The price of oil has been steadily declining since the end of the summer. As the Organization of the Petroleum Exporting Countries (OPEC) watches the price freefall, Albertans are left wondering what this means for our families. We're all hoping for the best. However, we should be aware of the risks we face and budget responsibly.
The price of oil has been steadily declining since the end of the summer.
As the Organization of the Petroleum Exporting Countries (OPEC) watches the price freefall, Albertans are left wondering what this means for our families. We're all hoping for the best. However, we should be aware of the risks we face and budget responsibly.
Almost all of Cochrane's major projects depend on money from the province. One fifth of the provincial budget comes from oil royalties. At the end of the day, Cochrane's budget is tied to oil exports. If the price of oil doesn't rebound, Cochrane's 10-Year Financial Plan is going to suffer.
When council approved the $45 million aquatic/curling facility, it was done under the assumption that Cochrane and its operating budget would boom for years to come. If we continue to plan under this assumption, we are bound to find ourselves in over our heads. It is never wise to plan expenditures on overly optimistic projections. With the new realities of the international oil market, we shouldn't need a crystal ball to see potential risks.
If OPEC decides to take action, the price of oil may bounce back above $100 a barrel soon. But there is a lesson to be learned: our economy isn't invincible. In fact, our economy is extremely volatile. Our budgets are largely dependent on decisions made by foreign dictators controlling oil prices. If things turn sour in Alberta, it won't be a new story. Our province has been here before. In the late 1970s, Alberta was booming. In just a few short years, politics in Ottawa and the Middle East changed everything, and the province crashed. We must realize it could happen again. Just as winter follows summer, economic booms are always followed by economic downturns.
As Cochrane moves forward, we must tread cautiously. I am confident that Alberta and Cochrane will muster through this slump. We shouldn't worry, but we should be prudent. In the coming years when the mayor and council start discussing things like a community cultural centre, local transit and renewable energy, we must be conservative about our financial assumptions.
If this isn't Alberta's reality check, history can assure us that one will come eventually.
