Canada will lose one quarter of all the jobs directly and indirectly related to oil this year, according to an estimate from an industry data analysis group.
Some 185,000 jobs linked to oil and gas will disappear this year, wiped out by a large decline in oil and gas investment, according to a new study from the Petroleum Labour Market Information (PetroLMI) division of Enform.
To put that number in some context: Canada created 139,000 jobs in the past year. At the current pace of job growth, the losses in the oil patch would wipe out 16 months’ worth of jobs gains.
By comparison, the loss of 17,600 jobs at Canadian Target locations wiped out about six weeks’ worth of job gains.
"The industry has already experienced significant impacts to its labour force since the price of oil started its decline last November," PetroLMI director Carol Howes said in a statement. "If oil prices continue to remain low, we anticipate additional reductions to spending and jobs before things start to turn around."
And it’s not just Alberta that will feel the pain. While that province will take the biggest hit -- PetroLMI estimates more than 125,000 jobs lost in the province this year -- other provinces will feel a knock-on effect.
Ontario stands to lose about 14,000 jobs, while B.C. stands to lose 20,000 and Saskatchewan 12,000. All told, about a third of job losses related to the oil price collapse will take place outside Alberta, the PetroLMI study said.
The oil and gas industry spent $125 billion in 2014 on development, exploration and operations, but this year that number is expected to shrink by $31 billion, the report forecasts.
That will result in a loss of employment comparable to the one seen during the Great Recession in 2009. But unlike the last recession, this time Canada’s oil and gas industry can’t count on a quick rebound.
It took some two years for oil prices to recover to above the $100-a-barrel level after the collapse of 2008/09, but this time around, forecasters are warning of a prolonged period of lower oil prices.
Investment bank Goldman Sachs forecast late last week that Brent crude will be trading at around $55 a barrel five years from now, in 2020. It was trading at around US$64 per barrel on Tuesday.
The International Energy Agency also recently forecast a prolonged period of depressed oil prices, noting that the turf war between OPEC and North American oil producers shows no signs of wrapping up. The oil price war “has just started,” the agency concluded.
“The price of oil this time around will unfold in very different ways across various oil and gas industry sectors and across provinces,” the PetroLMI report states.
“The outlook for 2016 remains unclear, and it is unlikely the industry will recover as quickly in 2016 as it did following the global recession in 2009.”
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