a bit for short falls in oil. As for how long this will go on for........no idea. I know OPEC wants to squeeze out the smaller players and no doubt some will be feeling the pinch. Of course we aren't impervious to world events here but perhaps are in a better position than most to weather the storm.
So that in a nutshell is my view of the big picture (such as it is). In Part II, I'll comment more on how how this impacts me on a everyday level.