Yes, oil is below $50 a barrel. Yes there are layoffs. Yes GDP in Alberta growth will “implode” to 2%, from an unhealthy super-exuberant 4% in 2013. Yes, oil projects are delayed or cancelled. Yes, Alberta may institute a provincial sales tax.
Yet, here are actually 10 +5 reasons why lower oil prices benefit the oilsands, c/o the Oilsands Magazine .. and yours truly:
More on each point here at the latest issue of the oilsands magazine.
Let me add a few:
Reason 11: More immigrants will rent, as they are spooked that house prices might not go up 5-6% a year and actually flat line or fall a bit even. Rental properties will continue be an excellent investment !
Reason 12: Real estate prices, including assets we buy such as mobile home parks or apartment buildings will be more realistically priced, based on actual rents not future 20% growth and ridiculous expense assumptions.
Reason 13: Mortgage rates have dropped drop, and may drop further than the last cut from 1% to 0.75% in prime rate and bonds, and will continue to stay low low LOW. Read more here in our blog why they will stay super low for two more decades.
Reason 14: construction folks, for such projects as our project in Cold Lake, will be easier to find, will be cheaper, as will be material.
Reason 15: Oil production is still rising in Alberta. The Canadian Association of Petroleum Producers, in a newly released industry review, predicts that “capital investment in Western Canada, including oil sands, will total $46-billion in 2015, down 33 per cent from $69-billion invested in 2014.” A significant drop, but still a large number. The review also forecasts total Western Canadian oil production to be about 150,000 barrels a day higher than the total 2014 production of about 3.5 million barrels per day, with a similar rate of growth expected in 2016. In other words, production is still expected to grow.
Oil prices will rise again due to demand destruction everywhere, worldwide. The only questions of oil price rebound are: when, how high and how quickly. As Peter Tertzakian, the Calgary based energy economist and author of “A thousand barrels a second” puts it in his article on oilmageddon “Today’s pain of submarginal price is universal throughout the global oil industry. Conservatively, producers around the world will be short over $1-trillion of oil revenue this year relative to last. Yet about $750-billion a year is needed to replace oil and gas reserves and satisfy growth. The numbers don’t go around; the deeper the capital starvation, the sooner there will be a supply response that remedies the imbalance.”
To invest in a profitable oilsands based real estate project, namely our residential land development project in Cold Lake, please click here – and get in on the ground floor before oil prices – and thus lot prices – rise again substantially !
Or check out or residential income properties based LIRA, RESP, TFSA or RRSP eligible investment opportunities – including the 5% income option – here if large exposure to the oilsands is not desired but you seek an income producing investment opportunity based on impeccably managed and recession-proof rental properties.