Plunging Oil Puts Alberta on Edge

Montana’s northern neighbor prepares for big cuts that could impact the Flathead Valley

By Justin Franz

Scan the parking lot at Whitefish Mountain Resort on any given weekend in January and you’ll see red and white license plates with “Alberta – Wild Rose Country” just about everywhere.

Albertans have been coming to the Flathead Valley for years and for good reason, said Donna Townley, an economist at the University of Lethbridge and part-time Flathead Valley resident. For many years, when the Canadian dollar was strong, the Flathead was an inexpensive getaway for Albertans. According to the Whitefish Convention and Visitors Bureau, 18 percent of visitors to Whitefish in the first nine months of 2014 came from Alberta.

But now oil prices are dropping and Alberta is facing “the most serious fiscal circumstances we’ve seen in a generation,” according to Alberta Premier Jim Prentice. The question now is will Canadians be flocking to the Flathead as they have in the past?

Alberta’s fortunes and its government budget are both closely tied to oil and, because of that, it has been considered Canada’s strongest economy for years. Taxes from the oil industry make up a huge part of the provincial budget, but as a result of dropping oil prices Premier Prentice announced last week that Alberta was, for the first time in years, facing a deficit to the tune of $500 million.

Andrew Leach, a professor of business at the University of Alberta in Calgary said the dropping oil prices would result in steep cuts in the provincial budget that will be released in March. How those cuts will impact average Albertans, who have enjoyed some of the highest average incomes in all of Canada, is yet to be seen. But it is possible that it will result in Albertans being a little more frugal in the coming years.

Dropping oil prices is also impacting the value of the Canadian dollar, which is a commodity-based currency. When the price of oil goes down, so too does the value of the loonie. Economists said the decline of the Canadian currency could have a more direct impact on tourism in the U.S. than a decline in the oil industry.

“As the dollar goes down in value suddenly my ski trip to Whitefish Mountain Resort got a lot more expensive,” Leach said.

However, Townley, the economist at the University of Lethbridge who studies the impact of Canadian tourism in Montana, doesn’t expect the lines at the border crossings to disappear. She said that while the economy in Alberta may struggle in the coming years, lower fuel prices would help other industries and the rest of Canada, which could help stabilize Alberta’s economic situation.

“Canadian tourism won’t just stop. But people may not come as often and when they do they’ll be spending less,” she said. “I don’t think Flathead Valley businesses need to worry, they just need to know that Albertans may be spending less and will be looking for more sales.”

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