Lesson 19 — Activity 1: Trade Affects Alberta

In the last lesson you learned about how Canada is connected to countries around the globe through trade. The global economy, the system that links all countries together through trade, makes the world interdependent. When countries are interdependent, they rely on each other and are strongly influenced by each other, in both positive and negative ways.

What kind of effect can the global economy have on us locally here in Alberta?

In this activity, you will learn about how the global economy affected Alberta during the past few years by looking closely at the oil industry in this province.

You learned previously that oil was a leading export product for Canada. In 2015, oil accounted for 19% of all Canadian exports (It was rated the #1 export that year). However, oil was also rated as sliding –32.9% in value (the #1 declining export).

What happened to the oil industry in 2015?

Oil prices in the world dropped substantially. This means:

• there was an oversupplied market (that means there was an abundance of oil for sale in the world by other countries. These countries could produce oil much cheaper than we could in Alberta.)

• OPEC (which is an intergovernmental organization of 13 Middle Eastern petroleum producing nations) decided not to cut any oil production, and this sent the price of oil to decline even further

Therefore, the value of our oil exports declined. The price decline for oil has now gone on for 20 months (as of April, 2016). In fact, the price of oil fell by 71% between June, 2014 and February, 2015.

What does the falling price of oil mean for people who live in Alberta?

It means many losses of jobs, falling house prices, and loss of our population as people move to other areas of the country to find employment. As many people have less money to spend, businesses suffer and people are not spending as much as before.

Self-check!