Over the past several weeks, the media has been full of stories about the sudden collapse of world oil prices. People, particularly in Alberta, have been speculating about the ultimate impact and length of this major economic blow.
However, while many reflect back to the economic and political turmoil of the 1980’s to gauge what may lay ahead, those memories have somewhat blurred about what actually happened during that decade.
What is mainly remembered is the first economic collapse in Alberta brought on by the imposition of the federal National Energy Policy in 1980-1981. The province had been enjoying an incredible boom up to that point. Almost overnight, the boom went bust, taking with it the jobs, businesses and life savings of a large number of people.
The blows in Red Deer and across Central Alberta were severe. Drilling and service companies quickly moved much of their operations to south of the border. While rental vacancies had been practically non-existent throughout much of the boom years of the 1970’s, the number of vacant apartments rose to nearly 18%.
One of the worst economic hits came when Ram Steel, a local manufacturing company, went bankrupt after the demand for drilling pipe dried up. The plant, on the north side of the City, was eventually taken over by Ipsco. That meant that operations continued, but on a much more limited scale.
However, Red Deer was shielded from some of the worst aspects of the sudden economic downturn. Several major projects, planned or commenced during the boom, had continued into the early 1980’s. Those big projects included the construction of the Red Deer Regional Hospital, the relocation of the Westerner Exposition Grounds to the City’s south side, the construction of the Bower Place Shopping Centre, and the development of Waskasoo Park.
Even the energy sector saw some welcome additions. In 1982, National Supply, one of the world’s largest makers of oilfield equipment, opened a $25 million drilling machinery plant on the southeast corner of Highways 2 and 11 (now 11A).
Nevertheless, the number of economic casualties continued to mount. In June 1984, work on the Red Deer College Arts Centre came to a halt after the prime contractor went under. It was not until 1985 that work was able to resume under another firm.
Finally, the economy seemed to stabilize and start to grow again. The Western Accord replaced the N.E.P. in 1985. Then another major blow struck. O.P.E.C. and particularly Saudi Arabia began to flood the market to maintain market share against all the non-OPEC nations who had ramped up production during the 1970’s and early 1980’s.
The result was a sudden collapse of oil prices. A barrel of oil, which had fetched as high as $44 in 1981, suddenly plunged to slightly more than $10 per barrel in March 1986. In contrast to the early 1980’s, there was no longer a cushion of on-going spending on major projects in Central Alberta. The Alberta provincial government was starting to implement a number of austerity measures to deal with a mounting deficit. Local unemployment soared to 10%. Red Deer’s population increased by a mere 100 residents.
Recovery from the 1980’s oil collapses was long and difficult. In the late 1980’s and early 1990’s, a world-wide recession set in. Another wave of troubles beset the oil and gas industry, as well as the agricultural sector. National Supply (renamed National Oilwell) finally closed its large manufacturing plant. The provincial government began to slash spending to deal with soaring deficits and debts.
Boom times did not return to Central Alberta until the later part of the 1990’s. The energy industry surged ahead again. The petrochemical complex east of Red Deer underwent a billion dollar expansion. Unemployment nearly evaporated. Labour shortages became a major concern. Once again, it seemed like the good times would never end.
Then, the world financial collapse struck in 2008.