Alberta’s longest post-war recession has sliced 6.5 per cent from its GDP over the past two years and kicked off an exodus of people, but it has been especially painful for the province’s geoscience community, the backbone of the oil and gas industry.
The recession has pushed up the provincial unemployment rate to 7.9 per cent, but for geologists and geophysicists, the jobless rate is closer to 50 per cent, and industry leaders say prospects are dim for the next two or three years.
“We are looking at another lost generation of geoscientists,” said Marian Hanna, president of the Canadian Society of Exploration Geophysicists (CSEG), who has been unemployed for a year.
“It is a significant loss and unfortunately Alberta, (and) Canada, are going to experience a brain drain,” she said, noting many are leaving the province or the profession altogether, while enrolment in geoscience programs in universities has fallen off due to lack of work.
The CSEG has lost about half its membership, which peaked at about 2,400 members, she said.
Other geoscience professionals are experiencing similar jobless rates, said Hanna, who was the president of a geophysical service provider until she was let go.
As the oil price crash passes the two-year mark, and government policies frustrate oil and gas investment, Alberta is struggling with growth that has fallen 3 per cent this year alone, according to a report Monday by TD Bank.
While the province is no stranger to oil booms and busts, this “recession is likely to go down in history as one of the most severe,” and is more than twice as tough as average past downturns.
The Alberta economy has suffered five recessions since the early 1980s, including the current one, the report says.
“While that is not a particularly outsized number given the traditional business cycle lasts about seven years, no other province in Canada has matched Alberta for the severity of its average recession,” the report says.
Only the downturns of the 1980s resulted in the same extensive job losses for geoscientists, who are at the front end of industry activity looking for oil and gas formations. Their loss will mean a major skills gap and shortages when commodity prices rebound, said Hanna.
In 1982, the unemployment rate hit 11.7 per cent, and 10.6 per cent in 1986, still higher than today’s official rate of 7.9 per cent.
But industry observers say that doesn’t reflect the real joblessness because many geoscientists worked as consultants, and many others are underemployed and working reduced hours.
“The unemployment rate is far higher than official statistics,” said Kim Davies, a geophysicist who used to head a junior oil company and now works in investment banking, which she said has its own challenges because deals are hard to finalize in such an uncertain market.
“Similar to the 80s, some people are looking overseas and Canadian expertise is appreciated all over the world,” said Davies. “A lot are looking at re-tooling” to enter other industries.
She said it’s not surprising to see government tax revenue decline, given the large number of geoscientists who have been sidelined after earning good salaries and paying high taxes.
According to StatsCan, more people left Alberta for other provinces than moved in from other provinces during the last quarter of 2015 and the first quarter of this year, ending five years of net interprovincial migration increases. The net loss was 977 people in the fourth quarter and 1,788 people in the first quarter.
With many geoscientists out of work for as long as two years, severance payments are running out and no one is helping them — including governments focused on shifting to a green energy economy, said Jackie Rafter, president of Higher Landing, a career transition company whose main clientele today are energy professionals who want to change career
“How long can they hold on?” she asked. “Who the heck is doing anything? It’s an ugly situation out there.”
Rafter said industry, including her own firm, have begun discussing how to retrain geoscientists who are financially strapped and likely have no prospect of employment for another two to three years.
Hanna said those applying for government jobs are being passed over because of their oil and gas experience.
“There is a lot that unemployed geoscientists can do to help (on climate change policy),” Hanna said. “(Governments) don’t want that input from ‘dirty’ oil and gas people, and I have heard that so many times.”
Stephen Johnston, the chair of the University of Alberta department of Earth and Atmospheric Sciences, jokes he’s the only geoscientist to move to Alberta in the last year.
Many students at the U of A’s geosciences program began their studies when prices were high and job prospects “still looked pretty good,” he said.
Since there are fewer jobs for graduating students today, Johnston said more of the university’s recent grads are taking master’s and doctorate studies than usual, waiting for the economy to rebound.
Johnston said his industry contacts are trying to tap into gold mining companies for consulting work in the absence of oil and gas contracts.
TD economist Derek Burleton said the 1980s recessions had a bigger impact on households because of double-digit interest rates and a bigger drop in home prices.
Housing prices are projected to fall by 12.2 per cent over the current recession, compared with 36.6 per cent in 1982-1983.
In the current downturn, the price of a detached home in Calgary is down 3.4 per cent year over year, and the price of an apartment-style condo is down by 5.9 per cent, according to the Calgary Real Estate Board.
At the same time, housing sales activity was down 26 per cent in 2015 and is down 10 per cent so far in 2016, according CREB chief economist Ann-Marie Lurie.
The people exodus has not reached the levels of the 1980s does not seem to have affected the wealthy yet, said Gerry Olynuk, senior vice president of Northland Wealth Management.
“We haven’t reached the pain threshold for wealthy individuals,” he said, adding that many people see the (provincial) NDP as a one-term government. “It was a vote for change, and the question of whether the NDP government has the staying power to work from a change movement to a government movement is a big one.”
But many will likely re-assess when the new carbon tax takes effect in January, 2017, he said.
“When people see those actual charges hit their personal bottom line, or business bottom line, that is when they start making decisions in terms of pain threshold,” Olynuk said.