Calgary Woes Spread as Oil Patch Budget Cuts Deepen in 2016

(Bloomberg) -- 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.

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.


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Copyright 2016 Bloomberg News.

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