If I get a hook in the middle, you'll know what's up.
I submitted a written version of my presentation in French and English, so I won't go through it in the interest of brevity. A couple of the main points I wanted to bring to your attention were, first of all, that this industry is cyclical. We've had sharp drops before in 1986, 1998, and 2009. The one I wanted to bring to your attention was in 1998. It stands out because that was when conventional oil production peaked in this country and we began the long-term shift to reliance on the oil sands for our oil.
The importance of that is that it shows that even at a time of weak prices other variables can be very important in determining the course of this industry, such as technological change or a change in tax policy. Alberta changed its oil royalties in 1998, which helped kick that industry off. Public attention tends to be fixated on price, and that's not the only thing that's going on here in the longer term.
The other thing I'll bring to your attention is that recessions in the resource sector generally, and especially in the oil industry, are quite different than recessions that we're used to. I was head of business cycle analysis. I studied recessions for Statistics Canada. I declared, you know, when the recessions began, when they ended. I spent a lot of time studying these things. Typically a recession in the auto industry and the housing industry is a very sharp cutback in output and employment. That's not what you get in the resource sector.
What happens in the resource sector? I circulated a graph of what happened in the manufacturing industry versus what happened in the oil industry over the last couple of decades. You can see that when oil output falls it's by very small amounts, 1% to 2%. The recessions in this industry are felt more in prices and profits than output and employment.
The whole dynamics of these recessions are quite different. You'll get a responsive output in the longer term as investment dries up, but you won't get the sharp drops in output that you would in auto assembly or housing. I'll remind people that recessions in the resource sector are different than in a lot of other industries.