Alberta has always been boom and bust, ever since oil was first discovered. There was an old bumper sticker from the 80's "Give Alberta another oil boom and I swear I won't waste it".
Office space vacancies in Calgary are nothing new. The economy will recover, people will forget the hard times, new buildings will go up and we'll do it all over again.
Back in the late 1990's/early 2000's it had a tech boom feel to it. Newly graduated engineers and geologists making the equivalent of $200,000 at 22. A friend from high school dropped out of his 2nd year of university because he could get a job paying $100,000 right now. Plenty of new vehicle, boats and new construction.
The Calgary-Edmonton corridor is one of the wealthiest areas in Canada. Alberta had the highest level of in-migration for a long time.
And keep in mind oil is now at $80/barrel and climbing. Those sweet, sweet oil royalties will be flowing into gov't coffers soon enough.
I've been in Alberta my entire life and seen the boom and bust cycle (partially from inside oil and gas software companies), but this cycle in particular is different. While I have been very successful in my life as an Albertan (two sweat exits so far, one more likely), it has been entirely because I sought work and built startups remotely from 2006 onward in other regions.
There's no guarantee the economy will recover at this point, and if it does, the likelihood of hitting the 2008 highs is vanishingly small.
There's no plan and has never been a plan to manage the resources of the province, so even the hint of a boom will distort wages up and down the ecosystem for a short period, followed by the waves of layoffs once that hint disappears and massive damage to every industry in the province.
I joined the board of the Alberta tech ecosystem for a term in the late 2010s while angel investing locally, and the picture was dismal but there were sparks of a revival. The current government that took power a few years ago completely ignored the new reality of the province and stomped on the ashes of the ecosystem.
Alberta is unfortunately heading towards Detroit-level dysfunction. There will still be activity, but the Alberta of the past is gone forever.
The only hope Alberta has is to switch government tracks and spend a real decade rebuilding from the continual societal damage that energy has impacted on it. And I'm not even talking about the environment yet. There is a real risk that Alberta will hollow-out and become little more than a slightly richer Saskatchewan.
As someone that grew up very close to Detroit, I’m afraid your analysis will be right. Sometimes you stop going from boom to bust to boom, and you just stay at bust.
At lest I hope Albertans will get enough transfers from the fed to run decent medical and education systems, I wouldn’t wish on anyones children the things I’ve seen young people in Detroit have to live through.
IMO, Detroit is at the peak of a boom cycle at the moment. Parks being filled out everywhere, Gilbert is in the middle of constructing his opus, grand central station is almost done(!), even the Illitch's are slowly building out district Detroit and fulfilling their obligation. The biggest problem at the moment for the mayor is deciding who to rain Biden bux on. Crazy to think about
Interestingly I found out yesterday that a fairly large tech conference plans to hold its North America event in Detroit next year. In all my time in the tech industry, I have never seen or heard of a tech event, except for maybe some local company thing, being held in Detroit.
I live an hour away from Detroit and drove a friend into the city a couple of years ago to show her around. At some point she said something like "This city looks normal, like any other city. I can see living here." Then I drove her off of Woodward, one of the main thoroughfares that's been rebuilt and looks great. Within about two blocks going perpendicular to Woodward the scenery changed into what people think of Detroit. So you can have a conference and it will be just fine for those visiting. Just stay within the pretty area, which is coincidentally where the police patrol all the time.
Where I live in the northeast US, it's pretty much the pattern with a lot of old industrial and/or port small cities. There's maybe a couple handfuls of gentrified blocks with restaurants, twee shops, entertainment venues, etc. Go a half dozen or so blocks and things get sketchier or at least a lot more rundown, albeit not historical Detroit levels.
The show is watchable btw. for the somehow cyberpunky feeling. Unfortunately canceled after 1 season only, in spite of favourable reviews. Strange.
Anyways, the most memorable thing for me was the part where the protagonist hops into his self-driving e-car to commute from the gated community he lives in, to work in downtown.
There is a sequence where it zooms out, to behind the car and then upwards, like filmed from a quadcopter, or so.
And then you see all the nice trees next to the highway are just fakery, hiding the ghettos next to it, by holographic walls :-)
> Office space vacancies in Calgary are nothing new. The economy will recover, people will forget the hard times, new buildings will go up and we'll do it all over again.
This mentality is why the current recession that started in 2015 hasn't turned around yet. The major oil and gas companies aren't coming back this time. It's time for the city to invest in something else instead of pandering to an industry that will drop them like a bad habit the moment the barrel drops below a certain price.
Tech can always an option. I mean we are entering WFH being the normal so office spaces aren't exactly what is required but once you start building Tech everything comes along with it (schools, stores,tech law firms etc) that supports Tech and in general people move where the money is.
In addition to higher extraction costs:
1. Alberta oil doesn't get the $80+ price you see quoted on the news. Although the major price gap has narrowed dramatically it still sells at a significant discount due to type and location.
2. Access to refineries and market is a real... challenge (to put it mildly). There has been huge opposition to expanding pipeline transport, some of it genuine (Environment, Culture) and some of it driven by self-interest ($$$). I don't want to start this debate but the result is we're still using a lot of fossil fuels right now, so (a) it's more expensive, (b) it's increased dangerous transportation by rail and (c) it's increased reliance on imports from some pretty nasty places in the world.
The funny thing is I moved to Calgary in the early 2000's when oil was well under $50/bbl and the environment was one of unbounded optimism and potential. When oil hit the same price a few years ago on the way down the would have thought the world ended.
> The funny thing is I moved to Calgary in the early 2000's when oil was well under $50/bbl and the environment was one of unbounded optimism and potential. When oil hit the same price a few years ago on the way down the would have thought the world ended.
Because the province ran out of the easy to extract oil and had to move to bitumen extraction which requires a much higher price of oil to be profitable.
Oil sands need the price of oil to be in the area of $100+ a barrel to be profitable.
Those are numbers that I recall being bandied about in the press when the oil sands were being developed.
I did a search for some actual numbers and they seem to be all over the place depending on the year, the type of bitumen converters being used, the age of the facility and the actual source. Oil industry numbers were about $20 a barrel less than the numbers I was seeing from investment firms.
I suspect that the numbers I was referencing were for new facilities being built back in 2015 or so. There was a lot of talk about new facilities being put into operation but that was when the price of oil was stratospheric.
Those numbers would have been higher than older facilities or upgraded facilities.
$70/barrel was the last number I heard 3-4 years ago. It's likely around $100 now due to higher operational costs. It's really hard to move oil in Canada.
It has more to do, I believe, with the cost of extraction and then processing the bitumen into a form that can be transported. It is quite energy intensive to do
I am no economist, but my understanding is that Alberta's oil sands must be extracted via fracking, which is expensive and only profitable when oil prices are high. That there is lots of oil available is besides the fact if it is no longer economically feasible to extract it.
This quality of the oil makes Alberta extremely sensitive to pricing shenanigans OPEC plays every once in awhile.
A couple years back when oil prices were artificially low, it was due to OPEC pricing oil well below even their cost, purely to drive other oil producers out of the game.
You are conflating a couple of things. Oil sands extraction is completely different from fracking. But, you did get the basic essence right in that oil sands extraction is quite dirty and expensive.
Fracking is actually a reasonably cheap way to extract additional oil from more conventional wells. That happens in Alberta, also.
The economics of it have to do with the massive amount of earth moved, and the relatively low amount of oil recovered per unit volume... and the work needed to be done to restore the mine afterwards.
The above added costs as well as the challenge of getting it to refineries. Lack of pipeline capacity to the coast (particularly Texas) is a big factor too.
Office space vacancies in Calgary are nothing new. The economy will recover, people will forget the hard times, new buildings will go up and we'll do it all over again.
Back in the late 1990's/early 2000's it had a tech boom feel to it. Newly graduated engineers and geologists making the equivalent of $200,000 at 22. A friend from high school dropped out of his 2nd year of university because he could get a job paying $100,000 right now. Plenty of new vehicle, boats and new construction.
The Calgary-Edmonton corridor is one of the wealthiest areas in Canada. Alberta had the highest level of in-migration for a long time.
And keep in mind oil is now at $80/barrel and climbing. Those sweet, sweet oil royalties will be flowing into gov't coffers soon enough.