Riding the 'Wave' of the Energy Industry


You may be talking about the state of Alberta’s energy industry with your friends or family. Perhaps you have been directly impacted yourself.

“There are a lot of energy workers and contractors losing their jobs right now,” says Brandon Scott, CMP and co-founder of Benchmark Mortgages, Inc. “Many of these workers are worried about their financial position as the pinch in the energy industry tightens. Some workers have been used to earning a very generous income. They may not have properly invested or saved that money. They may have spent it as quickly as it came in, and they are now worried and asking what their short and long-term options are.”

Scott has been working with clients to help them both for the short and long term as the economy beings to feel the pinch. He also prepares them to potentially be in an even better financial state for when the economy begins to upturn again.

“I grew up in California, and before moving to Canada I was an avid surfer,” says Scott. “I often view these financial cycles like surfing—you have to recognize how to ride the wave to stay on the board.”

Scott offers the following tips to clients who work in the energy sector:

1. Recognize there is a wave – A wave seemingly comes out of nowhere sometimes and can drench beachgoers from head to toe. They come in a series of sets, and then crash on the sand. Alberta’s economic cycle is really no different. It can best be summarized as boom, bust, and recovery. Each year could be likened to an economic wave with different action items to plan and prepare for. There’s no reason to be caught off-guard by the recent news. Having enjoyed four plus years of a robust Alberta economy, any level of retraction should come as no surprise. By understanding that there is a cycle to the industry, one can better prepare for the lulls and the swells.

2. Balance – So you’re ready catch a wave and enjoy the ride. You aim your board towards the shore, paddle like crazy and hope for the best. Start paddling too soon and the wave rolls right under. You not only miss it, you can be pushed into a less ideal position to catch the next wave. Too far forward on your board and you’ll quickly get overtaken by the powerful current; nose dive, and be slammed to the ocean floor and tossed like a load of laundry. Given what we know now of the situation and the forecast being a bit unknown, you may want to be more realistic about any upcoming major splurges like an extravagant vacation or buying another quad. Developing a budget or a spending plan based on these different cycles allows you to live within your means now and set aside savings to be used for leaner times. While some have yet to feel the pressure of this price plunge, now is the time to implement balanced spending to ensure there is an established emergency reserve even if it means refinancing a home, or setting up a line of credit.

3. Timing – For anyone who has ever tried to surf, it becomes clear very quickly that timing is everything. Perhaps the waves seem larger than they did when first paddling out. They always take on a slightly different perspective when you’re past the break than they do when you are on the shore. Someone who times things just right catches lots of waves, while someone who does not spends much of their time and energy missing them. The ripple effect should still be taken into consideration, as much of what we have seen in relation to lower oil prices may not be fully realized just yet. Employers may still be looking at where to make the appropriate cut backs and considering what areas make the most sense for lay offs. Talk to your bank about a loan modification, ‘skip-a-payment’ scenarios, or other payment reduction strategies. Those that plan ahead always do better when it comes to matters of finance.

Lastly, if you have followed the previous steps this is where things get really exciting. When people become fearful about the economy things go on sale. This is why timing is everything and being prepared allows you to take advantage of any opportunity that allows you to grow your net worth by capitalizing on real estate, stock deals, or other investments.

Scott says “If you’ve be fortunate enough to live in this land of milk and honey these last few years, make sure your affairs are in order so you don’t get caught on the down side of a growing current. Recognize what cycle our economy is in and learn to ride the wave to avoid wiping-out.”

Alberta is the world’s third largest proven resource of oil (after Saudi Arabia & Venezuela) and one in 16 jobs in Alberta are directly related to the energy sector. That’s more than 120,000 Albertans that could be directly impacted as the price of a barrel of oil has plummeted from $105 US as recently as six months ago to under $50 today.

Please contact us if you have questions on how to get through the ‘wave’ and be in a favourable financial situation when the energy industry recovers. info@benchmarkmortages.com (780) 800-5500