Plunging oil prices take toll on Estevan, Sask.'s economy

It's called the Energy City, but these days Estevan is more like the quiet city.

From the Energy City to the quiet city: Estevan's economy rides the roller coaster of oil prices

Estevan's economy has been hit hard by a downturn in oil prices. (Glenn Reid/CBC)

It's called the 'Energy City', but these days Estevan, Sask. is more like the quiet city.

The plunging price of oil is pulling the small southeast Saskatchewan down with it.

The hub of many small communities is the hockey rink, and in this case, the Estevan Bruins are noticing a difference.

Coach and GM Chris Lewgood says in terms of corporate sponsorship, the team is not used to being told 'no'.

"Nowadays we will make call backs to companies to see if they can contribute again this year and they won't even be there, they will have moved or closed their doors."

Businesses shut down for good

Ray Frehlick has worked in the oil industry for more than 60 years. (Glenn Reid/CBC)
"For sale" and "for lease" signs are a common sight in Estevan lately, with many businesses having shut their doors for good.

Estevan's backyard may still be busy with coal, power production and agriculture, but the oil is what drives the economy.

Ray Frehlick's company, Prairie Mud Service, supplies companies with drilling fluids to extract minerals, oil, gas and potash. He has worked in the industry for more than 60 years.

You gotta make tough choices.- Ray Frehlick , Prairie Mud Service

But with the current state of the oil and gas industry — operating at 40 per cent of what it was two years ago —  he's had to cut his workforce nearly in half. 

"We hate to lay off long-term employees, but to survive you've got to make tough choices."

The frailty of the oil industry is having a ripple effect on many other industries.

Hotels built just five years ago, initially operated at maximum occupancy.

Today, in some cases, their parking lots are near empty.

Food industry sees impacts

Peter Sereggela, owner of Cafe Tavern and Tap House, has had to reduce hours for some employees. (Glenn Reid/CBC)
The same can be said for the city's restaurants. 

Peter Sereggela owns the Tower Cafe and Tap House. His business is doing better than most thanks to support from the community, but he says cutting back his employees' hours is still inevitable.

"I've had staff that have been here for 15-20 years and they're like family, so it's real tough."

Food bank busier than usual

Perhaps one of the busies food-related establishments in Estevan is the food bank operated by the Salvation Army.

It's what Roy Ludwig, the mayor of Estevan, has to look at from his office window.

Roy Ludwig, the mayor of Estevan, says the downturn in the oil industry has affected his city big time. (Glenn Reid/CBC)
"And although oil is starting to turn around, the after effects are still with us and will continue to be with us for some time."

It wasn't that long ago that Estevan had very different problems. The city's infrastructure couldn't keep up with rapid growth.

Today unemployment and vacancy rates continue to climb, while the price of oil hovers around the $40 a barrel mark. Ludwig estimates the local unemployment rate is between 6.5 to 7 per cent right now.

Veterans in the oil business, including Frehlick, have seen oil drop to as low as $10 a barrel, but some say the damage it's caused has never been this bad.

"I think it's going to recover in time, but we've got two million barrels of surplus oil being produced a day. Until we get some sanity into our production it's not going to change," said Frehlick.