It’s been a painful year for oil and gas workers in Alberta, and for the families who rely on those jobs to pay the mortgage and put food on the table. On September 29, Imperial Oil announced it would lay off 20 per cent of its workforce, extinguishing roughly 1,000 Alberta jobs. Imperial also plans to sell off its Calgary campus, the company’s headquarters for the past two decades.
The Imperial job losses follow a similar announcement from ConocoPhillips, which is laying off about a quarter of its global workforce, of which 950 people work in Alberta and British Columbia. Earlier in the year, Chevron and Cenovus also released plans to cut jobs.
Long-time residents of Alberta may say this is part of a tacit understanding with the energy sector; the busts are painful when prices drop, but the jobs and the contracts and the good times return when the price recovers and the boom cycle begins anew.
That was the pattern for decades. But that stopped being true in 2014.
In terms of oil prices, the last big boom year was 2022.
Even with Western Canadian Select peaking at over $100 per barrel that year, there was no klaxon sounded for well-paid workers to come to the oilsands, as had been the case in booms of the past.
In fact, since the global oil price crash of 2014, the old link between high oil prices, ramped up production levels and oil and gas job creation in Alberta has broken down. In other words, even when the price comes back, production goes up – but the jobs have not.
Prior to 2014, industry was planning for strong long-term demand for fossil fuels, in the form of multi-decade investments in new greenfield production facilities.
Today, the focus of industry leadership has explicitly shifted towards cost containment through mergers, automation, and a reduced workforce. In 2012, Canadian oil and gas created 38 direct jobs for every 1,000 barrels per day of production. By 2023, that number fell to 22 jobs; a drop of 43 per cent.
This wasn’t due to federal regulation, imaginary “caps” on production or anything that any government did – in fact, Canadian oil and gas production grew by almost 50 per cent during this period. It is now higher than it has ever been. The companies simply produced more barrels with fewer workers – adopting short-term attitudes to maximize profit now, but being careful not to over-invest in the future.
Some people claim that oil is making a comeback. But this year’s projections from Shell, BP, and Equinor tell a different story. All three oil giants have published their expectations that, at best, global oil consumption will peak sometime around 2030. Canada’s oil and gas companies are responding rationally to a potentially permanent era of declining demand.
All this has major implications for any “grand bargain” between the federal government and Alberta. This is not the time for us to stake our economic future on an industry which appears to be cutting jobs and battening down the hatches against the realities of a world that is becoming less reliant on its product.
In this era of nation-building, if a new million-barrel-per-day export pipeline made good business sense, industry would be bringing a proposal forward to the federal government. The private sector has balked – with the provincial government instead deciding to gamble with $14 million of taxpayer money to make the proposal.
A far more effective way to create long-term good-paying industrial jobs for workers in Alberta is to look at where the global energy sector is heading, which is the decarbonization of oil and gas production and the rapid scale-up of clean technologies like renewables, electric vehicles, and low-carbon manufacturing. Governments at all levels have a critical role to play in bringing that investment and those jobs here.
Albertans don’t need a grand bargain that does not deliver long-term jobs and opportunities for the future energy economy. We need a plan for our province’s economy that recognizes the reality of our kids – one which seizes the energy transition as a moment of vast economic opportunity.
