Long time readers will be aware of some of the past work I’ve done on exposing the popular rhetoric used by Alberta politicians regarding the importance of the oil and gas industry in the province.
For example, I’ve debunked the myth that oil and gas is Alberta’s largest industry, that oil and gas royalties fund government revenues, that oil and gas generates the most income tax, that oil and gas employs the most workers, and so on.
For today’s news story, I thought I’d explore the connection between productivity in the oil and gas sector and employment in that sector. I was a curious whether increased production actually leads to increased employment, as the industry and politicians keep claiming it does.
First, I found data on oil production, GDP, and job numbers for Alberta. Then I extracted and compiled data specifically for the “mining, quarrying, oil, and gas” sector between 2007 and 2022.
Let’s look at a few charts.
This first chart sees oil production for conventional oil and non-conventional oil (bitumen). Natural gas is not included in this chart.
We see that between January 2007 and January 2022, production increased significantly. In fact, production grew 110.8% during those 14 years, from 8.3 million m3 to 17.5 million m3.
Next is GDP. The most recent data I could find was for 2020.
We see here that even though there was a bit of a dip at the start of last year (likely because of the drop in oil prices) and a bit of a dip because of the 2015–2016 recession, GDP generated in Alberta in the “mining, quarrying, oil, and gas” sector has increased during the same 13-year period I listed above.
Between January 2007 and January 2019, Alberta’s GDP produced by this sector increased by about $27 billion, from $64.01 billion to $91.03 billion. That’s a 42.2% increase.
And even if we include the $11 billion drop in GDP from the start of 2020 (despite it probably being an outlier), we’re still looking at an increase in GDP, by about $15 billion.
Not only that, but the proportion of the overall GDP generated by the “mining, quarrying, oil, and gas” sector also increased during this 13-year period.
Here, take a look:
We see that over the last 18 years, the “mining, quarrying, oil, and gas” sector has gone from generating 22.81% of Alberta’s GDP to over 26% of it during the last 3 years of the period.
From the 22.81% in 2007 to its peak of 26.5% in 2018, “mining, quarrying, oil, and gas” increased its share of the province’s total GDP by 16.3%.
So, over a period of 13 years, Alberta saw a 114% increase in oil production, a 42% increase in oil & gas GDP, and oil & gas made up a larger share of the total GDP of the province.
That must mean the industry created a bunch of jobs, right?
Well, that brings us to our next chart.
Overall, the “mining, quarrying, oil, and gas” sector actually lost jobs since January 2007, when it saw an even 150,000 people employed either full-time or part-time. Since then, we’ve dropped to 139,900, as of January 2022.
That’s a loss of 10,100 jobs. Or 6.73%.
Jobs were on the rise for a couple of years around the halfway mark, reaching as high as 173,660 jobs in 2014. But in the 8 years since then, it’s been pretty much downhill the entire time. Even the brief reprieve seen in 2018 and 2019 was still below the 2007 levels.
And even though we’ve seen a rise in oil and gas jobs over the last couple of years, we’re still below 2019 levels, before the UCP took office, let alone below 2014 levels.
Really, when you look at it, 2022 was not only a loss of 10,100 jobs since 2007, it was a loss of nearly 34,000 jobs since 2014.
Let’s consider that for a moment:
| 2014 | 2022 | Change | |
|---|---|---|---|
| Production (million m3) | 13.4 | 17.5 | 4.1 |
| Jobs | 173,600 | 132,800 | -33,700 |
So if we produced 4.1 million m3 more oil in the last 8 years, then why did the oil and gas industry lose nearly 34,000 jobs during the same period.
How is the industry pumping out 4.1 million more cubic metres of oil with 34,000 fewer workers?
Maybe through autonomous equipment, automation of control and safety systems, or joystick-controlled pipe-handling. Because if they’re producing more with fewer people, it’s not because the CEOs are donning blue coveralls.
And if they’re producing more now than ever before but with fewer workers, what guarantee will there be that giving them tax breaks, lowering their royalty rates, and otherwise subsidizing the industry will lead to more jobs?
4 replies on “AB sees record oil extraction, but not record oil jobs”
My sense is that the O&G jobs that were lost and have not come back are largely jobs related to construction of new O&G projects. O&G construction is much more labour intensive than O&G extraction, and the oil price crashes in 2014 and 2020 resulted in a number of planned O&G projects being shelved. Even with the recent return of higher oil prices, given the growing global desire to move away from fossil fuels it seems unlikely that we will see the same volume of new O&G projects as before, or the same demand for construction-related O&G workers as before.
Even then, oil and gas jobs are still below what they were when the UCP took office in 2019.
AUTOMATION, IMPROVEMENTS, fine tuning, efficiencies – Syncrude had one giant coker that ran continually. They added a second (maybe a 3rd?). But Suncor had 8 smaller (still good sized) cokers that ran in batches. They added another 8. Or more? But the big deal – was decreasing batch times. I believe they reduced batches from 18 hours to 12, and further to 8. So from 1.3 batches a day – to 3 batches a day. They are always looking for better, cheaper, safer, more efficient ways of doing things. This one just stood out for me.
I understand an old school fracking crew could consist of some 30 or so people. Of recent years, they number around 5? And now they have fully automated setups. So you can setup a new well – with no people. Automation is responsible for more job losses than moving operations to mexico or china. Next will be AI.
KEEPING IN THE BLACK – Suncor is pretty good at making sure that no matter how bad things are – they almost always manage to show a profit at each of their quarterly reports. In 2013, while the price of oil was over $100 – they had a bad quarter. The news rippled through the company because everyone knew that meant layoffs. At the time one site might have had 6000 employees and 6000 contractors. The next day they laid off 1000 contractors. And over the next 2 months another 2000. 2014 comes upon us, and the price of oil crashes. Then we REALLY started bleeding jobs across the province. People left, went back home east, got into other industries – and committed suicide at record paces. Jason kenney as the Federal Minister of Immigration – came up with “express entry”. Which fast tracked 1000 immigrants in each of 65 different trades and designations. With a steady supply of skilled tradespeople coming, (almost 500,000 trades people over the last 7-8 years) apprenticeships have been on the decline and the trade schools have been emptied.
They have done some hiring to have extra bodies around and catch up on shutdowns and maintenance thats been put off – but there are few new projects. Suncor was doing some hydrogen unit thingy and theres a new wind farm going in south of Calgary….. but yeah….. 10 years ago total investments in Alberta were almost $300 billion with oil/energy being half that ($150 billion). Today total investments are $150 billion with energy being $20 billion. Thats all projects over $5 million either in progress or proposed on the books. at albertamajorprojects.com
ATTRITION, REDUNDANCIES, TRIMMING FAT – Suncor has made many purchases, like Petro Canada and Syncrude. And so they have merged payroll, human resources, accounting, etc. More jobs lost there. Suncor originally formed in Ontario in the 60’s and still have (had) 2 head offices there. They recently decided to merge them into Albertas head office (or are in the process) and while they are bringing jobs here from Ontario – as an industry, i expect they lost more jobs merging there.
Side note on PetroCan – originally created as a pseudo crown corp by the ndp and liberals. Conservatives were never happy with government being in business, and so, they let it go public in the 90’s. Under government control – they had some 11,000 employees. Sold off – the new management brought that down to 5,000 employees – turfing 6,000 jobs. I know this has little to do with your numbers of employees in the energy sector of the last 10-15 years – (except that when Suncor snapped them up – further jobs were lost). But i like to repeat that story to show that – “holy shit they can trim a lot of fat and still have a working company”!
HIRING FREEZE? – A buddy of mine was saying they are hiring fewer people than ever, opting to go more with contractors. Contractors being easier to get rid of. When they do something like introduce self-driving trucks – they end up spending a fortune retraining truck drivers to do something else. Just an example – even though they announced self driving trucks more than 10 years ago – it seems to have not been fully developed yet.
OTHER ENERGY JOBS – Some of those were probably coal jobs. Harper declared that coal would be done by 2030, and conservatives passed legislation pretty much guaranteeing that. So when notley was premier – she elected to speed things along a little bit and provided retraining to people who would be losing their coal jobs.
FEAR – Oil is not rare – the entire planet is covered in it. And the price is artificially manipulated. Even now – opec+ is curtailing at least 3 million barrels per day. Its cool to sit back and make bank when the price is over $100. But not so cool when 2 countries – russia and saudi – can flood the market to drive the price to zero (during covid). And there are ways to replace much of its utility. It took Alberta 40 years to build a refinery – in an age when everyone was confident in oil and gas’s future. Now? Who is going to invest in anything? A pipeline? A refinery?
Over the past 10 years, the irving family (owners of the irving refinery out east) had proposals to expand their current refinery, or build a new one. And they opted not to do either. Because it would cost too much and never make money? Because it would take them 10+ years to get a refinery built and the price of oil could tank by then? Who knows. Instead they went and bought up running refineries in ireland.
So yeah, lots of jobs lost – and we won’t be getting them back. In the remote possibility that we do get 30,000 jobs in energy – it doesn’t put us ahead – just back to 2012 levels!
I’m sure there are many more, these just percolated to the brainwaves during a night time constitutional.
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