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June 2015 Alberta Economic Fundamentals

Ally

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News articles for June 2015.
 

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6 reasons why Calgary's real estate market hasn't collapsed

The Calgary Alberta real estate market is being watched today by more analysts than ever before. Some are hoping for a big dramatic fall, some are hoping it stays alive. However the truth are 6 factors that, when combined, give a much clearer picture on the health of the market. Frankly, it isn’t pretty, but it sure isn’t a disaster. In fact, when looking at past oil cycles vs real estate markets, today’s Calgary real estate market is performing exactly as expected as we hit the end of May 2015. The month that marks 9-10 of oil price drop from peak.

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New reality sets in at Fort McMurray that this downturn is different

With OPEC expected to keep its oil price strategy unchanged this week, Fort McMurray, Canada’s major oil producing centre, is adjusting to what could be a protracted era of slower growth. Its commuter workforce has declined, unemployment is way up, and the community is sharpening its focus on reducing costs.

It’s a surprising turn of events for a region known for years for its overheated economy, labour shortages, huge population influx and cost escalations.

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Oil execs say Notley more "collabrative" than Conservative government in tackling oil royalties

CALGARY – Executives from some of Canada’s largest oil companies say Alberta Premier Rachel Notley is doing a better job engaging with the energy industry ahead of her NDP government’s royalty review than the previous review conducted under the Progressive Conservatives.


“The door, actually, compared with the last time we looked at a royalty review, seems to be much further open,” Husky Energy Inc. chief operating officer Rob Peabody said at an RBC Capital Markets conference Monday.

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Interesting approach from #Calgary's Mayor: "Oil slump gives Calgary a skyscraper-building opportunity"

The oil price downturn is creating a building opportunity for commercial real-estate developers in Calgary, home to Canada’s petroleum industry, rather than deterring investment, Mayor Naheed Nenshi said.

“Our downtown commercial market is very strong and we’re getting a lot of folks saying they had been priced out of Calgary and now here’s their chance,” he said Monday in an interview at Bloomberg’s headquarters in New York. “I’m told by these very, very large skyscraper builders and commercial property developers, mostly backed by pensions, that they are patient money, and they make their money by building at this point in the cycle.”

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Edmonton’s timing for major infrastructure project construction could not have been better. With the slowdown in energy related jobs, many of these construction workers can be absorbed by the new major construction projects in the City. Including the new arena district, the new LRT and the major road works. Thus buffering some of the oil and gas pain

Something remarkable and historic is happening on the formerly derelict north edge of downtown Edmonton.

North America’s most successful arena districts in Los Angeles and Columbus, Ohio, saw related development around their new arenas, such as hotels, condo towers and officer towers, but things didn’t take off nearly so fast as is now happening in the Edmonton arena district.

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Edmonton International Airport designated as foreign trade zone

EDMONTON - The Edmonton International Airport has been designated as a foreign trade zone, the federal government announced Tuesday.

A second foreign trade zone, commonly called an FTZ, was created for the Calgary Region Inland Port.

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What cheap gas and a 150-year-old paradox say about where oil prices are going

That thing must chug a lot of gas,” I said to my friend who was proudly running his right hand down the side of his big new SUV.

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When deciding whether to invest billions into a region, one needs clarity and consistency in costing models. There are already enough 'shifting' numbers in their models (labour costs, oil price, transportation costs) an annual review would just add even more risk to the model and thus hold back capital or move capital investment to a more consistent ROI region. Annual reviews would be a catastrophe

Call it royalty review redux.

It’s been about eight years since the Alberta government last decided to tackle the thorny subject of oil and gas royalties.

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Even within markets there are sub markets that perform the opposite of the trends. Your job as an investor is to not buy into the overall averages

With jobs in Alberta’s oil and gas sector, Jackie and Andrew Bodner were tempted to put their Calgary house up for sale in January just as layoffs were mounting and homeowners were flooding the city’s market with new listings.

The couple was planning to move to Edmonton, where Mr. Bodner’s oil field services company was headquartered, but they weren’t set to move until the summer.

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The three major risks facing Alberta's petroleum sector

When I was a child in the 1970s, a cloud of doom hung over our heads in Alberta. One day, the adults told us in solemn tones, the province will run out of oil. This was the rationale for Peter Lougheed setting up of the Heritage Savings and Trust Fund.

Now we know that Alberta will never, ever run out of molecules of oil in the ground. But new clouds of doom lurk on the horizon. The problem for Alberta isn’t its shrinking volume of oil. It’s more complicated than that.

There are three major risks facing Alberta’s petroleum sector – some decades old, others more recent. The skeptics in the industry would point out that each could potentially derail the industry. But the optimists will counter that each can also be managed.

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Don’t allow the NDP rumours to stop you from being a strategic investor.

Late in the evening of May 5, just hours after NDP leader Rachel Notley had been declared the premier-elect of Alberta, it began to snow in Edmonton. It didn’t stop for almost 24 hours. It was the wet, heavy stuff, piling up on the budding leaves of spring and bringing down branches and entire trees. Needless to say, there were plenty of “hell has finally frozen over,” and “it’s going to be like this for the next four years” jokes.

But that’s what they were: jokes. By and large it’s business as usual in Alberta. The oil’s still flowing (or it’s still in the ground, to be extracted at a later date). Edmonton is still a forest of cranes, with 21 developments going on in a four-by-10-block stretch of downtown. Calgary’s still in a slowdown, but that’s more because of the price of oil than because of the stripe of the provincial government.

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Multi-family housing starts surge in the Calgary area

Numbers released by the Canada Mortgage and Housing Corp. on Monday show a surge in multi-family starts in the Calgary region for May.

The agency reported that starts in that sector of the housing market were up 79 per cent, year-over-year, to 759. That pushed total starts for the month up 2.7 per cent on an annual basis, to 1,058 units.

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The oil price: The one thing we know

For about the past seven months, nearly every cocktail hour conversation I have been involved with, wherever it begins, eventually meanders to an increasingly familiar round of speculation about the oil price. Are we at the bottom? What's the new normal? How soft is demand? How robust is supply? Which countries want the price to be X, and what are they doing to get it there? It's hard to find anyone who hasn't figured out how they feel about it as well, so the whole discussion is turning more into a ritualized exchange of talking points than anything thought-provoking.

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Oilpatch sharply cuts future production forecast

The organization representing Canada's oil industry is lowering its expectations for how much crude the country will produce in the future.

The Calgary-based Canadian Association of Petroleum Producers (CAPP) said in its annual forecast Tuesday it now expects production to rise to 5.3 million barrels per day by 2030. That's a drop of 1.1 million barrels from the agency's previous prediction, representing a 17 per cent cut.

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Alberta leads country in first-time homebuyers

Alberta has the highest rate of first-time homebuyers in the country, according to a new report released Tuesday by the Canadian Association of Accredited Mortgage Professionals.

The report, A Profile of Home Buying in Canada, found that 55 per cent of Alberta homes purchased in the past 27 months were by first-time buyers compared with the national average of 45 per cent.

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Chevron obviously knows something about future demand curve. You generally don't invest Billions of $$$ without some surety

Chevron, the second largest oil producer in the U.S., is doubling down on fossil fuels. At a time when no one can say if crude prices will rebound, the company is investing billions on oil and gas around the world and in the Gulf of Mexico. Bloomberg's Erik Schatzker takes us on one of Chevron's largest off-shore drilling platforms. (Source: Bloomberg)

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One person's rhetoric is another person's Goldmine

Saskatchewan Energy Minister Bill Boyd says Canadian oil and gas companies are choosing his province over Alberta for investment in exploration and production because of the new Alberta NDP government’s promise to review Crown royalty rates.

But he stopped short of calling the review a mistake during an interview with reporters after giving a speech to attendees of the Global Petroleum Show in Calgary on Wednesday. Nor would he guarantee that Saskatchewan will never change its royalty rates.

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Red Deer population cracks 100,000

The City of Red Deer has reached the milestone population of 100,000.

"This is a transformative, defining, game changing moment for our city," said Mayor Tara Veer.

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In sad news: The NDP energy chief of staff has a decorated and registered anti-pipeline past. Isn’t that like putting a vegetarian in charge of jobs in the beef industry.

Alberta’s Wildrose opposition has called out the new NDP government after learning that the chief of staff to Energy Minister Margaret McCuaig-Boyd is registered as a lobbyist against the Northern Gateway and Energy East pipelines.

Until recently, Graham Mitchell served as interim executive director at social media campaign group Leadnow, and is still listed as such on Ottawa’s lobby registry. In a long list of subject matter, he includes efforts to stop Enbridge Inc.’s Northern Gateway pipeline and to persuade the National Energy Board to expand its review of TransCanada Corp.’s proposed Energy East pipeline to include climate impacts of growing oil sands production and to allow broader public hearings. However, he reported no actual lobbying activity on those subjects.

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