Driven by oil, central Canada compliance is forecast higher in 2012
In October of 2011, Charles Mount blogged about the correlation of construction output and archaeological licences in Ireland. The correlation was such that you could predict with some confidence, either licences or construction output, from the other. Clever, but what drives the Canadian CRM industry?
Unfortunately, as pointed out recently in HBJ by Christopher Dore (17 February 2012), there is no North American Industry Classification System (NAICS) code for CRM archaeology and there are no country wide statistics on archaeological activity in Canada. Hence begins the quest for drivers for the Canadian CRM industry.
Initial speculation was that price of oil was a significant driver in the archaeological economies of Alberta and Saskatchewan. Both provinces have growing and diverse economies, but the petroleum industry is an important component of the economy. There is no single price of oil, but the New York Mercantile Exchange (NYMEX) produced a nice online summary of the price of light, sweet crude. Saskatchewan has both light and heavy crude. For this analysis I looked at the maximum weekly price for the year, the minimum weekly price for the year, and the closing price during the last week of the year.
Next I looked at the number of archaeological permits issued by Alberta and Saskatchewan between 2008 and 2011. There are a few differences in the numbers and types of permits that both provinces issue, but these are not material to the analysis. Overall for this time period, there was a sharp decline in 2009 with a slow recovery in 2010 and 2011.
The number of permits appears to be well correlated with the maximum price of oil (permits and oil prices are normalized to a maximum value of 100). Permits also correlated with the minimum and December close, however for the latter two, the price of oil leads the number of permits by a year. So the minimum price of oil sharply declined in 2008, the year with the highest price, but the decline in permits took place in 2009.
Does this make sense? It does. There is a base price to drill and if the price of oil is too low, it is better to scale back production until prices rise. My prediction is that given the high December closing price, the number of archaeological permits will increase in 2012.
What about other provinces? I am collecting data but I am curious what others think are the prime economic drivers of their regions.
Heritage Business Journal 