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Capital spending in Alberta lowest since 2009

Capital spending in Alberta lowest since 2009

Posted on: 3/5/2018 | Author: ATB Financial's Economics + Research Team

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Capital expenditures in Alberta on new non-residential construction, machinery and equipment (not including repair costs) are expected to come in at around $54.1-billion in 2018. This is more than the combined total for the four Atlantic provinces and Quebec and is second only to Ontario.

This sounds pretty good but, by Alberta standards, it is going to be a slow year. Compared to their peak in 2014 ($97.8-billion), capital expenditures in Alberta will be down by 45 per cent this year and by 22 per cent compared to the 10-year average ($69.7-billion).

The main reason for the drop is falling capital expenditures in the oil and gas extraction sector, which account for about half of all capital expenditures in the province (10-year average). Capital spending in oil and gas has fallen by 61 per cent from its peak in 2014 ($58.1-billion in 2014 compared to $22.5-billion in 2018). Spending outside the oil and gas extraction sector is down by 20 per cent over the same period.

Some of the drop in the oil and gas sector is linked to the recent completion of major oil sands projects. Other factors include relatively low oil and gas prices, worries about new pipeline capacity coming on line and more attractive investment opportunities in the U.S.

Capital Spending, graph​ ​

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