Murray K Mullen has seen the impact of low oil prices first hand. More than 100,000 jobs, $60 billion in earnings, and $33 billion in capital investments have evaporated, much of it in Alberta. The Mullen Group itself – the largest provider of specialized transportation for Western Canada’s oil and gas industry – has laid off more than 1,400 people.
The job losses are the “biggest human tragedy”, the chairman and CEO said during Truck World’s opening kickoff breakfast, noting how these people are sometimes forgotten by those who think a few rich “oil guys” are paying the price.
The losses are not limited to Alberta, either. “We are now stuck as Canadians and we’re all paying a little bit of the price because the capital investment boom in Canada has virtually evaporated,” he said. Until the oil business dried up, the energy sector accounted for 60% of such investments. Now it barely accounts for any at all.
“We’re more balanced than we have been over the last cycle, primarily because I saw some cracks coming,” he said of Mullen Group. “We’ll survive. You’ve got to adapt.”
The shift in prices can largely be traced to “disruptive technology” in the form of the horizontal multistage fracturing developed in Canada, and embraced in the U.S. to access previously unavailable oil deposits. Saudi Arabia and other OPEC countries responded by boosting production as well.
That could be a good thing, he said. “The negative that’s happening in Alberta is actually a positive for the consumer,” he said. Besides that, a high oil price would have fed the military buildup in Saudi Arabia.
The price of oil will rebound, but he expects it to even out at around $60 per barrel. “The cure for low oil prices is low oil prices,” he said, referring to how today’s low costs will eventually restrict available supplies. But even $60 oil won’t support new capital. Much of today’s available capital also comes through the public sector, which doesn’t tend to drive innovation.
It’s one of the reasons why he advocates for pipelines to take Canadian oil to new markets.
Anyone who wants to talk about the carbon footprint of Canadian crude oil, because of the greenhouse gases generated through Canada’s Oil Sands, should also consider the military spending in Saudi Arabia, he added.
There are also other “disruptive technologies” to come, Mullen predicts. Specifically, he expects someone will develop a realistic alternative to the combustion engine, probably in his lifetime. The alternative is even likely to come from someone outside today’s transportation industry, he said.
That might be the most disruptive technology of all.