Economy of Alberta

Economy of Alberta

Aerial photo of oilfield roads and drill sites in the Pembina Oil Field, 2008.
Currency	Canadian dollar (CAD, C$)
Fiscal year	April 1 – March 29
Statistics
Population	4,421,876 (2020)[1]
GDP	CAD$338.2 billion (2018)
All values, unless otherwise stated, are in US dollars.

The economy of Alberta is the sum of all economic activity in Alberta, Canada's fourth largest province by population. Alberta's GDP in 2018 was CDN$338.2 billion.^[2]

Although Alberta has a presence in many industries such as agriculture, forestry, education, tourism, finance, and manufacturing, the politics and culture of the province have been closely tied to the production of fossil energy since the 1940s. Alberta—with an estimated 1.4 billion cubic metres of unconventional oil resource in the bituminous oil sands—leads Canada as an oil producer.^[3]

In 2018, Alberta's energy sector contributed over $71.5 billion to Canada's nominal gross domestic product.^[4] According to Statistics Canada, in May 2018, the oil and gas extraction industry reached its highest proportion of Canada's national GDP since 1985, exceeding 7% and "surpass[ing] banking and insurance"^[5] with extraction of non-conventional oil from the oilsands reaching an "impressive", all-time high in May 2018.^[5] With conventional oil extraction "climbed up to the highs from 2007", the demand for Canadian oil was strong in May.^[5]

From 1990 to 2003, Alberta's economy grew by 57% compared to 43% for all of Canada—the strongest economic growth of any region in Canada.^[3] In 2006 Alberta's per capita GDP was higher than all US states, and one of the highest figures in the world. In 2006, the deviation from the national average was the largest for any province in Canadian history.^[6] Alberta's per capita GDP in 2007 was by far the highest of any province in Canada at C$74,825 (approx. US$75,000). Alberta's per capita GDP in 2007 was 61% higher than the Canadian average of C$46,441 and more than twice that of all the Maritime provinces. From 2004 to 2014 Alberta's "exports of commodities rose 91%, reaching $121 billion in 2014" and 500,000 new jobs were created.^[7] In 2014, Alberta's real GDP by expenditure grew by 4.8%, the strongest growth rate among the provinces."^[8] In 2017, Alberta's real per capita GDP—the economic output per person—was $71,092, compared to the Canadian average of $47,417.^[9] In 2016, Alberta's A grade on its income per capita was based on the fact that it was almost "identical" to that of the "top peer country"—Ireland.^[10]

The energy industry provided 7.7% of all jobs in Alberta in 2013,^[7] and 140,300 jobs representing 6.1% of total employment of 2,286,900 in Alberta in 2017.^[11] The unemployment rate in Alberta peaked in November 2016 at 9.1%. Its lowest point in a ten-year period from July 2009 to July 2019, was in September 2013 at 4.3%.^[12] The unemployment rate in the spring of 2019 in Alberta was 6.7% with 21,000 jobs added in April.^[13] By July 2019, the seasonally adjusted unemployment rate had increased to 7.0%.^[12]

By August 2019, the employment number in Alberta was 2,344,000, following the loss of 14,000 full-time jobs in July, which represented the "largest decline" in Canada according to Statistics Canada.^[14]

Beginning in June 2014, the record high volume of worldwide oil inventories in storage—referred to as a global oil glut^[15]—caused crude oil prices to collapse at near ten-year low prices.^[16][17][18] By 2016 West Texas Intermediate (WTI)—the benchmark light, sweet crude oil—reached its lowest price in ten years—US$26.55. In 2012 the price of WTI had reached US$125 and in 2014 the price was $100. By February 2016 the price of Western Canadian Select WCS—the Alberta benchmark heavy crude oil—was US$14.10^[19][20]—the cheapest oil in the world.^[21] Alberta boom years from 2010 to 2014 ended with a "long and deep" recession that began in 2014, driven by low commodity pricing ended in 2017.^[22] By 2019—five years later—Alberta was still in recovery. Overall, there were approximately 35,000 jobs lost in mining, oil and gas alone.^[22] Since 2014, sectors that offered high-wage employment of $30 and above, saw about 100,000 jobs disappear—"construction (down more than 45,000 jobs), mining, oil and gas (down nearly 35,000), and professional services (down 18,000)," according to the economist, Trevor Tombe.^[22] There was a decrease in wages, in the number of jobs, and in the number of hours worked. The total loss of incomes from "workers, business, and government" amounted to about 20 percent or about CDN$75 billion less per year.^[22] Since 2011, prices have increased in Alberta by 18%.^[22] However, a typical worker in Alberta still earns more than a typical worker in all the other provinces and territories.^[22]

By March 2016, Alberta lost over 100,000 jobs in the oil patch.^[23] In spite of the surplus with the low price of WCS in 2015—99% of Canada's oil exports went to the United States^[24] and in 2015 Canada was still their largest exporter of total petroleum—3,789 thousand bpd in September—3,401 thousand bpd in October up from 3,026 thousand bpd in September 2014.^[25] By April 2019, two of the major oil companies, still had thousands of workers—Suncor had about 12,500 employees and Canadian Natural Resources had about 10,000 full-time employees.^[26]

Alberta has the "lowest taxes overall of any province or territory" in Canada,^[27] due in part to having high resource tax revenues. However, overall tax revenues from oil royalties and other non-renewable sources has fallen steeply along with the drop in global oil prices. For example, in 2013, oil tax revenues brought in 9.58 billion, or 21% of the total Provincial budget,^[28] whereas in 2018 it had fallen to just 5.43 billion, or 11% of the Provincial budget. ^[29]

In the spring of 2020, Alberta's economy suffered from the economic fallout of both the COVID-19 pandemic and the 2020 Russia–Saudi Arabia oil price war."^[30]