Despite Rising Oil Prices, Alberta Prosperity Lags

Spread the love

Despite rising oil prices, prosperity lingers in Alberta

An Oil Well in Alberta

Even rising oil prices have not brought prosperity to Alberta. x27;yesterday in Alberta towns. The economy of some municipalities like Lloydminster and Fort McMurray does not seem to be doing as well as it did during the peaks in oil prices in 2014 or 2017.

“If I had said two years ago that oil revenues were going to skyrocket in Alberta, one might have expected Calgary and Edmonton to benefit and the rest of the province also benefit from it. However, that is not the case,” says Charles St-Arnaud, senior economist at financial institution Alberta Central.

In 2014, for example, many communities in Alberta and even Saskatchewan thought they were back to the gold rush. The hotels were always full, the bars and other establishments lived to the rhythm of party workers with well-filled wallets. Many people then decided to settle in the west of the country. But in 2022, things are different, says St-Arnaud, author of a study titled Where's the Boom?.

The oil sector is doing very well. Production peaked in the first half of 2022. Average production stands at 3.6 million barrels per day.

And thanks to higher prices, the total value of oil production from August 2021 to August 2022 amounted to $140 billion, an amount 75% higher than that recorded during the same period. period in 2014.

In the first six months of this year, the four major tar sands oil producers made profits of more than $21 billion, or more than three times the value of their profits at the same time last year.

However, companies are much more tempted to use their extraordinary profits to repay their debts and to pass this windfall on to their shareholders rather than to invest in their activities.

< p class="e-p">In 2022, producers reinvested only about 7% of their income back into their operations, compared to 25% in 2014, St-Arnaud said. The nature of investments has also changed. Companies are shedding costly investments to increase production, preferring smaller projects to improve efficiency or reduce greenhouse gas emissions.

En 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 employs only 75% of the total workforce in 2014. The same is true in the construction sector: the workforce ;current work is equivalent to 80% of that of this period.

Mr. St-Arnaud reports 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.

—Charles St-Arnaud, Senior Economist, Alberta Central

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 sector of activity.

“If it doesn' x27; there is no boom, recessions will be less damaging,” he argues. “Oil will always 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 points out.

Previous Article
Next Article