The decline of Canada’s fossil fuel industry is inevitable, and unlikely to be the disaster Conservatives like Alberta Premier Jason Kenney have been predicting, a study released this morning by the Vancouver-based Centre for Future Work concludes.
But we need to recognize reality and get cracking to make the transition a success, says Canadian economist Jim Stanford, the author of the study, Employment Transitions and the Phase-Out of Fossil Fuels.
Indeed, wrote the former Canadian Auto Workers economist in the 113-page paper, direct employment in fossil fuel industries in Canada is relatively small, about 170,000 jobs in 2019, or less than 1 per cent of total employment in Canada. “Its role in overall Canadian employment is modest and shrinking.”
And while employment in the fossil fuel sector has been steadily declining since 2014, that decline has occurred in the context of strong performance by the Canadian labour market. “Total employment expanded steadily through this period – recording a record-low unemployment rate in 2019,” Dr. Stanford wrote. “For every job that disappeared from fossil fuels between 2014 and 2019, 42 new positions were created in other industries.”
About 33,000 fossil fuel jobs disappeared between 2014 and 2019, according to the study, and another 17,500 disappeared last year during the COVID-19 pandemic and the recession that followed. “This pace of absolute and relative erosion is consistent with the complete phase-out of fossil fuel employment over a 20-year timetable,” Dr. Stanford wrote. “This would be consistent with Canada’s commitment to carbon net neutrality by 2050.”
He estimated Canada will lose about 8,500 employment positions in the field each year over the next two decades if the phase-out of the fossil fuel industry proceeds as expected. “The Canadian labour market typically produces that many new jobs every 10 days.”
“Even if energy prices recover and some new petroleum projects go ahead, there will be virtually no net hiring in fossil fuel industries,” he predicted.
Nor are oilpatch jobs consistently the well-paid, high-quality jobs that the fossil fuel industry and Conservative politicians have conditioned us to believe, the report says.
“Even absent climate change considerations, the quality and stability of fossil fuel jobs have been badly undermined in recent years by employer cost-cutting, automation, and other pressures,” Dr. Stanford wrote. “Real wages in fossil fuel industries have been falling, union representation has been eroded, and working conditions have deteriorated.”
So the conclusions of this study should reassure working people in Alberta and Canada despite the hysteria that is bound to follow the expected decision by U.S. President-elect Joe Biden to pull the plug on the controversial Keystone XL Pipeline to the U.S. Gulf Coast as soon as he is sworn in on Wednesday.
This is unlikely, of course. Encouraging Canadians to fear the inevitable transition away from fossil fuels will continue to be a key strategy adopted by Conservative parties, nationally and especially here in Alberta. The chance of Mr. Kenney’s United Conservative Party Government acknowledging the inevitable seems vanishingly small.
Still, Dr. Stanford wrote, “trying to ‘stop’ climate policy will protect neither the quantity nor the quality of fossil fuel jobs. Other measures must be taken to protect these workers.”
Unsurprisingly, the study shows fossil fuel jobs are distributed unevenly in Canada. “There are 18 communities (including one major city, Calgary) where fossil fuel jobs account for over 5 per cent of total employment. Even in most of those communities, however, fossil fuel industries are not the largest employer, and it is employment trends in other industries that will dominate regional labour market trajectories.”
A managed transition away from fossil fuel work – planned, supported, and phased-in over many years – can certainly be accomplished successfully with minimum dislocation, the report says. Indeed, other Canadian sectors are managing similar disruptions wrought by technological change and environmental concerns with considerably less fuss, among them transportation, retailing and communications.
“So for the sake of fossil fuel workers, as well as the sake of the planet, the inevitable phase-out of fossil fuels must be announced and confirmed quickly and firmly, and the process of wind-down commenced,” the study says.
Dr. Stanford, author of Economics for Everyone, A Short Guide to the Economics of Capitalism, has recently returned to Canada from Australia, where he worked for the Canberra-based Australia Institute. Born in Edmonton, he was educated at the University of Calgary, Cambridge University, and the New School for Social Research in New York City, from which he holds a PhD in economics.
The Centre for Future Work is a project of the Australia Institute, working in collaboration with the B.C. office of the Canadian Centre for Policy Alternatives.
First of all … I’m with you. We need to start weaning ourselves off of the oilpatch and the sooner we do it, the less painful it’ll be.
But I’m not entirely sure of those numbers from the Centre for Future Work (which sounds like something Alvin Toffler came up with).
To wit:
“…direct employment in fossil fuel industries in Canada is relatively small, about 170,000 jobs in 2019, or less than 1 per cent of total employment in Canada.”
170,000 jobs? That seems low for Alberta, never mind Canada. But I guess the “direct” in front of “employment” is the key here. Oilpatch-only companies. Companies that either look for oil and gas, drill it, haul it or refine it.
I would wager (not much, mind you) that 170,000 doesn’t count all of the contractor companies that work in the oilpatch, but also work in the forestry, agricultural, and construction sectors and thus aren’t counted. Drive around Grande Prairie and you’re going to see more pickup trucks branded with contracting-company logos than actual oilfield companies.
Roadbuilders, industrial paramedic services, water-haulers, welders, fabricators, X-ray technicians (for smaller pipelines), campsite services, and the like. The oilpatch might well be a smaller sector than we think, in and of itself, but it also contracts out to other players who support multiple sectors in the province.
The other issue is the income. Although I’ve quibbled with the numbers as noted above, I don’t doubt that there are fewer people employed in the energy sector (directly and indirectly) than we think. The issue (or the non-problem, I guess) is that they earn a lot more than a “typical” job outside the oilpatch. Alberta contributes more to the rest of the Canada in transfer payments than the rest of the country simply because we earn more here and that’s (mainly) due to the oilpatch.
Now … there’s a decent point to be argued that the disparity between what’s paid out in the oilpatch and what’s paid out in the rest of the economy is a huge part of the oilpatch’s problems (they spend a ton in the oilpatch), but at some point, there will be a reckoning on that.
The Canadian labour market may well produce 8,500 new jobs every 10 days, but I bet few-to-none of them pay 100-grand a year. That’s the problem that Alberta faces. You can argue it’s a sea-change we should have seen coming, but that isn’t going to make the water any less wet.
The report says those are direct jobs only. Perhaps Dr. Stanford will respond to your comment. DJC
Scott Mills wrote: “Alberta contributes more to the rest of the Canada in transfer payments than the rest of the country simply because we earn more here and that’s (mainly) due to the oilpatch.”
Not true. Alberta the province contributes $0 in transfer payments.
Provinces don’t pay into equalization. Taxpayers do. And most of Canada’s wealthy taxpayers live in Ontario and Quebec, not AB.
Equalization dollars come out of federal revenues. Federal general revenue mainly derives from income and corporate taxes, the GST, and tariffs on imports.
The biggest net contributors to federal revenues and therefore to equalization are wealthy taxpayers — wherever they live. Every millionaire in Ontario, Quebec, and elsewhere is a net contributor. And more millionaires and profitable corporations reside in Ontario and Quebec than in Alberta.
Canadians are taxed at the same incremental rates no matter where they live. Millionaires in AB are taxed at the same rate as millionaires in Ontario and New Brunswick.
*
In 2019-20 AB taxpayers contributed 14% of federal revenues = 14% of funds for equalization.
Ontario and Quebec taxpayers contribute 58% of federal tax revenues, which fund equalization. Ontario taxpayers alone contribute c 41% of tax revenues. AB taxpayers contribute 14%. BC taxpayers contribute 13%.
If Albertans stopped paying tax tomorrow, federal coffers would retain 86 cents on the dollar. 86 cents of every equalization dollar would still flow from (mostly wealthy) Canadian taxpayers to low-income Canadians in have-not provinces.
In 2018, Ontario taxpayers contributed $20.8 billion more to federal coffers than the province of Ontario received back. AB taxpayers contributed $17.2 billion more to federal coffers than the province of AB received back.
Data from StatsCan: Revenue, expenditure and budgetary balance Table: 36-10-0450-01
https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3610045001
Geoffrey: thank you for once again bringing objective evidence into the conversation. Having been involved in Alberta politics at various levels over the past 45 years, I can assure you offering up evidence is largely futile, but I respect your diligence. Most of the population is illiterate and the vast majority are innumerate. The UCP base, which is mostly urban, are true believers in oil and free enterprise and therefore immune to evidence and rational argument as are the people they elect.
There will be no systematic transition away from fossil fuels until the true believers abandon their pipeline cargo cult. Not much hope there, as even Calgary’s usually rational mayor is now talking about energy east as if transportation costs do not matter. But as you know, cargo cultism runs deep:
https://www.cbc.ca/news/canada/edmonton/government-pipeline-purchase-won-t-solve-trans-mountain-stalemate-say-analysts-1.4616880
Regarding Keystone, Mr. Biden clearly stated that ‘It is tar sands that we don’t need, that in fact is a very, very high pollutant’.
Meanwhile Mr. Kenney claims that not completing keystone will weaken what he refers to as a critically important Canada-US relationship, and that not buying Alberta dilbit will somehow undermine US security. It seems his approach to Washington echoes his ‘me and on my terms’ approach to Ottawa. Does anyone believe that silly comments regarding US security have credence outside the circle of failed and ineffective provincial premier that gambled Alberta’s future mid race on a one trick pony when the odds against success were already lengthening?
Spot on that we should be transitioning from fossil fuels but I fear that Kenney will use the cancelation of Keystone XL to push through the coal mines even faster than he already is. After-all, what world-recognized eco-tourism destination couldn’t benefit from removing a couple mountains and adding some open pit mining?
Hi Scott. Thanks for your thoughtful comment! The report includes direct jobs in fossil fuel sectors, INCLUDING oil well services & contractors. See discussion on pp. 13-19 and pp. 26-29 of the report. There are many indirect jobs which presently depend on the purchasing power arising from fossil fuel activity (everything from transportation to construction to accountants to Tim Horton’s shops). The key is to ensure that OTHER industries grow over time so that the indirect jobs supported by THOSE industries expand. Those other industries are at least as capable at generating spin-off indirect work as is the super-capital-intensive fossil fuel sector. Thanks again, JS
A positive note is a nicer way of saying: this is happening whether you like it or not.
A large proportion of the world’s multi-billionaire Big Boys are American, and when one of the most conservative, a Koch Bro, left this mortal coil, the Koch brand abandoned the tarsands as I recall. Should have been a wake-up call. No doubt their Detroit refinery where dilbit pumped via the rickety Enbridge pipeline is reconstituted as usable fuel will continue to operate for the time being. But Michigan has been none too happy about major and minor spills.
kenney has been as cavalier with the Big Boys as with public funds. He doth presume too much I think, as if he were indeed one of them himself. He’s like the bossy sergeant-major who makes life hell for the troops, fondly imagining he’s doing the bidding of the officers, until events prove he got it thoroughly wrong, and they hang him out to dry. He doesn’t get to set energy policy for the movers and shakers who are the puppeteers who run the US (and the world) through their two major bought-and-paid-for political parties. Those parties are more aligned on most things than people seem to imagine, especially defence spending which is half the nominal US federal budget; the making of mountains out of molehills on social issues and policies are where we get to witness rancour and the refined, ha ha, Democrats, versus the deplorable Republicans, doh. Biden is also no Sanders on social spending, so forget about affordable health care. Obamacare’s policies were written by the US health insurance industry, and Trump didn’t seem to get that if he canned it, a lot of very wealthy people doing just fine from it would not be happy.
Anyway, I have paid scant attention to Trump since Nov 3, because it was obvious the fix was in. No matter how much he pouted and wriggled and claimed fraudulent voting, he was out. Nobody that mattered was going to entertain his pouts, court cases, what have you. It had been decided he was just too damn much trouble. The rabble “attack” labelled an insurrection on America at the Capitol by some thousands of deluded nitwits sealed his fate. Like kenney, he wilfully misread the tealeaves, thinking himself brilliant.
So far as kenney goes, and harper and manning, the brains trust of the present schlock Conservative Party of Canada, I don’t really know if harper has ever really wormed his way into the top echelons at Davos or Bilderberg to actually really know anyone important. I’d guess not, as he’s not very approachable and he’d been chased from office in disgrace by a young progressive. His present consultant status means he tries to wander around in the big circles, but he’s not Maurice Strong or the Aga Khan’s friend, Justin. So the non-intellectual country boy pretender Albertans who run the remnants of the Progressive Conservative party and Reform dreamers and think themselves the dawn of right wing nitwit forces in Canada, and who think they can run the country based on junk economics and austerity are nowhere on the radar of the real Big Boys. Erin The Foole and cock rooster of a small band of not very bright and quite bigoted MPs roughly paralleling the brainpower of the UCP front and back benches, simply doesn’t get it. These four matter not except in a small pond called Canada, because they’re minnows in a shark pool, and their connections to the really powerful just aren’t there.
Keystone XL, well, Biden doesn’t give a damn about it. If the US really runs short of crude, they’ll simply take over Venezuela, a hop skip and a jump across the Gulf of Mexico. Nobody important owes Alberta anything to their way of thinking. Useful once, now not so much. The depradations of oil and gas exploration and recovery which blight Alberta’s landscape will never get cleaned up by private money, either. So what you have left is some guy who lectured an archbishop on social policy in San Francisco, hates pretty much anyone, has no time for listening to opposing views because he’s right and they’re wrong, and is as mean as the day is long, being cut adrift to flounder around casting blame for his stupidity on everyone but himself. An odious man with no redeeming qualities whatsoever that I can discern. For the error in believing his fantasies, Albertans will finally discover they’re nobodies on the world stage, and there is unlikely to be a troop of US cavalry deployed to rescue them. They were useful once, made a few bucks on the side even, and now they’re not.
Time to wake up and pay attention to Jim Stanford. He’s always made sense to me, cutting through the bafflegab of economics and putting the result in easy to understand terms. Meanwhile the province will suffer through the dying spiteful societal-wrecking spasms of kenney. I do not envy you the next few years.
For most of this past decade there has been lessening of demand for fossil fuels (including coal of all types), thus surplus supply. Why is it that our locals in government and the oil patch [CAPP] cannot see this? Why have most world major oil extractors and refiners left our province? Why are there so many more efforts being put into ‘renewables’ around the globe, even by some oil majors both private and country owned? Is there something about the borders around Alberta that prevents so many from seeing what is happening around the world when it comes to energy?
As long as this myopia continues, with the concomitant blustering, wailing, whining, and deflecting of responsibility (the latter of which the UCP claims we are good at, except for,,,), we shall not be a part of any of the proposed solutions to climate disruption. Not that the current crop of majority politicians and their dwindling numbers of supporters really care much about that! We are being left behind. We have skills and proposals at hand to keep people working for quite some time in directions seemingly anathema to those politicians.
What the Angry Midget’s tiny brain can’t fathom is that the fossil fuels industry is in a precipitous and unending decline. Thanks to the automation of a number of tasks, labour demand in the industry is falling…and machines can’t vote UCP, of course.
Unless Kenney is going to urge oil field workers to smash the machines, the path to the future is undeniable and inflexible. But since his tiny brain can’t hope to grasp anything resembling forward-thinking, Alberta is doomed to fall into the trap of Kenney’s weirdo 1950s vision of the future.
I was struck by how deluded Kenney was when he declared that the cancellation of Keystone XL will set relations between Canada and the US back generations. To when? The War of 1812? Maybe Kenney should get off his fantasy planet, but that maybe impossible because…you know…his tiny brain.
I think you’re correct to say Kenney operates on a “fantasy planet”—but I don’t mean the kind that’s petitioned by prayer (DJC has suggested prayer might explain some of why Kenney behaves as he does, that is, he prays that bitumen market price will rebound to pre-2014 levels instead of dealing with the fact that it probably won’t). I liken him to tRump who, I think, also operates on some sort of fantastic notion of reality.
In tRump’s case, I think his fantasy is supreme celebrity, the kind he thinks endows him immunity—as in, getting away with “grab ‘em by the pussy…you can do anything you want [when your’e a big star].” The US presidency is easily the brightest spotlight of attention in all the world, in all history—and it sure wasn’t political prowess or policy purpose (other than attaining the zenith of celebrity for himself and himself alone) that tRump sought the presidency for—in fact, he bragged he wasn’t a politician at all and his base cheered because they’re hypnotized by TV—and now, social media—culture and fame like The Donald has achieved. Indeed, they proved it by rationalizing tRump’s inexperience in elected office: ‘he’s a successful businessman and that will be good to run the country—to make America great again…” when, in reality, his self-produced “reality” TV show only cast him as a star billionaire. In real life—which anyone of his base could have discovered with the click of a mouse—he assiduously hides how much money he has, and brags of a personal business CV that omits his several bankruptcies, failed ventures, and dirty tricks or daddy’s money to escape consequences. His base believes him because he’s a celebrity in the haute couture of celebrity: American society.
Kenny lives for a parallel fantasy: partisan power which will allow him policies and politics the majority of Canadians have repeatedly voted against (hey, this is a democracy—we’re allowed to make mistakes like the single HarperCon majority we sent packing at the earliest possible occasion). The one, superficial contrast is that Kenney’s base cheers the fact that he IS a politician, in fact, that’s all he’s ever been, that’s all most observers think he aspires to—the zenith, of course: Prime Minister of Canada. Although that might not fly in the USA where tRump has deftly cultivated a populist hatred of alleged political elitism in a grossly exaggerated way (like a TV screenplay or advertisement), Kenney still offers something his base wants to hear: a return to better times (at least for his base), to make Alberta great again. Both leaders have had enough success to delude them into thinking they can still get away with whatever they need to in order to reach their respective Shangrilas.
It’s fascinating how the two parallel each other even though tRump is a reality-TV, political ignoramus as much as Kenney is intelligent, but only a TV empath with bitumen businesses and workers. The only way somebody as smart and dedicated as the K-Boy could parallel somebody as dumb and lazy as tRump is by way of fantasy. And vice versa.
They have a few things completely in common: both have electoral bases which believe in their respective government leaders’ fantasies: that’s essential for their success, as far as it goes, though tRump’s policies were stupid and mostly left not-done, and Kenney’s policies are also stupid and unlikely to ever be realized. Eventually their respective bases will be forced by circumstance and consequence to admit it. Covid, for example, but coal and bitumen pipelines and Mexican walls will also be accounted for (MAI) at some point. The other thing is that their bases have threatened to (or are proceeding to) turn against their erstwhile partisan heroes: the Proud Boys against Republicans politicians for not supporting tRump’s bullshit voter-fraud charge, for example, and Wexiteers against Kenney for not supporting their movement to separate from Canada. Fantasy is what fantasy does.
I can’t say I have any sympathy whatsoever for the oil patch, our so-called provincial government and especially not for our Dear Leader, Premier Randy Bobandy. For years this province was one of the only places left on the planet where a junior high drop-out could go off and make well into six figures a year and live the life of Riley. In fact an argument could be made that an entire subculture was born of this, worshiping at the alter of oil, entitlement and material possessions. Why bother with an education when you can just skip the time, effort and pesky student loans by going to the patch and start raking it in?
Unfortunately the house was made of cards and good times can’t last forever. The shift in thinking to wean this province off both oil and the entrenched lifestyle will likely take a generation (or two) to fully take hold. Painful but necessary. And it will take a new type of leadership that Alberta has yet to see to make it happen (remember, even Notley sold her soul and dignity to give the appearance she was pro-oil, apparently a necessary evil get elected in this province and to prevent an astronomical plummet of popularity among the rubes).
I believe the most important point here is this is happening, whether or not we want it. So, here in Alberta we have a choice. We can waste a lot of time and energy fighting it, or we can put this time and energy into transitioning our economy.
Kenney so far has chosen the former, which may work politically for a while. However, as the number of jobs in the oil industry steadily declines and there are fewer good paying ones, there may be less support for spending public money to prop up this industry. I expect there will be some scrutiny of particularly foolish recent spending such as the 1.5 billion invested in Keystone XL. Anyone who could read a poll would have figured out that was a very risky bet.
Of course, the oil industry will not go away any time soon. Hence the temptation of some politicians to try keep on propping it up to somehow try get it back to its glory years. I suspect it will be much like the coal industry which declined over several decades, but never got back to what it once was. I hope we will do better than those communities that did not transition their coal economies.
I haven’t forgotten our hero Peter Lougheed urging the Klein and Stelmach governments to slow down the growth of the oil sands, get control of the pollution, collect proper royalties and taxes and refine our oil in Canada and these Reformers wouldn’t listen.
Instead they slashed our royalties and taxes and invited the world to come and get our next to free oil and they weren’t smart enough to make certain that there was a proper system in place to get the massive increase in production that it created to foreign markets and as economist Trevor Tombe of the U of C has pointed out Albertans lost $575 billion. Yet oilmen have pointed out to me over the years it’s a lot higher than that because it doesn’t include natural gas royalties they gave away also and I bet they are right.
Look at Canada’s top ten exports and think about how we can replace fossil fuels in our economy:
Crude oil: US$53.8 billion (Up 19.5% since 2012)
Cars: $12.3 billion (Down -41.4%)
Gold (unwrought): $9.6 billion (Up 74.5%)
Petroleum gases: $6.6 billion (Down -14.7%)
Sawn wood: $5.9 billion (Up 8.9%)
Wheat: $5.3 billion (Down -12.8%)
Aluminum (unwrought): $5 billion (Down -3.2%)
Potassic fertilizers: $4.9 billion (Down -18.8%)
Coal, solid fuels made from coal: $4.4 billion (Down -16.6%)
Iron ores, concentrates: $4.2 billion (Up 28.3%)