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Alberta Online Encyclopedia

Boom & Bust
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OPEC Threatens the World EconomyThe discovery of the Leduc oil field in 1947 sparked considerable economic growth and change in Alberta. This development paled in comparison, however, to the tremendous boom of the 1970s. The prosperity of the 1970s was primarily due to the decision of the Organization of Petroleum Exporting Countries (OPEC) to increase the price of oil. As a result, oil prices jumped from $3 a barrel in the early 1970s to $44 a barrel by 1981.

Understandably, the provincial economy benefited enormously from this development, both in regards to the ripple effect of advances in the energy sector, as well as direct royalties paid to the oil refineryprovincial government. However, despite "province building" attempts to diversify the provincial economy, the Progressive Conservative government of Peter Lougheed largely was unable to shelter Alberta's fortunes from fluctuating oil prices. When the price of oil suddenly dropped from $39 a barrel in 1983 to $10 a barrel by 1986, Alberta's economy fell with it. The province remained in a recession until 1987 when energy markets rebounded.

Alberta remains susceptible to cycles of boom and bust due to its heavy economic reliance on the export of natural resources. Prior to World War II and the creation of the Canadian Wheat Board, prairie farmers were extremely vulnerable to these periods. Today, western Canadian provinces experience these fluctuations, but in Alberta the ups and downs of oil and gas dependency are much more pronounced.

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