Hicks on Biz: Cold Lake an example of Alberta pain BY GRAHAM HICKS FIRST POSTED EDMONTON SUN: FRIDAY, AUGUST 04, 2017 08:58 AM
“The environmental agenda has hijacked Alberta’s resource industry and our politicians,” wrote Craig Copeland, one of many readers responding to last week’s Hicks on Biz column entitled “Alberta’s economic suicide.”
“It gained traction in the early 2000s but has escalated lately with the new provincial and federal governments,” Copeland continued, “even though Alberta already had some of the strictest industrial environmental policies in the world. I fear we could be witnessing one of the greatest economic tragedies in Canadian history.”
Just another redneck opinion to be ignored, Alberta Premier Rachel Notley and her advisers would likely say. The current New Democrat government appears to put a higher priority on its climate change action plan than on the dismal state of the provincial economy, everywhere other than Edmonton.
Copeland, however, is no redneck.
He’s the long-time mayor of Cold Lake, one of Alberta’s more thoughtful and respected municipal leaders.
Nestled on the shore of the lake with the same name, Cold Lake is a small, picturesque city 300 km northeast of Edmonton and a stone’s throw from the Saskatchewan border.
The presence of Canadian air force CFB (Canadian Forces Base) Cold Lake offers some economic stability, and the city serves as a regional shopping centre for much of northeast Alberta and northwest Saskatchewan.
But Cold Lake is primarily an oil town. It’s the centre of the Cold Lake Oil Sands, second in size only to the Athabasca Oil Sands around Fort McMurray. Within an hour’s drive are in-situ oilsands extraction projects run by Imperial Oil, Devon Canada, Cenovus, Husky, CNRL and OSUM.
Here are the grim realities facing Mayor Copeland and his council.
Reports of Alberta’s improving economy are true, say local business people … if you can call a 10% recovery in 2017 from a 50% crash in 2015 and 2016 an improvement.
Cold Lake’s population has dropped by almost 1,000 residents, from a peak of 15,736 in 2014 to 14,961 in 2016. Those with public-sector jobs are okay. Everybody else has had to accept 30% to 50% wage cutbacks
Well-paid oil patch jobs are long gone. The patch used to employ 5,000 Cold Lake residents in construction, operating and oil service jobs. About 3,000 jobs are left in operations and oil service. No construction is currently taking place.
Since the “go-go years” of 2011 to 2014, housing prices have dropped by 25%. A house in a new subdivision worth $500,000 before 2015 sells for $350,000 today. Higher-end homes are near impossible to sell. One home with an asking price of $700,000 recently sold for $511,000.
New single-family housing starts have dropped from around 80 a year before 2015, to 55 in 2016. “I’m building condos in B.C.,” says Randy Meise, president of the Cold Lake builders’ association. “There’s no market at home.”
Cold Lake people don’t blame government for the massive drop in global oil prices.
But they are bewildered by recent provincial and federal government policies – carbon taxes, corporate income hikes, industrial emission caps - that have aggravated, rather than helped, the local economy.
Businessman Bob Buckle owns the Original Joe’s restaurant in Cold Lake. His gross annual revenue dropped from $3.3 million in 2014 to $2 million in 2015, and has since stayed flat.
“In the past, governments tried to help during tough times. Today, we feel like we’re being attacked by our own governments, what with higher liquor taxes, corporate taxes, carbon tax surcharges and minimum wage increases.
“I can’t increase my prices in this environment. Just keeping the doors open is a challenge.”
Mayor Copeland has an economic recovery wish list for his city, starting with the restoration of long-term investor confidence in Alberta’s oil and gas sector.
Building pipelines: “We need the new pipelines. No oil companies will make $2 to $3 billion investments without the certainty of getting their product to market.”
Streamlining regulatory processes: “Imperial Oil has applied for permission to expand its Cold Lake production from 160,000 to 210,000 barrels a day – using new technologies that dramatically reduce water usage and greenhouse gas emissions. But the process is so slow. Twenty intervenors are registered so far. A thousand to 1,500 construction jobs are on indefinite hold.”
New fighter jets for CFB Cold Lake: “4 Wing Cold Lake is the busiest fighter base in Canada,” says Copeland. “The air force has been waiting for new jets for five years.” New jets would mean base upgrades – i.e. new hangars – benefiting local business.
Whole-hearted government support rather than indifference or implicit hostility: “Alberta’s oil patch is one of the cleanest in the world,” says Copeland. “The last time Imperial Oil expanded at Cold Lake, an on-site camp wasn’t built in order to preserve four or five acres of trees.
“Why aren’t governments loudly defending and praising the oil patch for its environmental gains? Don’t penalize oil companies! Reward them for lowering emissions!”
Yes, there’s innovation and diversity. The Primco Dene Company, owned by the Cold Lake First Nations, is exceedingly successful. But its multiple businesses – outside of a casino – are mostly natural-resource related.
Cold Lake has some tourism – thanks to fishing, boating and waterfront recreation. The marina will soon be expanded, “but tourism is still a three-month-a-year activity,” Copeland says.
Reviving a leaner, greener fossil fuel industry, able to be profitable at $50 a barrel oil, appears to be the only real solution to Cold Lake’s challenges – and Cold Lake is a microcosm of every other Northern Alberta town or city other than Edmonton.
Is this the new normal, I ask Cold Lake Chamber of Commerce president and retail shop owner Ben Fadeyiw.
“It better not be,” he replies. “We’re Albertans. We can adjust. I can survive, working twice as hard for less money.
“But I worry about my staff. The last thing I want to do is cut their hours. They’re both single-parent moms.”