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Did the NDP actually destroy Alberta’s oil & gas sector?

It seems as though I can’t go anywhere online lately without someone complaining that the NDP shut down the oil and gas sector in Alberta. But how true is that claim?

One claim I often see from people online is that the NDP destroyed the oil and gas sector in Alberta while they were in power. It’s a lot of rhetoric, and I figured that I would take a look at several metrics to measure the accuracy of this claim.’

First, let’s look at the number of oil and gas businesses operating under the NDP.

Statistics Canada has a monthly dataset of active businesses; unfortunately, it goes back to only July 2015, which means we can’t compare the NDP data to the PCs.

That being said, here we go:

While we can’t see what the numbers were like for the mining, quarrying, and oil and gas extraction sector prior to the NDP gaining power, what we can see is that the province went from 4,290 active businesses in July 2015—just 2 months after the provincial election—to 3,524 active businesses in April 2019, their last month in power.

That’s a loss of 766 active businesses.

To be fair, that number continued to fall after the 2019 provincial election, when the NDP lost the reins, and even the UCP Job Creation Tax Cut wasn’t enough to stem the bleed before low oil prices and the pandemic further decimated the number of active businesses in the sector.

Capital investments

Next, let’s look at capital investments.

Earlier this year, Statistics Canada published business investment data, spanning a 15-year period between January 2006 and January 2021. The investment data covers capital and repair expenditures on non-residential tangible assets, such as inventory, vehicles, equipment, and buildings.

This graph clearly shows that capital investments in Alberta’s oil and gas sector plummeted during the time that the NDP were in power.

Granted, even at their lowest level, capital investments in the fossil fuel sector never bottomed out like they did in 2009 under the PCs or in 2020 under the UCP.

It’s probably no coincidence that each time capital investment fell dramatically, Alberta was in a recession, regardless of whether it was under the PCs, NDP, or UCP.

Production

So if the number of oil and gas businesses, as well as capital investment in the oil and gas sector, fell under the NDP, then surely oil and gas production also declined under the NDP, right?

Alberta has been tracking oil production since January 2007. Here’s what oil production looks like in Alberta every January since 2007.

What we see is not that oil and gas production paralleled business numbers and capital investment; rather we see that oil production didn’t suffer at all under the Alberta NDP. During their administration, oil production increased 15%. In fact, oil production increased every year the NDP were in power, ranging from a low of 1.46% in 2017 to a high of 7.7% in 2016.

Actually, the only time there was a drop in oil production was back in January 2010, under the Progressive Conservatives, when production fell by 4.3%.

Exports

Okay, so Alberta was producing more oil, but was it getting it to market? Well, according to the Canada Energy Regulator, here are Alberta’s exports since 2016.

LightHeavyCombinedChange
20160.080.340.42
20170.070.380.457.14%
20180.080.420.5011.11%
20190.100.420.524.0%
20200.100.400.50-3.8%
in million m3 per day

The first 3 lines were entirely during the NDP administration. The first 4 months of 2019 were under the NDP, as well.

Not only were the NDP exporting oil but they were exporting it in increasing amounts. In fact, exports increased by more than 11% in 2018, despite production increasing by only 2.5% that year.

In the NDP’s last two years, exports increased by 80,000 m3 a day. That works out to be 29.2 million m3 more oil being exported from Alberta as the NDP’s term drew to a close.

Unfortunately, CER’s data doesn’t go any earlier than 2016, so it’s difficult to compare exports under the PC government or even the NDP’s first year.

GDP

Next, let’s look at GDP in the oil and gas sector.

According to Statistics Canada data, GDP at basic prices (in 2012 dollars) for the oil and gas extraction sector actually increased under the NDP, just as production and exports had.

Under the NDP, GDP for oil and gas extraction went from $63.81 billion at the end of 2014 to $80.14 billion at the end of 2018. That’s a 25.6% increase.

During their 4 years in office, the NDP saw GDP for oil and gas extraction increase by $16.3 billion. In the 4 years prior to their being elected, it had increased by $12.8 billion.

By comparison, GDP for this sector grew 1.3% during the UCP’s first year and fell by 6.4% in their second, for a total net loss of $4.9 billion.

On a related note, oil and gas extraction GDP as a proportion of total GDP skyrocketed during the NDP administration.

Under the PCs, oil and gas extraction made up 20% or more of the province’s total GDP only once, at least since 2006. Under the NDP, it was above 20% every single year, and even increased each year, jumping from 18.86% at the end of 2014 to 23.95% four years later.

That proportion has continued to increase under the UCP, but just barely, increasing just 0.1 points their first year and 0.42 points their second.

By comparison, the smallest increase under the NDP was 0.66 points, and 2.18 points was the largest.

Jobs

Finally, let’s look at jobs, specially jobs in the “forestry, fishing, mining, quarrying, oil and gas” sector.

No matter how you look at it, oil and gas jobs tanked under the NDP, reaching their lowest level ever during this 15-year period.

Oil and gas jobs under the NDP fell to a low of 124,000 in July 2016. They had reached a high of 181,200 in May 2012, and even in May 2014, a year before the NDP took office, oil and gas jobs were at 173,100.

Now in all fairness to the NDP, that 50,000 drop wasn’t all on them. By the time they took office at the beginning of May 2015, jobs were already in freefall. They had gone from 177,400 in April 2014 to 158,500 in April 2015.

Before the NDP had even won the 2015 provincial election, nearly 20,000 oil and gas jobs had already disappeared, triggered by low oil prices and a recession, and there was no way the new government could turn the tides immediately.

In fact, it was a little over a year after the NDP were elected when the job losses finally came to a halt. Over the next two years, jobs in the sector kept rising, finally reaching a high of 153,300. By the summer of 2018, about 85% of the oil and gas jobs lost in the first 14 months of the NDP’s administration had come back.

After that, there was a slight drop in jobs between then and April 2019, when the party lost to the UCP. And that drop kept going, fuelled by low oil prices once again, right up until the pandemic. By February 2020, the month before the government implemented pandemic restrictions, oil and gas jobs sat at 131,300, its lowest level in 3 years.

So, did the NDP actually destroy Alberta’s oil and gas sector?

Well, despite seeing less in capital investments and fewer oil and gas companies during the NDP’s administration, Alberta’s oil and gas sector pulled more oil out of the ground than it did under the PCs. They also exported more under the NDP. And their GDP increased, particularly as a share of total GDP. And while oil and gas jobs dropped under the NDP, they’d been dropping for months prior to the NDP coming in, and they managed to bring back about 85% of them over the next two years.

And that’s not even counting flip flopping on royalty rates, or advocating for Line 3 and Trans Mountain pipeline expansions, or opposing the federal oil tanker ban.

So, it might be a bit misleading to say that they destroyed the industry. If anything, they were quite friendly to the industry.

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By Kim Siever

Kim Siever is an independent journalist based in Lethbridge, Alberta. He writes daily news stories, focusing on municipal, provincial, and federal politics, specializing in investigative journalism and critical analysis from a leftist political lens. He also writes regular editorials on general politics and social issues.

14 replies on “Did the NDP actually destroy Alberta’s oil & gas sector?”

It would be interesting to normalize all data presented to the world price for oil.

I presume world oil price has a greater effect on industry than any political group in power or their policies.

The only time this did not apply was Liberal made in Canada pricing, but that just preceded the great early 80’s oil price decline by a year.

Hello, Kim:

True, NDP did not singlehandedly destroy Alberta’s oil & gas sector. But by introducing the carbon tax on January 1, 2017, NDP contributed significantly to the demise of many businesses due to an increase in expenses at a time when their revenues went down. Many well-paying jobs were lost as a result and not just in the oil & gas but in many other industries and fields dependent on oil & gas workers’ buying power. My new business, started in September 2015 teaching tennis in a gym over the winter (a novel idea for Alberta but an old and tried method in Toronto of getting a jumpstart on the short Canadian summer season), was doing well for the first two seasons Sept 2015 to May 2017 (with people who registered in December 2016 for the spring session) as people still had financial reserves from previous good years and a hope for the economy to improve. But with the carbon tax and more companies going under in the next six months after the carbon tax introduction, I had fewer registrants in September 2017.

I found a better facility which should and would have brought more students, but my students came mainly or almost exclusively from the professional and middle-class economic level. By next September 2018, I was down to just three students (I would have had more but one lost a job and could not pay for himself and his son, another lost a job and found a new one with increased overtime so he could not attend, that’s three students lost right there). There were very few new inquiries as people worried more about being able to pay their mortgage rather than looking forward to taking tennis lessons. I guess being homeless did not appeal to anybody. Whether you recognize it or not, the carbon tax had a detrimental effect on Alberta and particularly on the Calgary economy, as Calgary does not have a steady government sector where people are paid no matter what the economic conditions are. Had my business been in Edmonton, government employees might have carried my business till economy had improved, but not in Calgary where carbon tax had more impact because there is no such sector impervious to economic ups and downs.

Taking tennis lessons from September 2018 on would have given Calgarians a chance to learn skills and to increase fitness and immunity, decrease stress and weight (and prevent pre-conditions which later on made them susceptible to Covid-19 infection coming around in less than eighteen months, leading to serious outcomes and landing some in the hospital or even in ICU) and develop social ties while being physically active. Tennis is one of those sports where social distancing can be implemented easily but one must have learned the technique over the winter to get any exercise benefit. No lesson, no technique, no desire to go out and be active, no social ties developed in normal times – when tough times come and one has not prepared, the situation becomes dire.

In September 2021 I found another great indoor facility, this time on a bus route and close to over 20 elementary, junior high, and high schools, counting about 5,000 students. This gym only accepted students 18 years and under and the management had no rules for REP as they only accepted teens. As news of unfit and overweight children (and gaining weight during the pandemic) spread, I distributed fliers to these schools through approved channels of communication. Without any other advertising I had one group, all under the age of 12 and ready to start, able to socially distance as the gym was very spacious.

As I was about to sign a rental contract, the management elected to become REP-compliant even for children under 12, thus preventing this group to be physically active this winter and learning a technique which would serve them well for the next six or seven decades of meeting friends socially on public courts or in clubs. In addition, learning tennis enables the students later on to pick up badminton, squash, racquetball, or the currently popular pickle ball – but it is not so easy to start with the other sports and switch to tennis as habits from those sports preclude learning proper tennis technique.

The negative effect of NDP’s policies such as the unfortunate introduction of carbon tax on January 1, 2017 did not just influence the oil & gas sector that year (perhaps the word ‘destroy’ is too strong) but also the construction, transportation, and building maintenance fields – these three fields representing the major occupations of young male opioid overdose victims. With gyms and yoga studios closed due to Covid-19 and inaccessible to lower stress with exercise, lost jobs, reduced spending power, and the provincial government’s debt gone from $10.9 billion to $80.9 billion in four short NDP years, increasing stress for those Albertans who worry about things like that (after Covid-19 crisis, it is now close to $110 billion and still rising without one new hospital even in planning stages) – those dollars could have been used by the UCP government to build more hospitals and/or contribute to actions to increase natural immunity of Albertans – the detrimental social (and not just economic or financial) impact of NDP is still being felt today.

Barbara, here is a graph showing the number of active businesses in Calgary between January 2017 and when the UCP are elected. As you can see, the number of active businesses in the city remained relatively constant after the provincial carbon tax was introduced.

Whatever was preventing you from finding enough clients, I don’t think the data supports the hypothesis that it was because businesses were shutting down because of the carbon tax.

You can see the data for yourself here.

Kim Siever, you maybe should have lived in Calgary at that time. Businesses don’t go broke over night. They hang in there as long as they can hoping things will improve. They do things like sell personal assets to stay in business and weather out the storm. Your Stats don’t reflect reality. And one last thing, while we may have been shipping oil under the NDP, no money was being made on it due to transportation costs. You maybe should have talked with O&G people before writing your article. Making comments like “The oil should be left in the Ground” doesn’t promote an Industry.

I wasn’t commenting on how long it takes for businesses to go broke. I was responding to Barbara’s claim that businesses shutting down were the cause of her losing clients between May 2017 and September 2018.

They aren’t my stats. They are stats provided by Statistics Canada and the Government of Alberta.

If no money was being made on oil, why did the GDP keep increasing every year under the NDP, especially at rates higher than production and export?

Where did I say, “The oil should be left in the ground?”

Cherry picking statistics. Take a couple from here for this reason, more from over here to prop and support left leaning rationale, etc.
production stats increase because there are existing wells and new wells are added daily bringing online more productions levels daily. Just because you make $1/hr doesn’t mean that’s all you’ll earn. There are variables changing daily.
NDP was and is not a friend to oil and gas. They may not have hurt certain aspects of the industry. But I will damned if I’m gonna let you shine me on and say they didn’t hurt industry in general. Oil and gas 4 life. I hope you paid your heating bill this month.

How about projects approved. Amount of construction work being done. I couldn’t buy a job that would last more than 2 months while the ndp were in power. I normally waited 2 or 3 weeks to get a slip. With NDP 4 to 6 months. That was the normal for over 20,000 oil and gas worker. And forget employing travel cards. But he’ll let’s bring more temporary foreign workers in to do the job for $15 hr less. All I can say it’s idiots that look at stats have know idea what’s really going on because they are to lazy to get off the computer and step into the real world.

Do you have a source for projects approved or amount of construction work done? I couldn’t find this information.

As I pointed out in the story, the number of oil and gas workers were significantly lower under the NDP than they were only a year prior to the election, so it wouldn’t surprise me that you it would take you longer to get a slip.

Kim, there predictably seems to be some resistance to your analysis from by the Calgary contingent. As much as I like tennis (especially in the winter) the suggestion that a new business venture failed because of gov’t measures is a bit rich. It may not have been viable under the most favourable of conditions.

Furthermore, the idea that Edmontonians are protected from low energy pricing is another old trope. Calgary “scooped up the gold” by attracting oil industry head offices in the 70s & 80s, but refuses to acknowledge the downside of that move – when prices are down, O&G sheds jobs rapidly, and leases expire without renewal. Construction levels off, consumer spending falls even from those that aren’t directly affected. That homeowners have to compensate for City revenue losses is a predictable result.

Most indications are that the NDP did not “rock the boat”, and stabilized the economy where possible. The PCs had lost their way, and the UCP is a fringe party of persons without sound ideas or ethics. It was only through wishful thinking that they were elected. So much damage has been done by them that it may take a decade to repair it.

World oil prices may improve, and this will have nothing to do with the AB Gov’t. They can, however, exacerbate a bad situation. We are dealing with coincident economic events, not causal relationships. To buy pipelines and refineries is not Gov’t business – it interferes with the marketplace.

Kim, I would suggest that the increased production and exports of oil and gas as well the increase to GDP should be attributed to the PC’s and not the NDP. The projects which came on line and began production under the NDP were all approved and construction started under the PC government so I don’t believe any credit should be given to the NDP for the benefits these projects provided. Two major projects that started production under the NDP are Kearl Expansion (2015, 120,000 bpd) and Suncor Fort Hills (2018, 180,000 bpd). the NDP didn’t have anything to do with the approval or attracting the investment for these projects and I would assume these two projects are the biggest contributors to the increased production.

You discussed the number of businesses decreasing but I’d like to add that a number of major oil and gas companies sold their oil sands asserts during the NDP’s term. Shell, ConocoPhillips, Exxon, Statoil, Imperial all divested from the oil sands. This leaves fewer companies for people to work at and contractors to bid to which gives the major oil companies more leverage over labour because they have less competition.

Thanks for the added insights, Corey. To be clear, I wasn’t attributing the increased production or exports to any party. I was just showing how all of the measures changed under the NDP, whether that’s increasing or decreasing.

Thanks for your reply, Kim. I’m curious why you came to the conclusion that the NDP were quite friendly to the oil and gas industry if we don’t have any examples of where the NDP helped grow or sustain the oil and gas industry? I don’t think the NDP targeted the oil and gas industry but I would argue that the NDP’s platform and their history in other parts of Canada would indicate that NDP lead governments are not friendly to any private industry or business.

As I indicated, they advocated for the building of Line 3 and TMX. They reversed their plans to increase royalty rates. They opposed the federal oil tanker ban. They also approved 4.5 million acres worth of oil and gas leases while they were in power.

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