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TuesdayJanuary13201519BridgestoneBlizzakMichelinX-IceNokianR2TIRENORTHLTD.917MacKenzieHwySS22HayRiverNTX0E0R8Callusat867874-2686GREATSAVINGSONALLTIRESTHATHAVEBEENTAKENOFFBRANDNEWTRUCKS-BUTHAVENEVEREVENSEENTHEROADTAKEOFFEHGreatWhiteNorthPlummetingoilpriceputsfutureofAlbertaseconomyoilsandsinquestionPricefreefallholdslittlepromiseforNWTshaleoilboominnearfutureByMEAGANWOHLBERGThefreefallofglobaloilpricesgaveanearlyChristmaspresenttomanyatthepumpsin2014butayear-endcrunchingofthenum-bersisspellingdisasterfortheAlbertaecon-omyoverthenextyear.TheworthofAlbertaseconomiclifebloodhasplummetedsodramaticallyPremierJimPrenticewasforcedtostartofftheNewYearwiththebleakannouncementthattheprovincesprojected1.5-billionsurplusfor2015willactuallyamounttoa500-mil-liondecit.ItsthemostseriousscalcircumstanceweveseeninagenerationinthisprovincehetoldCTVNewslastweek.OilpriceshavebeenplungingsteadilysincelastsummerdroppingfromUS100abar-reltobelowUS50lastweek-thelowestitsbeensinceApril2009.Albertasrelianceonfossilfuelsisasheavyasthecrudeitpumpsfrombelow.Forevery1pricedecreaseperbarreleachyeartheprovincecountsalossof215million.Thoughanalystsexpectthepricetore-boundslowlyoverthecomingyearsPren-ticesteamseesthebudgetremaininginde-cituntilatleast2018.Thelatestnumberscrunchedbeforetheholidayslastmonthplacepriceestimatesforoilat65perbarrelfornextyearsbud-getwhichwouldmeana6.7-billiondropinprojectedrevenuefortheprovince.In2016-17thataveragepriceisforecastedtoriseto75abarrelleavinga4.9-bil-liondecit.Buthopesofreturningtoabalancedbud-getby2018willbedashedifoilpricesremainbelow50abarreloverthelongtermleav-ingtheprovincewithessentiallynooilrev-enuewhichcurrentlyaccountsforaround10billion.Thegravityofthesituationmeansallausterityoptionsarenowonthetableforthealreadybelt-tightenedprovincein-cludingthepossibilityforcorporatetaxincreasesandtheintroductionofapro-vincialsalestax.OilsandsprojectspipelinescouldbedelayedThecollapseinoilpricesishavingseriousimpactsontheoilsandswhererevenueshavedroppedsignallingthepotentialfordelayedorevencancelledprojectsinanareaonceexpectedtotripleingrowthbetween2011and2035ifthedownwardtrendcontinues.Alreadyoilsandsworkersarendingthem-selvesunemployedandanalystsareexpect-ingatleastasmallstepbackforamultitudeofnewandexpansionprojectswhichwillseetheirtimelinestemperedoverthenextfewyearsifpricesremainlow.Thosekindsofdelayscouldhavesigni-cantimplicationsforpipelinediscussionsandsupportindustriesthoughthemostdi-sastrousimpactishadongovernmentroy-altiesandtaxrevenueswherea25percentdropinrevenueequatestoanapproximate50percentdecreaseinroyalties.JustoneyearagoleadersinAlbertawerestillfocusedontheneedtoexporttheirstrandedoilratherthanadiversicationofrevenuesources.Nowitseemstherealtaskaheadwillbetomakethefundamentaleconomicchangesrequiredsothatday-to-dayspendingonprogramsandser-vicesisntchainedtovolatileoilprices.ImplicationsfortheNWTThoughmarkedlylessdependentontheoilindustrythanitsneighbourtothesouthcrashingoilpricesalsocastashadowofun-certaintyontotheNorthwestTerritoriesplansforfutureshaleoildevelopmentintheSahturegion.Despitecelebratingitsrstpost-devolu-tioncallforoilandgasnominationslastfalllittleinteresthasbeengivenfromexplora-tioncompanies.ThetwotopcontendersintheregionCon-ocoPhillipsandHuskyOilwithdrewtheirplanstodrillintheSahtuearlierlastyear-evenbeforethepricedropped-andonlyonehassignalledapotentialdrillingstartdateof2016.WiththehighcostofexplorationintheNorthandthelackofinfrastructurelikepipe-linesandroadslargercompaniesarefocusedontheirsoutherndevelopmentswhereworkischeaperandunconventionaldrillingmoreeconomicallyviable.Nowsomeanalystssayoilwillneedtore-turnto100abarrelbeforecompanieswillstartlookingbacktotheNWT.StillifpipelinesheadingwesteastandsouthfromAlbertaareallblockedtheNWTdoesstandachanceofmusclingitswayintotheoilsandsafterall.Inthatcasethechoicetolooknorthwouldntbemuchofachoiceatallregardlessofcost.AlbertaPremierJimPrenticerightandFinanceMinisterRobinCampbellspeakwithmediainDecemberabouttheirBudget2015andnewactionstocontrolspending.PhotoChrisSchwarzGov.ofAlbertaNowitseemstherealtaskaheadwillbetomakethefundamentaleconomicchangesrequiredsothatday-to-dayspendingonprogramsandservicesisntchainedtovolatileoilprices.2014THEYEARINREVIEW