Low gas prices fuelling job losses in Alberta
But while many people see lower gas prices as a win, the decline in oil can have an overall detrimental effect on Canada’s economy, particularly in Alberta where oil is a big part of the province’s stability. The once job-rich province has already felt the effects of the lower fuel prices, with thousands of jobs already reported to be lost there in the energy sector.
Further instability in the oil industry has been created by a provincial governmental change that saw the NDP overtake the Progressive Conservatives. The NDP has long been a critic of oil production and environmental policies, and the move has rocked the foundation of the oil sector as it scrambles to adjust. Corporate taxes are set to spike under the new government (to 12 per cent from 10), which may prompt some energy producers to relocate their operations to other provinces with lower tax rates, as has happened in the past, spurring more job losses.
Unstable markets also mean a decline in investments in the oil sector and a lower value of the Canadian dollar due to the drop in crude oil prices that hurts our buying power globally. There is also an anticipated drain on employment insurance, which is a federal fund, as more people in the oil industry seek financial relief from job loss with no end immediately in sight.
There are more aftershocks from the energy collapse — commercial real estate sales have felt the pinch, according to data from RealNet, which provides real estate investment analytics. The company said in a recent report that commercial real estate sales in Calgary have taken a hit in the first quarter of 2015 compared to the same quarter a year previously.
That also means many energy companies have surplus space in their buildings and are looking to sublet to other sectors in Calgary. With the higher volume of office space available in the sublease market, sublease rates have dropped in that city, which is good news for some other industries that are looking to move in.
It will be interesting to watch how the oil industry situation will continue to shape the country’s economy as a whole, and the continued effects on Alberta’s position as an export leader in Canada. If there’s a positive in all of this, it’s that lower oil prices have led to higher exports to the United States, which some experts say will help balance out negative effects from the lower oil prices.