Is Big Oil a big job creator?

October 27, 2014

2-minute read

Job creation is high on the oil industry’s list of go-to arguments for increased investment in the oil sands. Energy extraction is a key driver of employment growth, they tell us, and the benefits extend well beyond Alberta. “Almost every community in Canada has been touched by oil sands development through the stimulating impact it has on job creation,” according to the Canadian Association of Petroleum Producers.

The industry’s favourite number? 905,000. That’s the projected increase in oil sands jobs in the next two decades, up from a meager 75,000 today, according to an oft-quoted report by the industry-funded Canadian Energy Research Institute (CERI).

But what does that number mean? And is it as impressive as it sounds?

According to the report, 905,000 is the total number of new oil sands-related jobs that will be created in Canada by 2035. That means it includes not only direct employment in the Alberta oil sands, but also indirect employment in associated industries, like truck manufacturing, and any “induced” employment that may be created throughout Canada due to increased economic activity in the oil sands.

Even if we take that 905,000 figure at face value—CERI makes a wide variety of optimistic assumptions and an accurate 25-year employment forecast is pretty farfetched—it works out to just 36,000 new jobs per year. And if we cut out indirect and induced employment, the report says the oil sands will create only 12,000 new jobs per year.

To make matters worse, the 905,000 lump sum hides huge regional disparities. According to CERI, 86% of new oil sands-related job creation will be in Alberta, including 100% of direct job creation. That’s hardly a recipe for widely-shared economic prosperity.

The oil industry is trying to cherry-pick cumulative data rather than presenting the annual and regional numbers we’re used to. “905,000 new jobs in Canada” is meant to sound more impressive than “12,000 new jobs in Alberta”. But at the end of the day the job creation reality doesn’t live up to the hype, even by CERI’s optimistic calculations.

And those calculations are really optimistic. According to the non-partisan Canadian Occupational Projection System (COPS), the oil and gas industry will add only 4,500 new jobs per year in the coming decade, not 12,000 like the CERI report claims. The COPS estimate even includes oil and gas industry jobs outside the Alberta oil sands.

To put that number in perspective, the health care industry in Canada will create more than 40,000 new jobs per year for the next 10 years. In fact, COPS predicts that almost a dozen different industries will create more jobs for Canadians in the coming decade than the energy sector will, including the education, retail, and computer services sectors.

By manipulating the numbers, the oil industry is trying to put a positive spin on a non-story. If there’s a benefit to the Canadian economy from the oil sands, you won’t find it in the job market.

Hadrian Mertins-Kirkwood is the CCPA's 2014 Andrew Jackson Progressive Economics Intern. Follow Hadrian on Twitter @hadrianmk.

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