(Calgary) Even rising oil prices haven’t brought the prosperity of yesteryear to Albertan cities.
Posted at 12:56 p.m.
The economy of some municipalities like Lloydminster and Fort McMurray does not seem to be doing as well as it did during oil price peaks in 2014 or 2017.
“If I had said two years ago that oil revenues would peak in Alberta, one would have expected Calgary and Edmonton to benefit, the rest of the province to benefit as well. However, this is not the case,” notes Charles St-Arnaud, senior economist at financial institution Alberta Central.
In 2014, for example, several communities in Alberta, and even in Saskatchewan, would have believed that the gold rush was back. The hotels were always full, the bars and other establishments lived to the rhythm of party workers with well-filled wallets. Lots of people then decided to settle in the west of the country.
But in 2022, things are different, says Mr. St-Arnaud, author of a study entitled “Where is the boom? »
The oil sector is doing very well. Production peaked in the first half of 2022. The average stands at 3.6 million barrels per day.
And thanks to the rise in prices, the total value of oil production from August 2021 to August 2022 amounts to 140 billion, an amount 75% higher than the same period of 2014. During the first six months of this year, the four major oil sands producers reported more than 21 billion in profit, more than three times more than the same period last year.
However, companies are much more tempted to use their extraordinary profits to repay their debts and pass the windfall to their shareholders rather than to invest in their operations.
In 2022, producers have reinvested only about 7% of their income in their operations, compared to 25% in 2014, mentions Mr. St-Arnaud. The nature of investments has also changed. Companies are shelving costly investments aimed at increasing production, preferring smaller projects aimed at improving their efficiency or reducing greenhouse gas emissions.
As a result: other sectors and workers benefit less from the spin-offs of this boom.
According to Statistics Canada, the province’s oil and gas sector only employed 75% of the total workforce in 2014. The same is true in the construction sector. The current workforce is 80% of that of this period.
Mr. St-Arnaud points out that the salaries of oil sands workers do not exceed those of other sectors as much as they have in the past.
“You don’t have to offer such high wages to recruit workers, because the demand for labor is lower. The average salary in Alberta used to be 10% higher than the rest of Canada, but the gap has narrowed in recent years. »
The economist is convinced that the oil industry has changed permanently. One of the advantages is that the Alberta economy will be less subject to the vagaries of this industry.
“If there is no boom, the recessions will be less important, he maintains. Oil will still be an important part of our economy, but it won’t be as much anymore. »
That’s not a bad thing, says Wood Buffalo Mayor Sandy Bowman.
“What we want is stable growth. The boom-bust cycle can be difficult for everyone and for the whole community, not just for workers,” he says.