Oil Gains Spur Growth In Canada’s Oil Cities

A modest rebound in oil and gas prices in international markets has given Calgary and Alberta the distinction of being the fastest growing metropolitan areas in Canada this year, according to a report by The Conference Board of Canada carried by Markets Insider

"The worst appears to be over for Calgary and Edmonton. Alberta's economy has been getting stronger thanks to a rebound in drilling and increases in oil production, which has helped to fuel renewed economic growth in the province's largest cities," said Alan Arcand, associate director for the Centre for Municipal Studies at the Conference Board of Canada. "But with oil prices struggling to rise above $50 per barrel, Edmonton and Calgary should expect to see more moderate growth in 2018."

Calgary will grow by 4.6 percent this year, but the jumpstart will slow to 2.1 percent by 2018. Similarly, Edmonton’s economy will expand by 3.9 percent in 2017, before slowing to a 2.2 percent pace by next year, the report says.

Canada is not a member of the Organization of Petroleum Exporting Countries (OPEC), an industry cartel that is attempting to offload an international glut of oil supplies by synchronizing output cuts. The United States, China, and other major producers are not a part of the deal either.

Non-OPEC Russia, a former rival of Saudi Arabia and OPEC, lent the bloc a hand by authorizing 300,000 in output cuts to further the 1.2 million in production reductions by member countries.

Related: Is The Aramco IPO On The Brink Of Collapse?

Canada and the United States have increased production from shale wells and rigs over the course of the year, counteracting the intended effects of the OPEC agreement.

Canadian pipeline company TransCanada announced last week that it would scrap its plans to build a 2,800-mile major pipeline that would traverse nearly the entire country, closing off a crucial potential export route for the nation’s oil sands. The $15 billion Energy East pipeline would have carried 1.1 million barrels of oil per day from Alberta to Canada’s eastern coast for refining and export, but the pipeline company shelved the project in light of the heightened environmental scrutiny.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:

• Oil Fundamentals Overturn Geopolitical Risk
• Major Energy Importer Bets $10 Billion On Natural Gas
• Goldman: U.S.-Iran Standoff Is A Long-Term Threat To Oil Supply