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Machinery and equipment prices rise for energy producers

Machinery and equipment prices rise for energy producers

Posted on: 8/29/2018 | Author: ATB Financial's Economics + Research Team

​​Alberta’s energy sector is seeing better days in 2018, compared to the oil price collapse it experienced three years ago. Though prices have improved, the cost for machinery and equipment used in oil and gas extraction continues to present a challenge.

Prices have gone up for everything from hydraulic pumps and drilling platforms to compressors and heavy equipment used at drilling sites. Energy producers who need imported machinery are paying even more.

The graph below shows the price index for both domestically-sourced and imported machinery. Domestically-sourced machinery has risen in price by about 10 per cent since the second quarter of 2010 (the most recent index value sits at 110.8), with little change since 2014. Prices stayed mostly stable during the oil price collapse.

Imported machinery, on the other hand, rose steeply between 2013 and 2015, reaching as high as 45 per cent above 2010 levels. The current index value for imports is 138.2.

Much of the gap between the two price indices can be explained by the fluctuating Canadian dollar. The loonie drifted lower between 2013 and 2015, partially because of falling oil prices. That pushed up the relative price of imported machinery. Since reaching a low point in early 2016, the Canadian dollar has strengthened somewhat, helping keep a lid on import prices.

Machinery prices

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