Alberta, the Canadian province holding the world’s third-largest oil reserves, expects 31,800 jobs to be lost for the remainder of the year as a crude price crash forces producers to cut costs.
Even with the job losses, overall employment will rise 1% in 2015 because of gains carried over from December, the provincial finance ministry said Tuesday in a statement to reporters in Calgary. That compares with a 2.2% increase in employment last year. It would take a loss of 80,000 jobs before year-end to prevent employment from growing, the government said.
Suncor Energy Inc., Cenovus Energy Inc. and other oil producers have already shed thousands of jobs this year as they cut spending on new projects. The energy industry accounts for about a quarter of Alberta’s economy, making the province the most reliant on crude in Canada, and previously fueling a boom that saw real estate prices and the number of millionaires in Calgary surge.
West Texas Intermediate, the U.S. benchmark crude, will likely average $62 a barrel this year, Premier Jim Prentice said in an interview on Feb. 6 at Bloomberg headquarters in New York. The finance ministry declined to provide an update on its forecast for oil prices.
Alberta’s finance mininstry said on Tuesday it still expects to end the current fiscal year with a budget surplus but warned the full impact of lower crude prices won’t be felt until the next fiscal year.
For the current fiscal year ending March 31, the government will post a surplus of $465 million , down from an earlier forecast of $1.1 billion. The slump in crude prices has erased about $7 billion of government revenues, Prentice has said.
Alberta’s economy will expand 0.6% this year, the finance ministry said. That compares with 3.5% growth estimated for 2014. Consumer spending and exports of oil will keep Alberta from falling into a recession, the government said.
“Alberta is clinging to a surplus in FY14/15, but a much tougher fiscal challenge lies ahead. Exactly how the province chooses to handle it remains to be seen, and will make the 2015 budget one of the most anticipated in years,” said BMO economist Robert Kavcic.
The province in the early part of 2014 accounted for more than half of the jobs created in Canada before the price of oil began to tumble from a June high of more than $100 a barrel.