"Layoffs taking place on a large scale in the oil patch."

[OracleOfCalgary]

They had two HR specialists on CBC radio this morning talking about O&G layoffs in Calgary, primarily due to low NG prices and a steep decline in drilling activity. They say that the oil sands projects are NOT picking up the slack and they actually expect the pace of layoffs to increase...

More on the story tonight on CBC TV at 6PM.

[BlackArcher101]

Too expensive to do anything in Alberta anymore. Lot's of companies are focusing elsewhere, such as overseas or southern united states.

[Bobblehead]

Although with the price of oil pushing record highs again, I could see things staying very busy.

[JD]

Oilsands projects couldn't possibly pick up the slack simply because of the large numbers of wells usually involved with shallow gas drilling. The upstream oil and gas industry has been slow for about a year now... I find it mildly amusing that this is only becoming news recently.

My company went through a couple rounds of layoffs last spring. They say they're done and should be able to sustain themselves as long as the industry stays static, which is what they predict. But in my position you can already see that the big guys have plans for a lot of drilling projects in the next three years. By this time next year, I believe things will be on the upswing again, barring other factors.

Should the eastern seaboard experience a long cold winter, shallow gas projects could become prevailent again as well.

[Suave]

Originally Posted by Bobblehead

Although with the price of oil pushing record highs again, I could see things staying very busy.

But for Canadian companies doing business in Canada the rise of the Canadian dollar has offset the increase in oil price. So most are not farther ahead then they were when oil was $50-60. Plus when your cost structure has increased substantially the result is a large decrease in activity which already started last summer.

[photon]

Originally Posted by JD

Oilsands projects couldn't possibly pick up the slack simply because of the large numbers of wells usually involved with shallow gas drilling. The upstream oil and gas industry has been slow for about a year now... I find it mildly amusing that this is only becoming news recently.

My company went through a couple rounds of layoffs last spring. They say they're done and should be able to sustain themselves as long as the industry stays static, which is what they predict. But in my position you can already see that the big guys have plans for a lot of drilling projects in the next three years. By this time next year, I believe things will be on the upswing again, barring other factors.

Should the eastern seaboard experience a long cold winter, shallow gas projects could become prevailent again as well.

Very true, I even think we were talking about this on this forum 9 months ago or so, this isn't new information. And not sure why it would be suprising.

I notice though that there's no actual numbers in the original post...

[Cowboy89]

Originally Posted by photon

Very true, I even think we were talking about this on this forum 9 months ago or so, this isn't new information. And not sure why it would be suprising.

I notice though that there's no actual numbers in the original post...

Considering the source is CBC that doesn't really surprise me !

My take on this is that as reflected by posts above that this started happening a year ago when the 2006 Natural Gas Storage overhang was depressing spot gas prices. Companies then started clawing back spending. However I think this newer wave of layoffs is coming from financially depressed small Natural Gas companies. Many companies are literally insolvent and thus the people on board have to go.

With regards to us talking about this on the forum 9 months ago: I have a saying that drives my belief in intelligence is that once the mainstream media knows about something it's too late for you to act on that information.

[photon]

Originally Posted by Cowboy89

With regards to us talking about this on the forum 9 months ago: I have a saying that drives my belief in intelligence is that once the mainstream media knows about something it's too late for you to act on that information.

Heh, very true.

Some better info on this:

http://www.canada.com/nationalpost/f...cd9b0e&k=33095

[Sylvanfan]

Well lets face it the high Canadian dollar isn't doing them any good either. Compared to 5 years ago they're already seeing a 50% increase in production cost vs. the currency that the commodity is generally traded in and thats without taking other inflationary measures into account.

Oh well one day Oracle will get his wish and the economy will crash leaving everyone in shambles and having to resort to rioting and looting to survive.

[Locke]

Originally Posted by Sylvanfan

Oh well one day Oracle will get his wish and the economy will crash leaving everyone in shambles and having to resort to rioting and looting to survive.

You mean it hasnt already?

I had better go and put that TV back.....damn....

Seriously though, a slowdown was inevitable. No economy can sustain the ridiculously rapid growth we've been experiencing lately, soon the factors are all going to level out and changes have to be made in order to maintain long-term viability.

[I-Hate-Hulse]

An interesting article from Time on the US housing slump. While I think we're in a bit of a unique situation here, lots of lessons to be learned here. I found this interesting though:

He and real estate specialist Case then teamed up to show that home prices are even more subject to booms and busts than stocks. They did it by measuring repeat sales, which give a better picture of price movements than the figures published by the real estate industry. In 1991 they turned this into the business that supplied the price data used in this article.

After publishing a best-selling critique of the stock bubble, Irrational Exuberance, just as the market peaked in March 2000, Shiller set to work adding a chapter on real estate for the second edition. As part of that effort, he cobbled together an inflation-adjusted index of home prices going back to 1890, which showed that a) the price runup from 1997 to 2006 was by far the biggest on record and b) home prices can fall for decades. Put those two together, Shiller argues, and it's at least possible that we're due for an epic decline in prices.

I think real estate in Calgary is seen somewhat as a "can't lose" proposition - and I think this article does well to show otherwise.

I've often heard that real estate is a superior investment to land, and found this interesting:

Shiller allows that the scarcity of property near the coasts might mean prices there will remain high, but then notes, "We can't make any more of the land, but we can build huge high-rises on the beach." Huge high-rises on the beach, in fact, played a major role in Florida's boom and bust. There are 40,000 condominium units being built right now in greater Miami, and consultant Lewis Goodkin estimates it will take five to seven years just to work through all that inventory. That's five to seven years of downward pressure on local housing prices, construction employment and the like.

Interesting works given the glut of condos scheduled to come online in the next 1-3 years. I think we should be hoping for nominal increases of 4% a year.... it's steady appreciation you want, not 40% annually.

http://www.time.com/time/magazine/ar...661682,00.html

[metal_geek]

I think the glut of condos comming online is a great thing!... Condos are the new starter home. Hopefully this depresses the prices allowing more people to move here. Meaning at some point in the future, there will be more people looking to move outta thier condos into my "Move up home".. ROFL...

Seriously though.. I sold my "BIG" house last year.. and bought a smaller cheaper house cause I wanted a more afordable house for all the people moving outta condos when the time comes to sell this one.
________
Love stories advice

[photon]

Originally Posted by I-Hate-Hulse

I think real estate in Calgary is seen somewhat as a "can't lose" proposition - and I think this article does well to show otherwise.

Definately, there's no can't lose proposition.. unfortunately with the big gains that have been going around there's tons of get rich quickers and investor seminars that tell people they can't lose, or at the very least don't tell them what the risks actually are.

Interesting works given the glut of condos scheduled to come online in the next 1-3 years. I think we should be hoping for nominal increases of 4% a year.... it's steady appreciation you want, not 40% annually.

I'd love 4% per year! So many people were attracted by the huge dollars of 40% increase, or flipping a house in 3 months for a $100k profit, thinking that was to be expected rather than understanding it was a once-in-a-lifetime kind of thing!

[I-Hate-Hulse]

Originally Posted by metal_geek

Meaning at some point in the future, there will be more people looking to move outta thier condos into my "Move up home".. ROFL...

I hear you. I specifically targetted a townhouse within walking distance to downtown last year when I bought as I think it's an ideal step upwards from a condo. I know from personal experience that there's going to be:

- lots people that tire of highrise living.
- don't want to give up urban living.
- can't afford the 850K for a detached house (and that's for a mid to low end one) within walking distance of downtown

I foresee a big increase in people that fall into the above, and a reasonable townhouses within walking distance to downtown are in very finite supply. Nowadays, if you have enough room for a townhouse complex you just build a 6 level condo to recoup your land costs.

I *think* that should insulate me somewhat in the event of a downturn, and at it's best - provide some good returns in the future.

But my name has Hulse in it, not Oracle

-----

Getting back on topic - I know a lot of service companies that are betting on a stronger Q4, and haven't cut staff in anticipation of this. Is anyone seeing evidence that Q4 is going to be a strong as they say?

[OracleOfCalgary]

After the '80s oil and real estate booms went bust in Calgary, there was a popular bumper sticker that said something like "Lord, Please Give Me Another Boom, I Promise I won't screw it up this time." There are a lot of young guys on this forum who don't have any doubt in their minds as to the gloriousness of Calgary's future and the infallabilty of Real Estate. I am just trying to sew that seed of doubt. Please just: 1. Don't take on a huge mortgage that you can barely manage because you are afraid of getting priced out of the market and, 2) Don't take a HELOC loan to buy an investment property because it is a sure thing and you see everyone else getting rich.

[photon]

Originally Posted by OracleOfCalgary

After the '80s oil and real estate booms went bust in Calgary, there was a popular bumper sticker that said something like "Lord, Please Give Me Another Boom, I Promise I won't screw it up this time." There are a lot of young guys on this forum who don't have any doubt in their minds as to the gloriousness of Calgary's future and the infallabilty of Real Estate. I am just trying to sew that seed of doubt. Please just: 1. Don't take on a huge mortgage that you can barely manage because you are afraid of getting priced out of the market and, 2) Don't take a HELOC loan to buy an investment property because it is a sure thing and you see everyone else getting rich.

I don't think you even read what other people post... who says the boom will last forever? Who says real estate investing is infallible?

Anyone who puts themselves at the edge of what they can afford is foolish, and someone who takes money out of their house to invest just because other people do it is also foolish. This is called pointing out the obvious. Borrowing money to buy stocks or mutual funds without understanding what's going on is also foolish.

I also think it's foolish to shout about the sky falling from the sidelines.

[Slava]

Originally Posted by photon

I don't think you even read what other people post...

###! I love seeing all of these threads though...I'm just dreading the eventual "told you so" thread that will one day take place!

[Sylvanfan]

Originally Posted by Slava

###! I love seeing all of these threads though...I'm just dreading the eventual "told you so" thread that will one day take place!

I have to admit that somedays...I wonder how badly off would you really be if you leveraged your house to 100% value, bought those fancy cars, took 4 or 5 trips a year to 5 star resorts, ate at the finest restaurants every night, let my wife spend whatever she wants on all those sure thing diets and buy all the clothers and trinkets she wants and than just declare bankruptcy when it all falls to pieces on you. You'd probably have lived one hell of a life for those 2 to 5 years until they finally nailed you. Meanwhile the "I told you so's" are just the guy who didn't file for bankruptcy and has a nice warm fuzzy feeling about himself and continues to say when I'm 75 and I retire, than I'll get the last laugh....just before I use up my last breath.

At the end of the day, not borrowing everything offered to me and trying to live within my means is setting me up to have another 40 years of a mediocre life where I can't have cool stuff so I can retire at 75 and hope not to run out of money while I suffer through 25 years of life that probably doesn't offer much. Really...is that going to be worth it for me? Sucks to be a lower middle class schmuck with no ambition and know it.

[Locke]

Originally Posted by Sylvanfan

I have to admit that somedays...I wonder how badly off would you really be if you leveraged your house to 100% value, bought those fancy cars, took 4 or 5 trips a year to 5 star resorts, ate at the finest restaurants every night, let my wife spend whatever she wants on all those sure thing diets and buy all the clothers and trinkets she wants and than just declare bankruptcy when it all falls to pieces on you. You'd probably have lived one hell of a life for those 2 to 5 years until they finally nailed you. Meanwhile the "I told you so's" are just the guy who didn't file for bankruptcy and has a nice warm fuzzy feeling about himself and continues to say when I'm 75 and I retire, than I'll get the last laugh....just before I use up my last breath.

At the end of the day, not borrowing everything offered to me and trying to live within my means is setting me up to have another 40 years of a mediocre life where I can't have cool stuff so I can retire at 75 and hope not to run out of money while I suffer through 25 years of life that probably doesn't offer much. Really...is that going to be worth it for me? Sucks to be a lower middle class schmuck with no ambition and know it.

You're just all rainbows and sunshine arent you?

[FurnaceFace]

Well, if I'm to believe the stockhouse "Newsblast" I received this morning a local energy company has just:

"completed $5 million worth of seismic testing to confirm that its [name] prospect in the Northwest Territories contained:40 billion barrels of recoverable crude! Oil/gas reserves worth $210 billion!"

Since everything on the internets is true, then the economy will take awhile before it's in the crapper on this alone.

(Note I've removed the company name and claim from the above as it's not from them, it's some dude who is "editor and publisher of Economic Advice, a widely-read and respected monthly investment advisory that's been helping readers build wealth for over 20 years." Basically he seems like a stock pumper and wants you to subscribe to his publication. The stock is up about 10% on the day but one day doesn't really mean much, it could just be speculation.)