Renewed optimism as price of oil reaches four year high, fuel prices expected to follow suit

Big boost for Alberta’s energy sector Ina Sidhu gathers reaction after the West Texas Intermediate price of oil surpassed the $70 US mark.

As the West Texas Intermediate (WTI) eclipsed the $70 US mark for the first time since late 2014, experts in Alberta say the higher price of oil is great for the economy but will likely translate to higher prices for motorists.

“The higher oil price will help our energy producers and our provincial government and our economy so, overall, that’s a positive,” said Todd Hirsch, “On the downside, it probably will translate into a little higher prices at the fuel pump.”

“Moving into holiday season, travel season, it will take more out of the pocket books of consumers and motorists.”

The WTI closed at $70.73 US on Monday.

The price jump has been attributed to a number of geopolitical factors including Venezuela’s drop in oil production and the United States’ decision on whether the current sanctions on Iran will be renewed.

“The market is really focused on Iran,” said Joe McMonigle of Hedgeye Risk Management in Washington, D.C. “This is where we’ve seen the recent bump in prices but they are both equally important.

Hirsch says WTI’s four-year-high expands the price variance with Western Canadian Select (WCS) and he attributes the disparity, a nearly $16 US difference as of Monday, to Canada’s landlocked supply.

“This has been brewing for some time and it all comes down to pipeline capacity especially our inability to get oil to tide water,” said Hirsch, referencing the lack of progress with the Trans Mountain pipeline expansion. “The sooner we can get it to tide water, the quicker we can narrow up that differential.”

“I think the implications for Alberta’s energy sector are quite dire but it’s bigger than that. This is a Canadian problem. It’s not restricted just to Alberta and our energy sector.”

Hirsch refers to the WTI’s current price as ‘a little overdone at the moment’ and his forecast for its price for 2018 was closer to $60 or $62. He adds he would not be surprised if the price returned to the $55 or $60 range given the volatile market.

Recruiters in Calgary say they have seen gradual growth over the last few months in the energy secrot and companies are hiring.

“We do know because of the current price, at its level, a lot of oil and gas producers are in the profitability zone,” explained Chris Massie of About Staffing. “That spills over to other companies who service them and they require additional staff, temporary or permanent basis, to support the increase of work that’s coming available.”

Massie says there is reason for optimism for those looking for work. “Now would be a good time to start getting the resume back together, start looking for job postings to apply to and you'll have a better experience than you did in 2014 because people are looking at your resume and calling you back for an interview.”

With files from CTV’s Ina Sidhu