Monday, February 2, 2009

Harper's income trust mistake featured prominently in Calgary Herald's Editorial.

Small oil and gas firms and workers suffering

Dave Yager, For the Calgary Herald
Published: Sunday, February 01, 2009

Following Tuesday's federal budget, the growing ranks of unemployed oil workers are "shovel ready" -- ready to go to Ottawa's House of Commons and Edmonton's legislature and shovel the bovine excrement out of both buildings.

Because from the bottom rungs of the oilpatch, what our politicians say about jobs and what they are doing are diametrically opposed. While the greatest challenge comes from collapsed oil and gas prices, federal and provincial policies continue to make a difficult situation worse. It doesn't have to be this bad.

This year's total jobs losses in the oil industry and the myriad of businesses that support it will rival or exceed those in Ontario manufacturing.

Drilling and well servicing has tanked. The direct job losses easily exceed 20,000 compared to 2006. This doesn't include any indirect support businesses like motels, restaurants and industrial supplies that keep Alberta's economic engine running. The Petroleum Service Association of Canada recently predicted a further reduction in drilling in 2009 to only 13,500 wells, about half of 2005 levels and the lowest since 1999. Total job losses will rise further this summer.

The biggest job killer is the oilsands collapse. Everyone bragged about a $100 billion backlog of new plants and upgraders. Three-quarters of those planned expansions have been postponed or cancelled. Some are in receivership. The layoffs of hundreds -- possibly thousands -- of design and construction engineers has been underway for months. Exact figures are impossible to gather.

Gil McGowan of the Alberta Federation of Labour figures that of the 160,000 construction workers in Alberta, 50,000 have been on-site on oilsands projects. He says Statistics Canada reported a 16,000 construction-worker decline in Alberta in December alone. A large portion can be attributed to the completion of CNRL Horizon and Opti-Nexen Long Lake and no new projects to go to. Suncor's sudden suspension of Firebag Phase 3 and the Voyageur up-grader in January added thousands more.

What's infuriating about the continued devastation of the oil industry's workforce is that it was never mentioned in the budget, the pre-budget lobbying or last week's media coverage. At the federal level, nobody is sticking up for the oilpatch even though it is a proven job and wealth creator.

In fact, the only federal actions concerning the oil business have made things worse.

The Alberta-supported Tory government got rid of income trusts and accelerated depreciation for oilsands construction.

During the last election NDP Leader Jack Layton flew over the oilsands and bragged about how he was going to shut things down. Displaced Liberal Leader Stephane Dion campaigned on a new carbon tax on the West's filthy oil industry so he could subsidize central Canadian voters and industries.

These self-righteous oilpatch job destroyers then teamed up to attempt to overthrow Stephen Harper's government and form a coalition with the separatists ostensibly because the Conservatives weren't borrowing enough money to create jobs. The hypocrisy is appalling.

Things are no better in Edmonton. On Jan. 1, and despite the advice and protests of every oil industry manager and investment analyst, Premier Ed Stelmach increased oil and gas royalties. After clobbering his province's most important industry, in his public pre-budget advice Stelmach actually had the audacity to ask Ottawa to ensure Alberta got its "fair share" of federal largesse. Alberta's oil industry and support economy will be devastated in 2009 if nothing changes. Yet stubborn Ed won't even admit he's part of the problem.

The regulatory and red tape onslaught from both governments also destroys jobs. The incomprehensibly long and expensive hearing process into the Mackenzie Valley pipeline plodded right through the recent boom. If federal politicians really cared about economic stimulus, why aren't we building that pipeline right now? A joint federal-provincial environmental panel just stopped EnCana's plans to drill 1,300 gas wells on the Suffield block, allowing Alberta Wilderness Association vice-president Cliff Wallis to proudly declare, "There's some good recommendations that will make it impossible . . . for EnCana to proceed."

Thanks Cliff. One assumes unemployed roughnecks can eat Suffield's kangaroo rats and rare songbirds now that their survival is assured.

The oil business has said for years that if governments just leave it alone, it will roll with the punches of volatile commodity prices. But our governments cannot control themselves when it comes to changing tax policies, increasing royalties, and creating an expensive and tangled mishmash of environmental protection policies and regulatory approval processes. Each is an employment killer created by politicians who purport to care about jobs for ordinary Canadians.

It is impossible not to be angry and cynical.

David Yager is a Calgary oil service executive. His column appears the first Sunday of each month.

© The Calgary Herald 2009

1 comment:

Anonymous said...

Hmm I guess the answer is not oil related shares to make up for my losses with Trust Units?

Any insight about the Teacher's recent interest in PCA? Timing seems very suspicious.