Photographer: Ben Nelms/Bloomberg

The Oil Price Crash Is Taking a Heavy Toll On Canada. And the Worst Is Yet to Come

  • Unemployment 6.9% in November from 4.6% a year earlier
  • Calgary business community feels "funeral"-like, mayor says

Crime is rising, home prices are falling and food banks are overwhelmed in Calgary as job losses spread. And the worst isn’t yet over in the heart of Canada’s oil patch.

Some of the city’s largest employers are poised to cut more jobs in 2016 as they reduce spending for a second straight year, adding to an estimated 40,000 oil and natural gas positions lost across the nation since the crude price rout began 18 months ago.

“We all know someone who has lost a job,” Naheed Nenshi, the city’s mayor, said in a speech this month, lamenting the “funeral"-like atmosphere in the business community.

Calgary, which boasted one of the lowest jobless rates in the nation as crude prices rose over $100 a barrel, is reeling after a global glut pushed prices down by two-thirds. Shares of energy producers have slumped along with oil. While Alberta’s biggest city is benefiting from gains in tourism and transportation, its economy is still 30 percent dependent on oil and gas, according to the mayor.

Oil rose to a one-week high after a report showed U.S. crude inventories declined, climbing 3.8 percent to $37.51 a barrel at 11:46 a.m. in New York.

QuickTake Canada

The largest 23 Canadian producers are set to spend 11 percent less in 2016, a cut of about C$3.61 billion ($2.59 billion). That includes reductions by Canadian Natural Resources Ltd., Imperial Oil Ltd. and Cenovus Energy Inc., according to company forecasts and analyst estimates compiled by Bloomberg. It follows a 32 percent cut in 2015.

Jillian Berling-MacKenzie, 25, was one of the lucky few of her graduating geology class to secure full-time work this year, at oil company ConocoPhillips. She bought a house with her boyfriend, also a newly graduated geologist with a job, before they both became victims of the cuts. A friend’s company has provided some contract work paying slightly more than employment insurance as Berling-MacKenzie tries to land positions just about anywhere, seeing no postings she qualifies for in her field.

Career Change

The dearth of opportunities has Keely Eng, 27, seeking a career change. Eng was let go from an engineering position in March at Nexen, the Cnooc Ltd. subsidiary. Dreading an extended job hunt, Eng took medical school exams and has applied to several programs.

“The industry isn’t doing well and I’m not super-established, so it isn’t too late to switch,” Eng said.

Career transition firm Gilker McRae Ltd. is already hearing from companies planning next year’s cuts. The firm helped with more than 20 downsizings in 2015, mostly in Calgary, said Ross Gilker, owner and president. A typical year would include one to three.

Stampede Cuts

The impact of the energy downturn is easy to see downtown in the easing traffic, emptier office buildings and closed restaurants. The Calgary Stampede, which runs an annual rodeo and events throughout the year, suffered its own round of cuts last month after losing funding and site bookings.

Kevin Mulligan, 61, was among Stampede workers who “got the Tuesday boot,” he said. The former park maintenance manager, six years from retirement, is helping his wife with a Christmas wreath-making side business to supplement severance payments while job-hunting.

“My new job is finding a job,” Mulligan said.

Calgary’s unemployment rate rose to 6.9 percent in November from 4.6 percent a year earlier, Statistics Canada data show, as 21,100 more were put out of work. Home sales have fallen 21 percent this year as the average price skidded 2.6 percent, according to the Calgary Real Estate Board.

Brown Bagging for Calgary’s Kids is providing 16 percent more school lunches than in September -- about 2,900 across 187 schools. The rise is unprecedented, said Tanya Koshowski, the group’s executive director. Food bank use jumped 23 percent in Alberta in the year ended March 2015, the country’s biggest increase, according to Food Banks Canada.

Crime Surge

Police are pointing to economic decline and rising drug use to explain Calgary’s crime surge. In the first 10 months of 2015, commercial break-ins almost doubled from a year earlier, bank robberies were up 65 percent and home invasions increased 52 percent, Calgary Police Service data show.

There is a silver lining. Thanks in part to Canada’s weaker currency, some sectors have been doing well, such as transportation, agriculture and tourism, and have been a source of employment for people previously working in energy, said Todd Hirsch, chief economist at ATB Financial. He predicted the oil industry will start recovering in the second half of 2016 as companies stop cutting jobs.

“We’ve got a bit more tough sledding before it starts to turn around,” Hirsch said.

Greg Cosma is being patient about a rebound, using his woodworking skills and time to volunteer building houses with Habitat For Humanity. The 58-year-old engineer was let go from Cenovus in October, the second industrywide cut he’s endured in the past decade.

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“If you’re good at something, you have a future,” Cosma said, offering advice to the new grads entering Calgary’s energy work force: “Don’t sweat it.”

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