Cheap gas good at the pumps, but costing us overall: Rob Greenwood
Motorists in Newfoundland and Labrador are certainly welcoming the cheap price of gas at the pumps as Brent crude oil dips below $50 a barrel this week, but some experts say the cheap price per litre is costing us more than we realize.
The oil industry is one of the most vital pieces of the province's economy, and Memorial University's Rob Greenwood with the Harris Centre says people will see the effects when government has less revenue to spend.
Greenwood said less money for government has already prompted a hiring freeze, tighter budgets, and a lot of areas that suddenly aren't getting the province's cash.
"So if you sell to government and it's a massive buyer, and that extends beyond direct government to college, university, health care, municipal — that whole segment of our economy is massive," he said.
Alberta jobs effected
During the recent oil boom, consumers and businesses were happy to let the good times carry on, but the industry's slow down means a loss in confidence.
"If you start to get a slow down then people start to get scared, and once you put the brakes on that, it has a self-reinforcing effect. So I think, by far, that's the most significant impact indirectly that is already happening," said Greenwood.
Another impact that's already being felt is the slow down in the Alberta oil patch.
Barbara Neis, a sociology professor at Memorial University in St. John's, said a study looking at long-distance commuting is starting to examine the province's dependence on long-distance jobs.
"To what degree are we a remittance economy, basically. What proportion of, particularly I think in rural and remote areas, what proportion of the livelihoods, employment, services, purchasing, construction in housing and so on and so forth, is being driven by employment that's happening in oil and gas outside this province?" said Neis.
Neis said the data for the study is still being collected, but anyone who has spotted big houses sprouting up in smaller communities can tell Alberta oil is fuelling some of the prosperity here.
'Diversify your economy'
Nobody really knows what will happen if the tank runs dry, but Greenwood said it isn't all doom and gloom on the horizon.
Along with motorists, industries like the fishery and manufacturing are benefiting from cheap fuel.
However, Greenwood said $50 oil should be a wake-up call for government, businesses and consumers that nothing lasts forever.
"Diversify your economy so that when the oil prices are up, absolutely let's take advantage all we can. But let's not let that be the only egg in our basket."