Oil industry profits will see a big boost this year as some of the cost-dampening effects of the recession linger, according to a forecast by the Conference Board of Canada.
However, the business think-tank cautioned the price of labour and materials is poised to rise in future years as the pace of development picks up in the oilsands.
“The recession had one positive effect — costs in the industry have come down precipitously,” said the report released Thursday.
Numerous oilsands producers began to put their multibillion-dollar projects on hold in late 2008, as the recession whittled away at demand for fossil fuels and made it too costly for companies to borrow money. Investment in the sector contracted by 26.4 per cent last year, causing capital costs to decline at a similar rate, the Conference Board said.
Many of those delayed oilsands projects have since been put on the front burner. Increased production from those projects, along with stronger crude oil prices, has led the Conference Board to predict oil industry profits of $8.1 billion this year. That’s two-thirds higher than the $4.9 billion the industry eked out last year, but still half of what it raked in at the height of the boom in 2008.
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