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In 2016, Alberta's unemployment rate dropped to the lowest rate in 27 years. Although, many took on part-time jobs and began receiving government assistance, many still struggle financially today.

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2 years later, many from the oil industry still find themselves out of full-time work and will likely never return to the oil industry. Only about 25% of oil industry workers in Alberta will return to their previous jobs.

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This is a look inside of the 2016 crisis experienced by the Oil Industry in Alberta and the current "recovery". I feel that this relates to the course because it forced many people into debt and affected investments in Canadian oil and gas.

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This is a look inside of the 2016 crisis experienced by the Oil Industry in Alberta and the current "recovery". I feel that this relates to the course because it forced many people into debt and affected investments in Canadian oil and gas.

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At the beginning of the decline in Alberta's oil industry, unemployment quickly became the lowest rate it has been since the eighties due to oil prices dropping drastically. Many workers believed the province would "bounce back" at some point and they would eventually return to their jobs but that doesn't seem to be the case and the future remains bleak for former oil industry workers. who wish to return. Most have had to find jobs at entry level in other job sectors despite wanting to stay in the oil industry.

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Alberta has gone from oil boom, to oil bust. We take an up close look at the growing desperation in parts of the province. """ Subscribe to The National to watch more videos here: https://www.youtube.com/user/CBCTheNational?sub_confirmation=1 Voice Your Opinion & Connect With Us Online: The National Updates on Facebook: https://www.facebook.com/thenational The National Updates on Twitter: https://twitter.com/CBCTheNational The National Updates on Google+: https://plus.google.com/+CBCTheNational """ """ """ """ """ The National is CBC Television's flagship news program.

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Even though some oil workers have returned to their jobs in the industry, the majority never will. The Alberta government boasts it's recent growth in employment rates but doesn't seem to want to address that there is little to no growth in employment rates in the oil industry. They don't seem to care that most of these people will have to start over with their careers and there is no guarantee of employment even if they get an education.

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Alberta's oil industry watching prices closely

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Just as the province is getting back on its feet, many families are faced with higher bills as the carbon tax increases. It must be especially difficult to deal with for those who are still laid off from 2016 and are struggling as it is to make ends meet. "Going Green" can actually negatively affect Canadians who are struggling by raising environmental taxes such as the carbon tax and permanently eliminating jobs in the energy sector.

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Carbon tax increase hitting Alberta on Jan 1, 2018

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The unfortunate reality for many former oil and gas workers is that even if they return to full-time work, they will make significantly less money than they used to. Many are also faced with the stigma associated with being unemployed for a long period of time; that there's something wrong with you because you can't find a job.This is a problem for anyone laid off for a long period of time.

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CALGARY - A packed house erupted into applause as Fred Kerr walked on stage during a warm, mid-August evening at Yuk Yuk's Comedy Club in Calgary. He was the first featured comic, liquor was flowing and everyone was eager for a good time.

"Folks, like a lot of Calgarians, I lost my job," the former oilpatch worker said, reaping his first, tentative laugh. "Yeah, I appreciate the sympathy," Kerr continued. More laughs.

"But I won't be unemployed for long because I have a bachelor of arts degree." More laughs. "In French Literature." More Laughs. "From the University of Calgary." More laughs.

"You laugh, but the real reason I have confidence in my prospects is because a BA in literature is exactly Justin Trudeau's qualification." Big laughs.

He then covered the newsiest topics in his five-minute skit - Donald Trump, marijuana legalization, North Korea - kept the language clean and the political criticism mild to avoid misfiring with the young audience.

Encouraged by a final round of applause, Kerr glided away from the spotlight, satisfied with a good night's unpaid work.

In reality, Kerr, 54, isn't optimistic about his job prospects in oil and gas. He was vice-president of investor relations at Pengrowth Energy Corp. when he was laid off in mid-2014 as oil prices started to collapse. Despite having a top-drawer résumé, he remains out of work.

More than 100,000 oilpatch employees - roughly one in three - lost their jobs during the oil downturn of the past three years, according to estimates by the Canadian Association of Petroleum Producers (CAPP) and the Canadian Society of Unconventional Resources (CSUR).

Energy prices are recovering, but many are still out of a job, gave up looking for work, retired early or are starting over in entry-level positions in other industries at a fraction of their previous salaries.

Meanwhile, green and other new economy jobs promised by governments as part of their push to transition toward renewable energy have been slow to materialize, and they usually go to better-qualified candidates from other industries when they do.

Government efforts to re-integrate displaced oil workers have been slow and minimal next to the legions of jobless made redundant by the new priorities.

Dan Allan, CSUR president, said job cuts have slowed since the early days of the downturn when companies were adjusting their spending to survive, but people are still losing their jobs as international companies pull out of Canada.

During previous downturns, hiring resumed when prices bounced back, but the jobs seem to have gone for good this time, Allan said.

The pullout of major oil companies such as ConocoPhillips Co. and Royal Dutch Shell PLC makes future job prospects even more ominous because big companies historically hire and train new graduates and the next generations of employees.

"Canada is not considered to be the safe and reliable and friendly environment it used to be five, six, seven years ago," Allan said. "We have lost investment appeal."

A new survey by Petroleum Labour Market Information (PetroLMI), which conducts research on energy sector labour trends, highlights the gravity of the situation.

The survey, based on 864 responses - employees, laid-off workers, students and others who have given up looking for work - and whose preliminary results were shared with the Financial Post, found 70 per cent were impacted by the downturn in one way or another, and 35 per cent lost their jobs.

Of the respondents, 30 per cent were engineers, almost 14 per cent worked in business and operations management and support (environment, safety, human resources, office administrators, business analysts), nearly 23 per cent worked in technical services and eight per cent worked in trades. The vast majority - 77 per cent - were Albertans.

Canada is not considered to be the safe and reliable and friendly environment it used to be five, six, seven years ago

Dan Allan, president, Canadian Society of Unconventional Resources

Among the 200 unemployed respondents, a staggering 22.5 per cent said they have been out of work for more than two years and 27.5 per cent have been for more than a year.

Of those, 70 per cent said they are looking for work in any industry, while only 25 per cent want to return to oil and gas.

The findings confirm that it's highly unlikely all the workers impacted by the downturn will be rehired by the oil and gas industry, said PetroLMI vice-president Carol Howes.

"There are growing worries the recent layoffs, perceived lack of growth and stability in the industry, as well as concerns regarding environmental impacts are all coming together to create a perfect storm," she said. "And that will have an impact on the industry's ability to attract and retain the best and the brightest."

Would-be comic Kerr has spent the past three years looking for work, but few jobs are opening in his field as companies downsize, consolidate or leave town, he said. The jobs that did come up usually went to former oil and gas analysts who are switching their highly paid riskier positions in brokerages for corporate jobs offering steadier pays and shorter working hours.

Kerr has learned to live with less money and to appreciate his freedom. In addition to a BA, Kerr has an MBA from Western University in London, Ont., held senior jobs in institutional sales at FirstEnergy Capital Corp. and Acumen Capital Partners, and worked in investor relations at Petro-Canada and Canadian Airlines International Ltd.

Comedy is like a lot of businesses. Five per cent of the people make 95 per cent of the money

Fred Kerr, former energy executive and now a stand-up comic

Kerr took up comedy to fill his ample spare time and rekindle a passion he enjoyed in his youth.

There are some transferable skills between institutional sales and stand-up comedy, he said, not joking at all.

"Those (sales) jobs involve trying to sell an idea to someone and having to be prepared that they might completely reject the idea. All you have is moral suasion. You have to understand what the audience needs and try to provide it," he said. "In stand-up, you are trying to find things that are funny to you and then bring the audience along and hope that they can be convinced that that is funny, too."

The reward in the investment industry is money, he said. In comedy, it's making people laugh - though there can be good money for those who get good at it, which is his plan.

"It's like a lot of businesses," Kerr said. "Five per cent of the people make 95 per cent of the money."

But the lack of employment growth in oil and gas worries groups such as CAPP, said chief executive Tim McMillan. In a recent presentation to the Alberta government calling for a renewed effort to restore investment, his group said policy changes to speed up the transition to renewable energy have had a profound impact on the province's job market and not in a good way.

Between 40 and 50 regulatory policy and regulatory initiatives underway at the provincial and federal government level are increasing costs and scaring away capital to rival jurisdictions, the group said.

Before the price downturn and before the election of an NDP government in Alberta and a Liberal government in Ottawa, the energy sector employed one out of three Albertans, contributed $10 billion a year in government revenue and 40 per cent of GDP, CAPP said.

The drop in investment means there are 100,000 fewer industry workers in Alberta than there were on average in 2012, 2013 and 2014, it added.

A large number of people are experiencing long-term unemployment, which CAPP said "is associated with permanently lower wages and increased difficulty finding employment, with the potential causes being skill loss and/or the stigmatization of workers who have been unemployed for long periods, making it especially harmful."

Efforts to encourage upstream oil and gas natural gas investment would help arrest this trend, and also begin to move the province's job market back into positive territory, the group said.

The Alberta government has boasted the provincial economy is returning to growth, with a 3.1-per-cent real GDP rise expected in 2017, after a six-per-cent nominal GDP contraction in 2016.

New jobs are being created, nearly 17,000 jobs so far this year, the government said, while unemployment is expected to decline to 7.8 per cent, after reaching a 22-year high last November of nine per cent (Calgary's unemployment rate was even higher, 10.3 per cent).

CAPP argues most of the hiring has been by government for jobs in health, education and public administration.

Melanie Popp, a 38-year-old single mother with a master's degree in engineering from the University of Calgary, knows first hand what it's like to be without a regular paycheque for two years. Her last oil job was at Paramount Resources Ltd., where she specialized in hydraulic fracturing.

To make ends meet, she's been consulting two days a week in her field, renting out rooms in her house on Airbnb, and slashing expenses.

Popp is looking for full-time work, but being out of steady work for so long is becoming a problem that comes up in job interviews.

"Employers want somebody who is fresh," she said. "They want someone who has been laid off for two months instead of two years. There is that unconscious bias that there is something wrong with a person who hasn't been able to find work for two years."

She's looked for work in technology, banking, education and the green industry, so far without success. She's applied for oil jobs, too, though she's not eager to go back.

"My layoff was, next to my divorce, the worst thing that ever happened to me," she said. "And you change after that. And there is a fear it is going to happen again."

I am scared to be part of a team again, because the family that I created in my last job kicked me out

Melanie Popp, a laid-off energy engineer

Joblessness can be "isolating and lonely," she added. "I am scared to be part of a team again, because the family that I created in my last job kicked me out."

Jackie Rafter, president of Higher Landing Inc., a Calgary-based company that helps energy professionals transition to new careers, said most of her clients don't want to return to oil and gas because they no longer trust the industry and believe its future is uncertain.

Many lost their homes, are taking jobs that are way below their qualifications, or are applying for every job in sight only to be rejected, which fuels their trauma, she said.

"This is a whole new paradigm shift that we never had to contend with before," Rafter said. "It's affecting people emotionally, financially, professionally, socially and it's putting a lot of pressures on their families and their careers. And often they get into a panic mode. It's a real struggle to get them past that."

There are jobs in technology, manufacturing, real estate, she said, but it will take years to clear the oilpatch's jobless bulge, and many openings are in the hidden job market, which means they are not advertised because employers don't want to be inundated with résumés.

Rafter's company runs the Grizzly Den, a program that helps jobless clients figure out what they want to do next, identify their transferable skills and then appear before a panel of potential employers to talk about what they would bring to their organizations.

The innovative program has been so successful that Higher Landing is part of a pool of employment services providers that receives government funding to help get people off employment insurance.

"You have to figure out what your value is and be able to pitch yourself to those people who are going to appreciate your value," Rafter said. "Spinning your résumé on social media doesn't work. You have to be smart and do your homework. But if you can't explain why you are so different and what makes you so wonderful, how can anyone else?"

People came to work in the morning and there was a security guard who wanted you to leave the office. People worked there for many years. There was no dignity

Dennis Agbegha on what he witnessed as layoffs his the energy patch

Dennis Agbegha is one of Higher Landing's success stories.

The 38-year-old with a master's degree in petroleum geoscience from the U.K.'s Imperial College London (which he attended on scholarships) was working for Exxon Mobil Corp. on deep-water prospects off West Africa when oil prices collapsed. He was laid off last year and tried his luck in Calgary, only to find thousands of other geologists on the street.

After working with Higher Learning, Agbegha applied for hundreds of positions at companies ranging from oil companies to warehouses. The lone response came from ATB Financial, the Alberta government-owned bank. He won a job in its call centre and returned to the workforce in February.

He went through the training and loved the environment, but his salary - $40,000 a year - was the lowest he'd had in 12 years. He got a $10,000 raise when he was quickly promoted to a new position in business banking, but he still earns 25 per cent of what he earned at Exxon.

"If you think about it from that perspective, it will make you feel bad," Agbegha said. "But if I think about the fact that this is my life, this is where I want to be, that I better face the challenge, some day I believe my experience will show up and it's going to get better. I am always positive."

He is not even thinking about returning to oil and gas because of the way the sector handled the price crash.

"There was no human side to it," he said. "It was just about business. People came to work in the morning and there was a security guard who wanted you to leave the office. People worked there for many years. There was no dignity."

Like other oilpatch workers, Agbegha saw little evidence of green jobs during his search.

Victoria Waye, a Calgary-based recruiter at EnergeiaWorks, which primarily fills jobs in the solar and wind industries for clients in Alberta and Ontario, said openings for green jobs today in Alberta are measured in the "dozens" rather than in the hundreds or thousands.

Those jobs are in maintaining and operating existing facilities, installing solar panels on roofs and installing charging outlets for electric cars. She expects hiring will pick up once companies start building new renewable energy projects under the province's Renewable Electricity Program.

Alberta's government has said its Climate Leadership Plan will create 7,000 jobs by transitioning to renewable and natural gas-generated electricity by 2030. Even more promises of green jobs have been made by the federal government, which claimed in its April budget that Canada is well positioned to tap into the global, $1-trillion-a-year clean tech market.

According to the International Renewable Energy Agency, there are 65,100 renewable energy jobs today across Canada. Of these, 28,700 are in big hydro, 17,700 are in liquid biofuels, 10,500 are in wind and 8,100 in solar energy.

It is about restarting their careers rather than picking up where they left off in the oil and gas industry

Victoria Waye, a Calgary-based recruiter at EnergeiaWorks

Still, a mismatch in skills, experience and pay expectations means oil and gas workers are unlikely to land those jobs, Waye said.

For example, in wind energy, "they don't know who the suppliers are, who the vendors are, what the regulations behind wind are, how to develop the land, how to find the land, any kind of those scenarios that are needed to be highly competitive with other companies that have experienced employees," she said.

Companies also hesitate to hire trades workers from oil and gas because they're expected to leave when something more lucrative comes along. Trades jobs in the oilpatch pay $50 to $60 an hour, compared to $20 to $25 an hour in green energy, Waye said.

The picture is no rosier for energy professionals, she said.

A wind project manager knows how to handle everything from finding a site through to construction, while an oil and gas project manager knows bits and pieces of a project and is supported by a large team. As for pay, a project manager earns $100,000-$120,000 a year in the wind industry compared to $200,000 in oil and gas.

"It's about restarting their careers rather than picking up where they left off in the oil and gas industry," she said.

That's exactly what Ryan Lemiski is doing. The 34-year-old geologist with a master's degree in earth and atmospheric sciences from the University of Alberta in Edmonton is returning to school part time in September to earn an MBA focused on energy from Queen's University in Kingston, Ont. He hopes it will open doors in the green industry.

About 18 months after losing his job at Nexen Inc., owned by China's CNOOC Ltd., Lemiski landed a short-term contract that is now over.

Prospects for geologists remain terrible, he said. The few job openings draw hundreds of résumés and tend to be filled by those with very specialized backgrounds, such as experience in the Montney or in the Duvernay.

"In Canada, I don't think the industry is ever going to be the same," Lemiski said. "I was waiting for the government to make an announcement on what they are going to do to transition people from energy jobs to other sectors. I haven't seen anything besides rebates on light bulbs."
Financial Post ccattaneo@nationalpost.com Twitter.com/claudiaoutwest

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100,000 jobless energy workers struggle for a place in the new economy

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CALGARY - A packed house erupted into applause as Fred Kerr walked on stage during a warm, mid-August evening at Yuk Yuk's Comedy Club in Calgary. He was the first featured comic, liquor was flowing and everyone was eager for a good time.

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In 2013-2014, oil companies admittedly over-hired and over-paid many of their workers which ultimately affected the 2016 recession. This is why the oil industry took such a big hit when the price of oil dropped. There has also been advancements in oil extracting technology(ie. rigs that used to take 30 people to run now only require 2), making many former jobs obsolete.If you factor that in with companies cutting costs by down-sizing, outsourcing, etc., it's no wonder why so many people will never get their jobs back.

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Just say the words "economic recovery" in Alberta and watch how some people get their backs up.

There's a palpable tension in this province when talk turns to the end of the recession, which, by all objective measures, is indeed over. After two painful years of contraction, Alberta is now widely expected to lead the country in GDP growth.

Add to that the latest employment data, which blew away even the most optimistic projections. Statistics Canada said the province gained 26,000 jobs in December, most of them full-time. Believe it or not, more people are employed now than before the oil-price crash.

And yet, utter that word - recovery - and, well, it just doesn't feel right.

Why?

Because it's not, strictly speaking, what's happening.

When a recovery isn't a recovery

A recovery is a return to a previous state. To recover is to regain what was lost. But the hard truth, analysts say, is Alberta's oil industry - the bedrock of the economy for so long - will never be the same as it was before the crash.

The recession forced employers to trim the fat, and they found plenty to cut. The industry emerged lean, and maybe a little mean. The human cost amounted to 2,400 layoffs per month, every month, for a year and half.

As hard as it may be to hear, some of those jobs probably never needed to exist in the first place.

And yet, today, some workers are finding the tables have turned back in their favour. Labour shortages in certain sectors have employers desperately seeking help. Technological advancements that made old jobs obsolete hold promise to create brand new ones. All while employment grows even faster in other parts of the economy.

So what does "recovery" mean, in this context?

Different jobs. New skills. A changed industry.

And maybe - just maybe - a glimpse of that long-elusive goal: diversification.

Peaks of the past

The latest job numbers look encouraging on the surface, but drill deeper and you'll unearth a fault line.

Take a look at the the red line in the graph below. It shows total employment in the province over the past five years.

Now take a look at the blue line. It depicts jobs in oil and gas, which remain well below their 2014 peak.

And while there have been some recent gains, few analysts expect all those jobs to come back any time soon - or ever.

​Todd Hirsch, chief economist with ATB Financial, offers a blunt assessment of the high-paying jobs that used to abound in Alberta's oil patch.

Hirsch said it's a "widely accepted truism now" that companies overhired - and overpaid - in 2013 and 2014. Then, when the price crash came, many of those jobs had to go.

"The reality, and it's kind of a harsh reality, is a lot of them were unnecessary," he said.

Hirsch believes this was a natural consequence of a "very competitive environment" for workers as firms raced to expand in an era of $100 oil.

But today, we're in a new era.

Oil is back, but different

Just because prices have rebounded to $60 a barrel and Alberta has seen an uptick in drilling activity, don't expect a major resurgence of jobs.

"The reality is, it is a different industry going forward than it has been in the past," said Carol Howes with PetroLMI, an industry group that studies the labour market.

In a report released late last year, PetroLMI said it was "highly unlikely that Canada's oil and gas industry will rehire all of the workers downsized since late 2014."

Jobs in petroleum exploration and production remain hard to come by, the report found, meaning no recovery for engineers, geoscientists, and those on the business and operations side of things.

It's a different story for skilled and semi-skilled field personnel. But many of those people have left the industry - or the province - in search of better opportunities.

That, paradoxically, has led to labour shortages in some parts of Alberta.

This, despite innovations that make it easier to extract oil with fewer and fewer workers.

More oil from fewer people

Mark Salkeld, president and CEO of the Petroleum Services Association of Canada, said advanced drilling rigs, remote monitoring systems and automation are increasingly common in the field.

He said a hydraulic fracturing crew that used to require 30 workers - one on each pump - can now be handled by just two people and some remote controls.

At the same time, little job growth is expected in the oilsands, as the sector changes tack.

After years of expansion, Howes said, major players are now adjusting their focus. Rather than investing big money in future projects, they're bringing projects that have been under construction for years online, and aiming to extract as much oil as possible.

So while oilsands output (the yellow bars in the graph below) is projected to grow for the next several years, only a small amount of growth is expected in employment (the blue line).

This may all sound like doom and gloom, but Howes said some job growth is better than none.

"While we may not be expanding at a dramatic pace like we have in the past, there will still be a lot of opportunity," she said.

"But the jobs will be different."

Mining a new resource: data

Alongside petroleum and natural gas, rig crews are also extracting a new resource from the ground these days.

"We're pulling data out of the hole as we're drilling, in real time," Salkeld said.

"And there's just volumes and volumes of information coming out."

That data fuels the automated systems that control modern oil extraction and guides decisions made back at the head office. Knowing how to handle this valuable new resource will be a key skill in the future, and Salkeld expects opportunities will abound for programmers, data analysts and field workers familiar with digital technologies.

He also expects continued job growth in clean technology that reduces the industry's environmental impact.

In fact, he plans to take his own career in that new direction.

After seven years at the helm of the petroleum services association, he's leaving the position in March to take a job in clean tech.

"It just seemed like the timing was right," he said.

Changing times

So if oil and gas hasn't been leading the way, where have all these new jobs in Alberta come from?

The biggest growth has been in manufacturing, which added 18,000 positions over the past year. That was followed closely by retail and wholesale trade, with 16,000 new jobs. The financial, insurance and real estate industries kicked in another 11,000.

The resource sector had a relatively strong year, too, with 12,000 new jobs in the past 12 months. But that's still 19,000 fewer than three years earlier.

And this gets at the heart of why this "recovery" feels so different.

Alberta has been through booms and busts in the past. Price crashes have routinely taken jobs down with them, but they've always bounced back. For some historical context, consider this one final graph.

Resource-sector jobs plunged 24 per cent in the late 1990s but were back to their previous peak in three and a half years. Recovering from the 2008 financial crisis - and accompanying free fall in natural gas prices - took just a little bit longer, but still clocked in at under four years.

Today, by contrast, we are three and half years into the latest crash, and haven't even recovered half of the resource jobs we lost.

And yet, total employment is back to where it once was in 2014.

Economists are still watching how this will all play out.

Hirsch believes it just may be the beginning of the economic diversification that Alberta has talked about for so long.

"You see evidence of it happening," he said. "But it hasn't happened yet in a convincing way."

So while oil and gas may not be roaring back, it has been moving in a new and upward direction, and Alberta along with it. We don't know exactly where that will take us, but it won't be to the same place we once were.

In that sense, Alberta hasn't recovered from the recession. It has adapted.
Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn - the challenges we face and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca

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Why Alberta's economic 'recovery' feels so different this time | CBC News

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Just say the words "economic recovery" in Alberta and watch how some people get their backs up. There's a palpable tension in this province when talk turns to the end of the recession, which, by all objective measures, is indeed over. After two painful years of contraction, Alberta is now widely expected to lead the country in GDP growth.

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Workers protest outsourcing of jobs in the energy sector in May 2017. The oil industry hasn't fully recovered since the price of oil dropped in 2016 and companies have cut costs drastically.

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While the economy is on it's way back up, the oil industry in Canada may never recover. Investment levels are expected to drop in 2018. It has become quite apparent that Alberta is not the oil powerhouse it once was and likely will never return to that especially since the oil industry in general is losing interest and greener, renewable energy is on the rise. Unfortunately, this doesn't mean more jobs in the energy sector as oil workers tend to be overlooked when wind and solar companies hire since they would have to completely re-train them for the new jobs.

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On Wednesday, Alberta's Finance Minister Joe Ceci presented the government's latest fiscal update. He does this every three months, and it's usually a dry affair with a few tweaks here or a revision there. But this time was different.

There was plenty of big news, both good and bad.

Let's start with the good.

Economy up, deficit down

The government expects Alberta's economy will grow 4.5 per cent in 2017. This is faster than any other province, and marks the third consecutive increase in growth since last year's budget. The previous estimate was 4 per cent. The one before that, 3.1 per cent. And the one before that, 2.6 per cent.

And with faster growth comes more jobs and higher incomes.

In 2018, unemployment is expected to be lower than previously thought, averaging 6.8 per cent - down from the previous forecast of 7.6 per cent. And household incomes are rising more quickly than previously forecast.

In short, the recovery is stronger and more robust than most forecasters expected - government and private sector alike. Welcome news to Albertans hard hit by recession.

Alberta's finances are also improving.

The deficit for 2017-18 is expected to be $9 billion, instead of the $10.5 billion that was previously expected. The improvement largely stems from higher than expected royalties, at $4.5 billion this fiscal year (that's the highest level since 2014-15), and higher investment income thanks to a strong stock market last year.

These gains, and others, more than offset slightly lower than expected income tax revenue. But there was plenty of bad news to offset the good.

The cost of pipeline constraints

While global oil prices are up, this only modestly benefited Alberta.

A barrel of West Texas Intermediate (a common North American oil benchmark) is currently more than $60 US per barrel. That's higher than this time last year, and double where it was two years ago.

But a barrel of Western Canadian Select - an important benchmark in Alberta - is now at $36 US per barrel, which is actually lower than one year ago.

Alberta is landlocked, so many producers here receive a discounted price. And with export pipelines full, and more producers turning to rail, this discount has grown - a lot. In November of last year, the differential averaged roughly $14 US/bbl. Right now, it's about $25, (although it had exceeded $30 earlier this month).

This matters for industry. And for Alberta.

The latest data from Statistics Canada, released only hours before the Finance Minister's update, shows investment levels in Alberta are expected to decline in 2018, for the fourth consecutive year. Compared to 2014, investment is down $35 billion (61 per cent), most of which is due to the declining in oil and gas activity.

Going forward, the government estimates the high differential due to pipeline constraints could cost Alberta $10 billion over the next five years in foregone oil and gas investment.

The high differential also costs Albertans. In the update, we found out how much.

In 2017-18 alone, pipeline constraints and a larger than necessary discount cost the government roughly $500 million. And, between now and 2022, the absence of new pipelines could cost an estimated $9 billion in foregone royalties.

That's an average of $1.8 billion - or more than $400 per Albertan - per year.

Let that sink in.

Absent rising royalties, there are only difficult choices ahead.

A large deficit

The $9-billion deficit, while an improvement, is still 2.7 per cent of Alberta's GDP - making it the largest deficit in Canada and the second largest in Alberta in 25 years, the largest being last year.

It's also a worse budget-balance than roughly 80 per cent of every provincial or federal budget since 1980. How the government will address the fiscal challenge remains to be seen.

The minister reiterated the government's goal of balancing by 2023-2024. But it is unclear how they plan to do that. Will spending growth be restrained? Will new revenue sources be found?

With the full budget out in three short weeks, we won't have to wait long to find out.
Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at calgarytheroadahead@cbc.ca

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Alberta's economy is recovering, but there are tough choices ahead | CBC News

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On Wednesday, Alberta's Finance Minister Joe Ceci presented the government's latest fiscal update. He does this every three months, and it's usually a dry affair with a few tweaks here or a revision there. But this time was different. There was plenty of big news, both good and bad.