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Low Crude Prices Squeeze Calgary Stampede

Low Crude Prices Squeeze Calgary Stampede

Posted by PanamericanWorld on July 03, 2015

As companies in Canada’s once-flush oil patch slash budgets in line with a slump in global crude prices, the belt-tightening is hitting one of Western Canada’s most venerable traditions: the Calgary Stampede.

The 103-year-old rodeo-centered event has survived floods, droughts and Mad Cow disease, but the recent downturn in oil and gas revenue has forced energy companies to cut back on sponsorships and Stampede-themed client events during the annual festival, which kicks off Friday.

The City of Calgary, which markets itself using the slogan “Be Part of the Energy,” is the headquarters for many Canadian oil and gas companies, as well as a regional headquarters for multinational giants. The Stampede pumps about 345 million Canadian dollars (US$275 million) into the local economy each year, according to organizers.

But the slump in oil prices in recent months has meant industry-wide wage reductions, layoffs and sharp budget cuts, all of which have weighed on consumer spending, real-estate prices and overall economic sentiment in what was until recently Canada’s fastest growing province. The pain has also been felt across Canada because energy is Canada’s biggest export. The country’s national statistics agency reported Tuesday that national GDP shrank 0.1% in April, the fourth month of declines in a row, leading some analysts to forecast that the Bank of Canada is likely to cut rates in July for the second time this year.

The downturn is taking a toll on the Calgary Stampede, a 10-day festival featuring carnival rides, country-music performances and chuck-wagon races. Three key official corporate sponsors backed out this year, and the Stampede says corporate events booked onsite are down about 10% on the year. The provincial government, which is dependent on energy royalties, slashed its annual grant to the Stampede by 20%.

“When we did the budgeting [last year] oil was at $90 a barrel, but when we hit the reality of January we were sitting at about $56 a barrel,” said Warren Connell, chief executive of the nonprofit that runs the Calgary Stampede. “That did have an impact on us, mostly on the sponsorship side but also through the general economic conditions of Calgary,” he said.

Many companies have scaled back or pulled the plug on offsite Stampede-themed parties, traditionally among the major networking events of the year here. Long a staple for financial and legal-service firms with connections in the energy business, these bashes often entertain hundreds of guests decked out in Stetson-style hats, embroidered western shirts and cowboy boots. But this year, Calgary’s typically festive midsummer mood is lower key.

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