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Mcleans' article mentioning Ross Rebagliati

Blog by | April 3rd, 2009

Sharing Alberta’s pain

Why its economic woes will be felt across the country

Sharing Alberta’s painNick Cook, an athletic farm boy from B.C. with Ross Rebagliati good looks, was just out of high school when he arrived in the energy hub of Nisku, Alta., two years ago, looking for work. Within days he’d scored a job as a leasehand, the lowest rung on the drill-rig ladder. “I did my drug test and they said, ‘Okay, are you ready to work?’ I said, ‘Yeah, I’m ready.’ They said, ‘Okay, drive out now, you’re already late.’ ” He was soon earning $21 an hour mopping spit off the ground. So eager was Alberta’s overheated oil patch for even inexperienced labour that his wages soon jumped to $26 an hour. It was brutal work—he put in his share of six-week stints—but back at camp two gourmet cooks awaited, a “campy” to clean up, a fridge full of pop, juice and ice cream, and all the satellite TV he could watch. “I would say we lived pretty good,” he says.

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Now Cook is channel surfing at his father’s home in Salmon Arm, B.C. He has not worked since September and has no prospects. He owes $8,000 on his credit card and can no longer afford the minimum payments. “I miss working hard,” says Cook, now 21. “You feel like a real man. It sounds stupid to say. But you’re making decent money. You’re really working.”


Thanks to recession and collapsed commodity prices, there are few Nick Cooks working the patch today. Oil trades at US$50 a barrel, after peaking at US$147 in July. Natural gas, the real backbone of Alberta’s conventional energy sector—accounting for almost three-quarters of its conventional field activity and royalties—hit $13.69 per million BTUs, then fell 70 per cent over the same period. Red Deer is a traffic jam of parked drilling rigs. Thousands of Calgary engineers, once recruited from around the world, are abruptly out of work and flocking to job fairs mounted by the likes of Saudi Aramco. CalgaryInc, a business magazine whose annual “Top 40 under 40” once profiled young phenoms and defined the city’s sometimes brash and callow boom time, just closed. “A huge swath of the workforce right now has only seen one side of a cycle—they don’t know what it’s like,” says Roger Soucy, president of the Petroleum Services Association of Canada. This is what it’s like.

Next month, Finance Minister Iris Evans will drop an Alberta budget that posts a deficit for the first time in 15 years—$1.4 billion—largely due to the sinking Heritage Fund rainy-day savings account. The Alberta Tories are otherwise busy pruning the province’s Ralph Klein-era perks. Last week they cut a gas rebate providing Albertans with a winter heating subsidy. Weeks before that they unloaded the “Alberta Advantage” slogan, adopted by Klein to advertise the province’s low taxes and lack of debt.

None of this is new for Alberta. In the early 1980s, inflation, low oil and gas prices and the National Energy Program conspired to deflate good times. A second hit to oil and gas prices in 1986 prolonged the malaise into the 1990s. (The more sardonic among oil patchers have taken to updating that old bumper sticker—“Please God, let there be another oil boom, I promise not to piss it all away next time”—adding entreaties like, “Okay, God, this time I’m serious.” Others favour Britney Spears above the tag line, “Oops, I did it again.”)

But this time the consequences of Alberta’s slump won’t be limited to the West. Canada owes a good deal of its prosperity over the past decade to Alberta’s energy boom, from beefy federal surpluses to soaring stocks to the surge in the dollar. But if Alberta once shared its wealth, the rest of Canada will now partake in its bust. A massive diaspora of tradesmen—seasoned veterans as well as youngsters like Cook—has bled from Alberta into some of Canada’s most depressed regions. So abrupt is the migration that in Newfoundland, to name one destination, Premier Danny Williams has set aside $800 million in stimulus, aimed in part at putting that province’s prodigal sons to work.

The trouble will ripple out also in the form of diminished tax dollars for Ottawa. Indeed, since commodity prices began soaring in the late 1990s, Albertans have shouldered an enormous share of the national burden, says University of Calgary economist Robert Mansell, not merely through the federal equalization system but via the employment insurance program and the Canada Pension Plan, too. Mansell estimates that between 2003 and 2004, Albertans sent the feds an average net fiscal contribution of $3,500 per capita in 2004 dollars, compared to $2,500 from Ontario taxpayers and $1,500 from British Columbians. In the last four years, those contributions grew to “an average of about $4,000 per capita per year,” he says. “The average Alberta family of four has been making a net fiscal contribution to the federal government of about $16,000 per year.”

A hefty but now waning dose of cash—another thing we’ve seen before. According to Mansell’s calculations, the average Albertan’s contribution was a whopping $12,735 in 1981, the year after the introduction of the NEP, which was designed to send a greater share of Alberta’s energy wealth to the rest of Canada. The next year, oil prices tumbled and that contribution shrank to $8,563 (again in 2004 dollars). Then, after Brian Mulroney cancelled the NEP in 1986, Albertans’ average net fiscal contribution fell to just $680 per capita. Still, that contribution remained high relative to other provinces in the late 1980s and early 1990s, then it soared again when commodity prices boomed in the 1990s. Over the years—and to particular effect during the era of federal budget surpluses—Mansell says Albertans contributed a per capita average of $2,510 per year, over three times the $758 Ontario taxpayers sent Ottawa.