Do we invest in new economic sectors, or double down on oil and gas?
Calls for economic diversification have grown louder after more than six years of deep oil and gas industry recession that started with an OPEC oil price war and continued with the push by governments to transition to cleaner energy sources. After scores of international oil companies left the city and remaining companies merged to cut costs, Calgary, which used to be one of the world’s top oil and gas centres, is struggling. The 30 per cent office vacancy rate in its downtown core is the highest in the country, there is high unemployment, young people are leaving and remaining taxpayers are carrying a higher municipal tax load.
Municipal and provincial leaders are pushing to attract companies in new sectors like technology, the arts, clean energy and agriculture. Initiatives include providing funds for start-ups through The Opportunity Calgary Investment Fund, a $100-million City of Calgary initiative managed by Calgary Economic Development; retraining oil and gas workers to transition to the digital economy; and the opening of the Platform Innovation Centre. Proponents say the strategy is already working. Tech companies are starting up, moving to Calgary, or growing operations.
Skeptics think Calgary should defend its oil and gas sector because of its high environmental standards and its oversized contribution to the economy. With oil prices recovering due to lack of investment during COVID-19 and investor focus on greener energy, they argue that oil and gas could come roaring back, as it has in the past. Moreover, skeptics argue the energy transition will take decades and Calgary shouldn’t write off its oil and gas industry just yet.
Where do you stand on economic diversification?