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Calgary & Alberta Economy

Social Justice

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Good thoughts. I am curious about if we took this the other way. What are things we can do locally that don't currently? Our mega export volumes hid the huge deficit of wealth that leaves this province in pretty much every other category. Wealthy Calgarians don't tend to retire in Alberta and keep their wealth here that they accumulating from our resource extraction industry. We probably have the highest % of vacations outside the province. We probably produce the least amount of our own vegetables. We probably buy the most boats, RVs and other toys produced per capita than most places anywhere etc.

The reason for these is two-fold: (1) it's not cost-effective for us to capture more of that business and (2) so much of our population is so wealthy they don't bat an eye at expensive real estate, vacations or purchases anywhere else. Perhaps there is room for self-sustainment and capturing more of the wealth we generate provincially (or at least within Canada). How?

Partly the story may be that folks with less wealth will be forced to cut back on their international trips and houses (more camping, less Cancun). Another part might be an enlightened policy environment that encourages a bunch of growth in industries to increase their cost-effectiveness so that we can generate new exports or at least capture more of the wealth that typically flees this province. A similar approach was done in the provincial favourite, the oil sands. It made no sense without federal investment for decades in the technology and research to make it cost-effective (until now at least). Smaller industries that are bit players today can be scaled up and we could end up with a more diverse and more self-sustaining economy.

Perhaps the future economy is one that is more local focused and self-sustaining, regardless of what level of wealth we find ourselves at.

Yeah...I agree. It's good to support local. But once again we to do something or export something of value.


I keep hearing the argument "we'll never find anything to replace O&G, it's our biggest export, it's the source of Canada's wealth." But my concern is that this decision has already been made for us. Even if peak oil is "years" away (maybe 10-15 years?) the pandemic has already taken away a big chunk of those years. What are the chances that oil prices rise and stay high enough to make major investments in the oil sands economical? Add on top of that the additional costs of having to restart production that was shut down during the pandemic.

The oil sands were already struggling to attract private sector investment prior to COVID. My concern is that the government plunges more and more public money into the industry for ideological reasons rather than trying to put us on better footing to recover from whatever the global economy looks like after this.
I think you're right to an extent. It's unwise to tie ourselves to a commodity that fluctuates in price so much. Although, I'm still unsure what we as a province can do to besides Oil and Gas. I like your idea about expanding our post-secondary institutions, but I don't think that will be enough. We don't have many geographical advantages.

Calgary has head offices for Oil and Gas. To a much smaller extent, we're a regional distribution hub. And that's about it.

Edmonton has provincial government jobs and is a manufacturing hub for O&G. And that's about it.

Vancouver is a port city which houses several head offices for mining and forestry companies across the province. The lower mainland is a large agricultural producer and has some light manufacturing. Chinese money and immigration keeps the construction industry humming. This is a geographical advantage.

Toronto is the financial center of Canada. The GTA is home to most of Canada's manufacturing. Also, foreign money and immigration keeps the construction industry humming. This is a geographical advantage.

Ottawa is supported by government jobs and post-secondary.

Montreal has head offices for Quebec companies. I think the greater region has decent manufacturing.

Besides those cities and a few 'hip' towns across the country, there isn't much economic activity in Canada. Without O&G Alberta is bigger version of Saskatchewan and Manitoba.

Lastly, I'm still uncertain about the future of oil. By 2050 there's going to be about 10 billions humans on this planet. They're all going to want to buy smart phones, and fly places and buy shit from far away. Factories will need lubricants and cars will need to drive on asphalt. Tankers will need diesel and planes will need jet fuel. Once again...I'm not against investing the green energy, but I don't think we can have modernity without fossil fuels.

TL;DR Technology and energy are not the same thing.
 
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JonnyCanuck

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In my search for hope and optimism for our energy industry?, I found some.

Watched on YouTube ...'Michael Moore presents Planet of the Humans'. Produced by Michael Moore, a left-leaning activist and directed by Jeff Gibbs, a life long environmentalist.
It blows a gigantic hole in the belief that we can make a wholesale shift to renewable energy and replace fossil fuels. Renewable energy cannot be produced without dependence on fossil fuels. In fact, my big takeaway is that some renewable energies (i.e biomass) are more environmentally destructive than fossil fuels. We are talking about burning trees, chemically treated woods, tires, sugar cane, animal fat, seaweed …. to fuel plants??? And guess what. Just like it did with fossil fuels, capitalism has found a home in renewables.
While well-intentioned, the hardcore environmentalists are clearly delusional, uninformed and full of hypocrisy. The transition to 100% renewables is not going to happen in the lifetime of anyone currently living. Unfortunately, the greens have a big megaphone these days... particularly with politicians who will bend whatever way the 'wind blows' (pun intended) ?
Eliminate carbon intensive fuels such as coal … of course!. Replace all plants globally with either clean burning natural gas or nuclear energy … makes perfect sense! However not to a hardcore environmentalist who will accept nothing but renewables. Well they better get informed on what is a real renewable.
We need to find a solution that is not just based on science but also on common sense.
Go Alberta Go! ??
 
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CBBarnett

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In my search for hope and optimism for our energy industry?, I found some.

Watched on YouTube ...'Michael Moore presents Planet of the Humans'. Produced by Michael Moore, a left-leaning activist and directed by Jeff Gibbs, a life long environmentalist.
It blows a gigantic hole in the belief that we can make a wholesale shift to renewable energy and replace fossil fuels. Renewable energy cannot be produced without dependence on fossil fuels. In fact, my big takeaway is that some renewable energies (i.e biomass) are more environmentally destructive than fossil fuels. We are talking about burning trees, chemically treated woods, tires, sugar cane, animal fat, seaweed …. to fuel plants??? And guess what. Just like it did with fossil fuels, capitalism has found a home in renewables.
While well-intentioned, the hardcore environmentalists are clearly delusional, uninformed and full of hypocrisy. The transition to 100% renewables is not going to happen in the lifetime of anyone currently living. Unfortunately, the greens have a big megaphone these days... particularly with politicians who will bend whatever way the 'wind blows' (pun intended) ?
Eliminate carbon intensive fuels such as coal … of course!. Replace all plants globally with either clean burning natural gas or nuclear energy … makes perfect sense! However not to a hardcore environmentalist who will accept nothing but renewables. Well they better get informed on what is a real renewable.
We need to find a solution that is not just based on science but also on common sense.
Go Alberta Go! ??
But to focus it back to the local and province economy: the problem isn't that the world doesn't need oil and gas, the problem is that in most scenarios our oil and gas isn't likely to produce jobs and wealth growth into the future - at the very least not in the way we grew accustom to, but in many scenarios not even at all. A high cost producer far away from markets with insurmountable transportation disadvantages in a world awash in oil all the while many are slowly pivoting away from it, at a time with rapid increase in automation and technology improvements in extraction itself is negating the potential job opportunities that was the reason we want the sector in the first place.

That's the problem a generation of our industry-captured, single-minded, crony-filled political class has and continues to fail in dealing with. Finding enemies (real or perceived) and counterfactuals feel great, but they don't solve your actual problem: creating an robust, successful and prosperous city and province in any possible future. Some, many, most or all of possible futures contain a lot less oil and gas jobs and wealth for this province - regardless of whether the world transitions.

To not plan or manage the risk associated with the different ways this could go through diversifying is incredibly reckless, albeit unsurprising given the transition of energy from an industry to an ideology in Alberta's political circus. Everyone forgets its not about energy: it's about jobs and wealth, regardless of where it comes from.
 

Silence&Motion

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The problem isn't that the world doesn't need oil and gas, the problem is that in most scenarios our oil and gas isn't likely to produce jobs and wealth growth into the future
This!

Eliminate carbon intensive fuels such as coal … of course!
Yes! Which is why the oil sands are in trouble. In a world of stagnating oil consumption with a heavy price on carbon, Alberta is not going to be competitive. Jason Kenney's line "the last barrel of oil that the world burns will be from Alberta" is total BS. And it's not just because the world doesn't want our oil. For the reasons stated by CBBarnett, we're going to be deriving less and less benefit from the industry.

We don't have many geographical advantages.
I find this attitude, which is extremely common among Albertans, to be both confusing and depressing. We are the 4th largest metro area in the fastest growing G7 country. That alone makes Calgary an extremely well positioned city for developing a robust, diversified economy similar to Minneapolis, Columbus, Denver, etc. Vancouver, Toronto, and Montreal are not going to absorb all of Canada's economic growth (they can't). There will be plenty of spillover in Calgary and there will be plenty of opportunities for homegrown economic activity. Can't people in this city see that the oil and gas sector, although it has allowed us to supersede other mid-sized Canadian cities, has also stunted the growth of other sectors (both public and private).
 

Social Justice

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I find this attitude, which is extremely common among Albertans, to be both confusing and depressing. We are the 4th largest metro area in the fastest growing G7 country. That alone makes Calgary an extremely well positioned city for developing a robust, diversified economy similar to Minneapolis, Columbus, Denver, etc. Vancouver, Toronto, and Montreal are not going to absorb all of Canada's economic growth (they can't). There will be plenty of spillover in Calgary and there will be plenty of opportunities for homegrown economic activity. Can't people in this city see that the oil and gas sector, although it has allowed us to supersede other mid-sized Canadian cities, has also stunted the growth of other sectors (both public and private).
I hope you're correct, and it's always good to hear a bit of optimism these days. Can you elaborate on what a robust and diversified economy would look like in a Calgary context? What type of companies and industries could be brought here? What type of companies and industries could be grown here? How would we go about achieving that?

I hear a lot of vague platitudes such as "Green Energy" and "A robust and diversified economy". They're easy to say and they sound lovely, but I like to see a pragmatic approach on how to move forward with less reliance on Oil and Gas. While Denver, Columbus and Minneapolis could serve as a good template, the metro area of each of these cities are around 4 million people. Also, the nature of American economy differs from the Canadian one.
 

JonnyCanuck

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I hope you're correct, and it's always good to hear a bit of optimism these days. Can you elaborate on what a robust and diversified economy would look like in a Calgary context? What type of companies and industries could be brought here? What type of companies and industries could be grown here? How would we go about achieving that?

I hear a lot of vague platitudes such as "Green Energy" and "A robust and diversified economy". They're easy to say and they sound lovely, but I like to see a pragmatic approach on how to move forward with less reliance on Oil and Gas. While Denver, Columbus and Minneapolis could serve as a good template, the metro area of each of these cities are around 4 million people. Also, the nature of American economy differs from the Canadian one.
All good questions considering the biggest driver of the U.S economy, which by definition is very diverse, is their own consumption aided by 330+ million people. Whatever new economy we grow in Alberta, cannot be supported by Canadian consumption alone. We don't have the population. Like oil and gas, we need to be able to export this new economy to other countries including the U.S. I am sorry but someone is going to have a hard time convincing me that 'green energy', if that is what we should grow, is exportable.
 

darwink

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Ten years from now I hope that Calgary and Alberta has seen over the course of the decade:
  • A higher percentage of people graduating from college and university going into start-ups instead of sure things as consultants or working for big firms each year;
  • A culture where those who succeed stay and invest some back into the next round of companies
  • $50 million a year in investments in early stage tech venture capital companies a year, with a lot of firms having a ~$1 million runway to fail; and
  • Some of those companies growing, and growing a lot, and not being moved until they are too big to move, and not being acquired before a good chunk of early employees have enough money to then help seed new companies
That is it. Anything else strays far too far into my project wish list!
 

Silence&Motion

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Green energy is not a silver bullet. There is no silver bullet. There's not going to be a single industry that's going to swoop in and replace O&G in a way that still lets people move here with only a high school education and make a six-figure salary. A variety of sectors will probably take advantage of what Calgary has to offer: ample office space, a mass transit system, international airport, universities, hospitals, liberal immigration laws, an internationally-recognized quality of life, etc. Tech, definitely. But also more finance. Specialized manufacturing. Logistics. More tourism/hospitality. Film and other cultural industries. Non-O&G energy (hydrogen, nuclear?). Biotech.

I've been banging this drum a lot, but I really think we need to start thinking about how attractive cities drive economic growth rather than being the products of economic growth. The flip side of the "we're doomed without O&G" attitude in Alberta is the "we have ____ because O&G paid for it!" (insert hospitals, schools, parks, roads, etc.). We can't be looking for a new sugar-daddy industry that's going to buy us all kinds of nice things. We need to invest in nice things and wait for the economic activity to follow.
 

CBBarnett

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I've been banging this drum a lot, but I really think we need to start thinking about how attractive cities drive economic growth rather than being the products of economic growth. The flip side of the "we're doomed without O&G" attitude in Alberta is the "we have ____ because O&G paid for it!" (insert hospitals, schools, parks, roads, etc.). We can't be looking for a new sugar-daddy industry that's going to buy us all kinds of nice things. We need to invest in nice things and wait for the economic activity to follow.
Agree with this completely. Alberta has two cities that are not appreciated for their role in our prosperity and future because the provincial narrative is they are a product of growth rather than the engine of it. I've always thought it was remarkable how uninterested many in this city are in at marketing itself as a place that people would want to visit and stay. Affordable houses and "close to the mountains" is okay, but that's leaving a lot of money on the table.

You'd think a century of way above average tourism for a city our size due to Stampede and Banff, plus a busy international airport, would have made a few more realize that there is a market for visitors in the city and we might want to invest in something that makes them spend some time here in the city itself.

For decades we seem totally cool with all those tourists skipping straight from the airport to walk down charming Banff Avenue while we undercut and demolished most of our charming main streets and didn't bother to expand their sidewalks for 50 years. Hell, we even expanded the highways to get them out of here faster. Stephen Ave is a remarkable street for visitors but we don't bother investing in it or the surrounding areas to make it more comfortable, sustainable or vibrant. We razed Victoria Park for a big 10 day per year festival, but don't mind if visitors and residents have to walk through a kilometre of derelict parking lots and uncomfortable urban spaces the other 355 days of the year. Our riverfront and pathway system is spectacular, but largely woefully undersized and in poor shape outside the city centre as maintenance and network quality have forever been far down the list of priorities.

Part of the story is a suburban mindset that is naturally aloof to urban non-automotive things, but I think there is also that "crowding out" that occurred thanks to our provincial and municipal obsession with a single industry that naturally looks to wealth located far away from urban places. It helped us turn a blind eye on the small and big things we could do to be a more attractive place and give industries that are far more city-focused a chance to grow.
 
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Surrealplaces

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Calgary will absolutely do okay in the long run. It'll have its bumps and knocks, and we're already seeing some of that, and I know sometimes people say it'll be the next Detroit once the oil industry dies down, but it won't be...not even close. A better example of Calgary's future are cities like Denver or Pittsburgh. Both landlocked cities that had their main industries take a beating (mining and steel respectively) but they found other ways to continue growing and being progressive. Especially Denver, which also happens to have other similarities to Calgary. If cities like Winnipeg and Saskatoon, etc.. can continue to grow, no reason Calgary can't do the same or better. We'll have to get used to not having steroid type growth, but there is so much potential.

I still think we'll have one or two more booms coming which will make the overall long term transition, slow and fairly drawn out,but the transition will happen. It's already been slowly happening in the background over the past 25 years or so. The Calgary of today isn't the Calgary of 1981.
 

Silence&Motion

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One of the reasons I'm optimistic about Calgary is because of the situation in Detroit (and many other rust belt cities). The mythology of these cities is that they exist in this post-apocalyptic state because their industries died out and were never replaced by new economic activity. However, the fact is that metro Detroit (and many other rust belt metros) are thriving. The main issue with the rust belt cities is segregation and inequality, not economic decline. They're only thriving in their suburban regions. Their inner-cities (usually represented by a separate government) have been systematically cut off from the new service-based economy.

While Canadian cities have their faults, our level of segregation and inequality is minuscule compared to American cities. For example, almost all of our social programs are funded at the provincial level, so rich people can't just move to Airdrie and starve the Calgary Board of Education for funds.
 

heightjunkie

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One of the reasons I'm optimistic about Calgary is because of the situation in Detroit (and many other rust belt cities). The mythology of these cities is that they exist in this post-apocalyptic state because their industries died out and were never replaced by new economic activity. However, the fact is that metro Detroit (and many other rust belt metros) are thriving. The main issue with the rust belt cities is segregation and inequality, not economic decline. They're only thriving in their suburban regions. Their inner-cities (usually represented by a separate government) have been systematically cut off from the new service-based economy.

While Canadian cities have their faults, our level of segregation and inequality is minuscule compared to American cities. For example, almost all of our social programs are funded at the provincial level, so rich people can't just move to Airdrie and starve the Calgary Board of Education for funds.
I've posted about this before, but having lived in Ann Arbor, driving through Detroit is surreal. The far suburbs of the Metro area (which is geographically enormous, makes calgary look like childsplay) are booming- huge houses, endless construction. It gets progressively worse as you approach the center, with whole "rings" just abandoned. Like a big tree with rotted core. It's not a story of collapse, but it is a story of wealth disparity, purposeful segregation, massive corruption, and a lack of redevelopment and reinvestment in good civic spaces.

One Detroit mayor is serving a 28 year prison sentence for corruption.
 

Surrealplaces

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You guys have hit the nail on the head, Detroit is definitely a unique case for the reasons mentioned above, and Calgary won't turn into the next Detroit any time soon, nor will most any other city for that matter. Calgary's future should be no different than most cities in a similar geographical position (ie, not a port city), except I think we can do better than most.

With birth rates fairly low for most NA cities, most of the growth will come through migration. Calgary's birth to death rate has been higher than the norm due to a younger population, but eventually we'll probably move more towards the growth being from migration.

I guess the question becomes, what will drive migration to Calgary. Usually for most cities it's jobs and international migration (people arriving to cities where they have friends or relatives). Calgary has some advantages for both.

-We have a high percentage of immigrant population (the highest percentage after Toronto and Vancouver), and it's probably why we've been adding decent numbers of international immigrants through this downturn.

- It's hard to envision non O&G job growth, but we have some things going for us. Good location geographically as a transportation/distribution hub, large well served airport, large amount of modern office space.

- proximity to the mountains has its rewards also.
 

ByeByeBaby

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Pittsburgh survived it's industrial base dying because some of that steel money funded world-class educational and health infrastructure, and because of that it's a leader in biotech and information technology. How well are we funding our advanced education and health care base?

I'm fundamentally pessimistic about the future of Alberta because the majority of the citizens here are. I personally think that Alberta and especially Calgary has a lot of great potential; it's got natural beauty, decent weather, good transportation and other infrastructure, an educated populace, some cultural capital and a real sense of multiculturalism that means we can be cosmopolitan without the high costs of the West Coast. I think that Calgary and Edmonton could invest and build on these strengths and move past oil and gas.

However, most Albertans seem to think that the only reason a business would locate here is because we have low tax rates, and that if our tax rates were to even rise to be the same as Saskatchewan then we'd lose out. I think we're better than Saskatchewan, but our government (and the majority of citizens who elect them) disagree. If you don't think you can compete on anything other than being the cheapest, then you must -- by definition -- think you're the worst at everything else.
 

zagox

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Pittsburgh survived it's industrial base dying because some of that steel money funded world-class educational and health infrastructure, and because of that it's a leader in biotech and information technology. How well are we funding our advanced education and health care base?

I'm fundamentally pessimistic about the future of Alberta because the majority of the citizens here are. I personally think that Alberta and especially Calgary has a lot of great potential; it's got natural beauty, decent weather, good transportation and other infrastructure, an educated populace, some cultural capital and a real sense of multiculturalism that means we can be cosmopolitan without the high costs of the West Coast. I think that Calgary and Edmonton could invest and build on these strengths and move past oil and gas.

However, most Albertans seem to think that the only reason a business would locate here is because we have low tax rates, and that if our tax rates were to even rise to be the same as Saskatchewan then we'd lose out. I think we're better than Saskatchewan, but our government (and the majority of citizens who elect them) disagree. If you don't think you can compete on anything other than being the cheapest, then you must -- by definition -- think you're the worst at everything else.
I think the narrative that we are starving education and health infrastructure is a bit overblown. We had to pay salaries far in excess of the rest of Canada during the boom to get teachers and doctors to move here. Now they make more than other provinces, despite our lower cost of living. One can certain criticize the UCP for the callous way they are going about re-aligning public sector salaries to the market (especially during a pandemic) but it needs to be done over time.

I agree with you that there is a defeatist attitude, especially amongst working/middle class older white Albertans, that we are only going to succeed with some combination of low costs and resource wealth. I don't see that attitude amongst immigrants, nor when I talk to younger professionals. Our demographics are changing faster than many people realize, and some of that is just going to wash out over time as we get more diverse and more urban. Colorado had a similar attitude, and in the rural areas plus Colorado Springs it still does, but demographic change (Californians and Latin Americans moving to Denver) changed the balance.
 

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