Alberta’s economy could use a cup of joe
Oil and gas capital spending is half of what it was four years ago
By Rob Roach, ATB Economics 2 June 2021 1 min read
Not everyone is a daily coffee drinker, but even if you aren’t, you probably have some sense of what happens when someone misses their morning dose of caffeine.
For some of us, we can barely function. For others, it’s more a matter of feeling sluggish. In both cases, it has an adverse impact.
Alberta’s economy has been missing its morning coffee for quite some time.
Updated quarterly numbers from Statistics Canada show that capital spending by Canada’s* oil and gas extraction industry has contracted 13 times in a row on a year-over-year basis (i.e., comparing each quarter to the same quarter of the previous year).
Spending over the first three months of 2021 was down by 51.0 per cent compared to the first quarter of 2017 and by 74.2 per cent compared to 2014 when the sector was booming.
At an estimated $16.1 billion for 2021, capital spending by Alberta’s oil and gas extraction sector is a huge boon for the Alberta economy, but it’s not providing the economic jolt it was just a few years ago.
There are several reasons for this, including the oil price crash and the pandemic that put a lid on new spending last year and the ongoing challenges surrounding the pipelines needed to get Alberta’s oil to market.
On a less gloomy note, even though capital spending is off to a slow start this year, strong prices and rising demand should spur more investment and help get at least a little more caffeine into our economic system before the end of the year.
*The numbers are for Canada as a whole, but Alberta accounts for about three-quarters of national oil and gas sector investment.
Answer to the previous trivia question: About 96 per cent of Albertans have household Internet access through a fixed broadband connection (2020 data).
Today’s trivia question: The result of horizontal drilling, the longest oil well (as opposed to deepest) in the world is found in Russia’s Chayvo oil field. How long is the well?