Economy of Alberta facts for kids

Quick facts for kids
Economy of Alberta

An aerial photo of oilfield roads and drill sites in the Pembina Oil Field, 2008.
Currency	Canadian dollar (CAD, C$)
Fiscal year	April 1 – March 29
Statistics
Population	4,421,876 (2020)
GDP	CAD$338.2 billion (2018)
All values, unless otherwise stated, are in US dollars.

The economy of Alberta is all the ways people in Alberta make and spend money. Alberta is Canada's fourth largest province by population. In 2018, Alberta's total economic output, called its Gross Domestic Product (GDP), was about $338.2 billion Canadian dollars.

Alberta has many different industries, like farming, forestry, education, tourism, banking, and making things. However, the province's history and way of life have been strongly connected to producing fossil energy (like oil and gas) since the 1940s. Alberta has a huge amount of unconventional oil in its oil sands, making it Canada's top oil producer.

In 2018, Alberta's energy industry added over $71.5 billion to Canada's total GDP. This shows how important oil and gas are to the country's economy. From 1990 to 2003, Alberta's economy grew faster than any other part of Canada. In 2006, the money each person in Alberta made (called per capita GDP) was higher than in any U.S. state and among the highest in the world! By 2014, Alberta's exports had grown a lot, and 500,000 new jobs were created.

The energy industry created many jobs in Alberta, providing about 7.7% of all jobs in 2013. However, the number of jobs in this sector can change with oil prices. For example, in November 2016, the unemployment rate reached 9.1%, but it was as low as 4.3% in September 2013.

Starting in 2014, a lot of oil was produced worldwide, causing oil prices to drop very low. This led to a "long and deep" economic slowdown in Alberta that lasted until 2017. Many jobs were lost, especially in mining, oil, and gas. Even though prices have gone up since 2011, a typical worker in Alberta still earns more than workers in other Canadian provinces.

Alberta has the lowest overall taxes in Canada. This is partly because the province used to get a lot of money from oil taxes. However, as oil prices dropped, so did the money the government earned from oil. For instance, in 2013, oil taxes brought in $9.58 billion, but by 2018, this fell to $5.43 billion.

In the spring of 2020, Alberta's economy faced big challenges because of the COVID-19 pandemic and a "price war" between Russia and Saudi Arabia over oil.

Understanding Alberta's Economy

How Alberta Makes Money: Key Data

This section shows how different parts of Alberta's economy contribute to its total output.

GDP by sector, 2016      Oil, Gas, & Mining (16.4%)     Manufacturing (6.7%)     Transportation & Utilities (6.6%)     Business Services (11.8%)     Real Estate (11.7%)     Tourism (5.1%)     Retail (9.5%)     Public Administration (5.4%)     Finance & Insurance (4.8%)     Education (4.1%)

The table below shows how Alberta's economy has changed over the years.

• Nominal GDP is the total value of all goods and services produced.
• GDP per capita is the average economic output per person.
• Unemployment is the percentage of people who want to work but can't find a job.

Recent Economic Challenges

In early 2020, Alberta's economy faced a tough time due to the COVID-19 pandemic and a big drop in oil prices. Experts predicted this would be one of the hardest economic periods Alberta has ever seen.

The price of oil fell sharply because of the pandemic and a "price war" between major oil-producing countries. This meant that Alberta's oil, especially a type called Western Canadian Select (WCS), became very cheap. Low oil prices hurt Alberta's economy a lot, leading to job losses and less money for the province.

To help, the government sometimes decided to cut how much oil companies could produce. This helped oil prices go up a bit, but it also meant less oil was being sold. Even with these challenges, Alberta's economy is working to recover.

Alberta's Government Budget: Deficit and Debt

Alberta's government sometimes spends more money than it collects in taxes and other income. This difference is called a deficit. By March 2019, Alberta's net debt (the total money owed after subtracting assets) was $27.5 billion.

In the past, Alberta had a lot of financial assets, meaning it owned more than it owed. However, recent economic challenges have changed this.

The table below compares Alberta's net government debt to its GDP with other provinces in March 2019. A lower percentage means less debt compared to the size of the economy.

Alberta's Credit Rating

A credit rating is like a report card for a province's financial health. In December 2019, a company called Moody's lowered Alberta's credit rating. This happened because Alberta's economy relies heavily on oil and gas, and there aren't enough pipelines to move oil efficiently. Moody's also noted that Alberta's energy sector produces a lot of greenhouse gases, and the province is at risk from natural disasters like wildfires and floods.

How Alberta's Income Compares to Others

In 2006, the money each person in Alberta made (real per capita GDP) was higher than in any U.S. state and among the highest in the world. In 2007, it was about $74,825 Canadian dollars, much higher than the Canadian average.

By 2017, Alberta's real per capita GDP was $71,092, while the Canadian average was $47,417. This means people in Alberta generally produce more economic value than people in other provinces. In 2016, Alberta's income per person was almost the same as Ireland, a top-performing country.

The table below shows Alberta's income per person over different years.

Alberta's Economic Size Compared to Other Provinces

This table shows the total economic output (GDP) of Canadian provinces and territories from 2014 to 2018.

Province or Territory	GDP (million CAD, 2014)	GDP (million CAD, 2015)	GDP (million CAD, 2016)	GDP (million CAD, 2017)	GDP (million CAD, 2018)
BC/BCE	219,060.9	224,153.4	231,509.9	240,657.9	246,506.3
Alberta	338,262.6	326,476.7	313,241.5	327,596.2	335,095.6
Saskatchewan	80,175.7	79,574.2	79,364.4	81,179.0	82,502.7
Manitoba	58,276.3	59,082.5	60,066.2	61,941.2	62,723.1
Ontario	659,861.2	677,384.0	693,900.4	712,984.3	728,363.7
Quebec	338,319.0	341,688.0	346,713.7	356,677.9	365,614.4
New Brunswick	29,039.6	29,275.7	29,686.3	30,271.8	30,295.3
Prince Edward Island	5,205.6	5,280.7	5,372.2	5,553.3	5,700.0
Nova Scotia	34,747.2	35,013.4	35,549.3	36,075.4	36,518.2
Newfoundland and Labrador	31,143.3	30,806.0	31,334.5	31,610.6	30,757.9
Yukon	2,510.9	2,320.2	2,482.5	2,554.5	2,626.1
Northwest Territories	4,574.6	4,621.3	4,679.8	4,861.3	4,954.7
Nunavut	2,363.6	2,353.0	2,434.3	2,685.3	2,955.0

Where Alberta's Economy Happens

Alberta's location within Canada

Alberta is located in the northwestern part of North America. It's a landlocked province, meaning it has no coastline. This makes it harder to transport goods to major world markets by ship. Because of its location, Alberta relies heavily on good transportation links.

Historically, Alberta's economy has changed as different important products became popular. First, it was furs, then wheat and beef, and now mostly oil and gas. New ways of transporting these goods, like railways and pipelines, have been very important for Alberta's growth.

Before the 1950s, Alberta was mainly a farming province. Its economy depended a lot on the price of wheat. But in 1947, a large oil field was found near Edmonton. This discovery, along with a growing demand for energy, completely changed Alberta's economy. Since then, Alberta's economic success has largely followed the price of oil and natural gas.

The money from oil and gas has helped Alberta develop many other industries. This includes making equipment for the oil industry, as well as financial and government services. Alberta's population has grown much faster than its neighboring provinces, Saskatchewan and Manitoba, largely due to the oil industry.

Key Economic Areas and Cities

Most of Alberta's population lives in a boomerang-shaped area called the parkland belt. This area has good soil for farming and is home to the major cities.

Calgary and Edmonton: Economic Hubs

Calgary and Edmonton are Alberta's two biggest cities and most of the province's population lives in or around them. They are close enough to each other to form an "urbanized corridor."

While both cities have strong service economies, they have slightly different strengths. Calgary is known for being the headquarters for many oil and gas companies. Edmonton, on the other hand, has more jobs in government, universities, and hospitals. Edmonton's nearby towns also have many manufacturing businesses, often linked to oil and gas.

The Calgary-Edmonton Corridor

This area between Calgary and Edmonton is the most developed part of Alberta. In 2001, about 72% of Alberta's population lived here. It's also one of the fastest-growing regions in Canada. A study in 2003 found that this corridor had a high level of wealth, similar to some U.S. cities, but with Canada's good quality of life, including universal healthcare.

Calgary–Edmonton Friendly Rivalry

For a long time, Calgary and Edmonton have been seen as economic rivals. For example, in the 1980s, both cities wanted to be known as the "Oil Capital of Canada." This friendly competition is part of Alberta's history.

Jobs in Alberta

Alberta has a modern economy where most people work in service jobs like healthcare, government, or retail. However, industries that extract natural resources are also very important.

The unemployment rate in Alberta can change a lot. In March 2016, it went up to 7.9%, which was the highest since 1995. But by April 2019, it was 6.7%, with many new jobs added.

The table below shows how many people work in different industries in Alberta.

Major Employers in Alberta

Some of the biggest employers in Alberta include:

• Alberta Health Services: The provincial public health authority, employing over 100,000 people.
• Canada Safeway Limited: A large food and drug store chain.
• Agrium Inc.: A company involved in agricultural products.
• University of Alberta: A large public university.
• Canadian Pacific Railway: A major railway company.
• Suncor Energy: A big oil and gas company.

Main Industries in Alberta

Oil and Gas Extraction

Drilling rig in Alberta.

Alberta is Canada's largest producer of oil and natural gas. It's also the world's second-largest exporter of natural gas and fourth-largest producer. Large chemical plants are located in central Alberta, turning oil and gas into products shipped worldwide.

The Athabasca Oil Sands in northeastern Alberta hold a massive amount of oil, almost as much as the rest of the world's traditional oil reserves combined! New methods, like steam-assisted gravity drainage (SAGD), help extract this oil more easily. Fort McMurray has grown a lot because of the oil sands projects.

The price of oil is very important for these projects. When oil prices are high, it's profitable to extract oil from the oil sands. However, low oil prices, like during the 2015-2016 oil glut, can hurt the industry.

Natural Gas

Natural gas is found throughout Alberta. In 2018, Alberta produced 69% of Canada's natural gas. About half of Alberta's natural gas is used within the province, mainly by industries. The rest is sent to other parts of Canada and the United States.

Alberta has one of the largest natural gas pipeline systems in the world, stretching over 39,000 kilometers. However, sometimes there are too many pipelines or not enough, which can affect prices.

Coal Mining

Remains of the former Atlas Coal Mine, near Drumheller, now a National Historic Site of Canada.

Coal has been mined in Alberta since the late 1800s. It was very important for the early growth of many communities. Alberta still produces a lot of coal, and much of it is used to generate electricity within the province. However, Alberta plans to stop using coal for power by 2023.

Alberta has huge coal resources, holding 70% of Canada's total coal reserves.

Electricity Production

Alberta generates electricity from various sources. In 2016, about half of Alberta's electricity came from coal, and about 39% came from natural gas. The province also uses wind power, hydroelectric power (from water), and biomass (from organic materials).

The table below shows the different sources of electricity in Alberta in 2016.

Manufacturing

The Edmonton area is a big center for making equipment used in the oil and gas industry. It also has a large petrochemical industry that turns oil into other products.

However, manufacturing sales in Alberta have sometimes dropped when the oil and gas sector is struggling.

Food Processing

Because Alberta has strong agriculture, food processing is an important industry. Companies like XL Foods, which processes a lot of Canada's beef, are located in smaller towns like Brooks.

Transportation

Headquarters of the airline WestJet, in Calgary.

Edmonton is a key hub for distributing goods to northern communities. Calgary is home to the headquarters of Canadian Pacific Railway, a major railway company.

WestJet, Canada's second-largest airline, has its main office in Calgary. Calgary International Airport is a major hub for the airline.

Agriculture and Forestry

Grain elevator in southern Alberta

Agriculture

Farming has always been a big part of Alberta's economy. The province produces over $3.3 billion worth of cattle, and nearly half of all Canadian beef comes from Alberta. Alberta is also a leading producer of buffalo (bison) for food.

Wheat and canola are the main crops grown in Alberta. Farmers often use dryland farming methods, which means they don't irrigate their fields. Alberta is also the top province for beekeeping in Canada, with honeybees helping to pollinate crops like canola.

Forestry

Alberta has huge northern forests with lots of softwood trees. This allows the province to produce large amounts of lumber, oriented strand board (OSB), and plywood. Several plants in northern Alberta also make wood pulp and newsprint (paper for newspapers) that are sent around the world.

Forests cover about 59% of Alberta's land. The government allows a certain amount of wood to be harvested each year.

Services

Even though industries like oil and gas are very visible, most people in Alberta work in service jobs. This includes jobs in retail, transportation, banking, real estate, professional services, education, healthcare, and public administration. The number of jobs in the service sector has been growing steadily.

Finance

Calgary is home to the TSX Venture Exchange, a stock exchange for smaller companies. Many corporate headquarters are in Calgary, and the financial services industry has grown to support them. Major banks have offices in Calgary, and new financial technology (fintech) companies are also starting there.

Edmonton is home to the headquarters of Canadian Western Bank and ATB Financial, which are major Canadian banks located west of Toronto.

Technology

Alberta has a growing high tech sector. This includes well-known technology companies like iStockPhoto, Benevity, and Attabotics in Calgary, and Bioware and AltaML in Edmonton. The growth of these companies is helping Alberta's economy recover and grow in new ways.