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Comment by mmastrac | Hacker News Reader

Odd to see my hometown here on HN, though many HNers are from here. Calgary has some unique issues -- the major ones being that the politics of the province are brutally toxic and this has halted and even reversed a lot of gains we made in the last decade trying to turn it around.

Oil and gas dying is part of the problem, but ask many new grads from local universities why they are leaving and the answer is mainly that this is just not the place for them. That's a terrible sign for the future.

The comment by julianlam elsewhere in this thread reminded me of a time I toured a local startup's office who had "reclaimed" an executive level of a previous oil and gas company. The entire floor was decorated like a Roman Emperor's quarters and the boardroom table itself was worth somewhere north of $200k (possibly as much as half a millon).

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Alberta has always been boom and bust, ever since oil was first discovered. There was an old bumper sticker from the 80's "Give Alberta another oil boom and I swear I won't waste it".

Office space vacancies in Calgary are nothing new. The economy will recover, people will forget the hard times, new buildings will go up and we'll do it all over again.

Back in the late 1990's/early 2000's it had a tech boom feel to it. Newly graduated engineers and geologists making the equivalent of $200,000 at 22. A friend from high school dropped out of his 2nd year of university because he could get a job paying $100,000 right now. Plenty of new vehicle, boats and new construction.

The Calgary-Edmonton corridor is one of the wealthiest areas in Canada. Alberta had the highest level of in-migration for a long time.

And keep in mind oil is now at $80/barrel and climbing. Those sweet, sweet oil royalties will be flowing into gov't coffers soon enough.

> "Give Alberta another oil boom and I swear I won't waste it".

I immediately hear Ron Howard's voice (Arrested Development narrator) saying "They did waste it".

It seems that this is the default. Norway is a notable exception.

> It seems that this is the default.

https://en.wikipedia.org/wiki/Resource_curse

Benevolent dictators are the way to go, if you can only find one.

Luckily Norway is rather solid democracy.

And didn't listen to the Right, who wanted it all privatized outside the country.

Yeah absolutely. How can this be a bust time when the oil prices are so high?

I am no economist, but my understanding is that Alberta's oil sands must be extracted via fracking, which is expensive and only profitable when oil prices are high. That there is lots of oil available is besides the fact if it is no longer economically feasible to extract it.

This quality of the oil makes Alberta extremely sensitive to pricing shenanigans OPEC plays every once in awhile.

A couple years back when oil prices were artificially low, it was due to OPEC pricing oil well below even their cost, purely to drive other oil producers out of the game.

The above added costs as well as the challenge of getting it to refineries. Lack of pipeline capacity to the coast (particularly Texas) is a big factor too.

You are conflating a couple of things. Oil sands extraction is completely different from fracking. But, you did get the basic essence right in that oil sands extraction is quite dirty and expensive.

Fracking is actually a reasonably cheap way to extract additional oil from more conventional wells. That happens in Alberta, also.

Thank you for the clarification!

> my understanding is that Alberta's oil sands must be extracted via fracking

https://www.oilsandsmagazine.com/technical/mining/surface-mi... and https://www.oilsandsmagazine.com/technical/mining

These are large surface mines.

The economics of it have to do with the massive amount of earth moved, and the relatively low amount of oil recovered per unit volume... and the work needed to be done to restore the mine afterwards.

> restore the mine afterwards

Cue the laugh track.

Just view it from space:

https://www.google.ca/maps/@57.0798964,-111.8686816,106744m/...

It looks a right mess.

Oil prices aren't high. $150+ in 2008 was high.

In addition to higher extraction costs: 1. Alberta oil doesn't get the $80+ price you see quoted on the news. Although the major price gap has narrowed dramatically it still sells at a significant discount due to type and location. 2. Access to refineries and market is a real... challenge (to put it mildly). There has been huge opposition to expanding pipeline transport, some of it genuine (Environment, Culture) and some of it driven by self-interest ($$$). I don't want to start this debate but the result is we're still using a lot of fossil fuels right now, so (a) it's more expensive, (b) it's increased dangerous transportation by rail and (c) it's increased reliance on imports from some pretty nasty places in the world.

The funny thing is I moved to Calgary in the early 2000's when oil was well under $50/bbl and the environment was one of unbounded optimism and potential. When oil hit the same price a few years ago on the way down the would have thought the world ended.

> The funny thing is I moved to Calgary in the early 2000's when oil was well under $50/bbl and the environment was one of unbounded optimism and potential. When oil hit the same price a few years ago on the way down the would have thought the world ended.

Because the province ran out of the easy to extract oil and had to move to bitumen extraction which requires a much higher price of oil to be profitable.

Oil sands need the price of oil to be in the area of $100+ a barrel to be profitable.

You have a source on that $100/barrel?

Last figures I saw were $30/barrel was breakeven.

$70/barrel was the last number I heard 3-4 years ago. It's likely around $100 now due to higher operational costs. It's really hard to move oil in Canada.

It has more to do, I believe, with the cost of extraction and then processing the bitumen into a form that can be transported. It is quite energy intensive to do

> energy intensive

Yes, but this means your variable input costs are proportional to your sales price.

Indeed. Its quite the economic puzzle

Those are numbers that I recall being bandied about in the press when the oil sands were being developed.

I did a search for some actual numbers and they seem to be all over the place depending on the year, the type of bitumen converters being used, the age of the facility and the actual source. Oil industry numbers were about $20 a barrel less than the numbers I was seeing from investment firms.

I suspect that the numbers I was referencing were for new facilities being built back in 2015 or so. There was a lot of talk about new facilities being put into operation but that was when the price of oil was stratospheric.

Those numbers would have been higher than older facilities or upgraded facilities.

I've been in Alberta my entire life and seen the boom and bust cycle (partially from inside oil and gas software companies), but this cycle in particular is different. While I have been very successful in my life as an Albertan (two sweat exits so far, one more likely), it has been entirely because I sought work and built startups remotely from 2006 onward in other regions.

There's no guarantee the economy will recover at this point, and if it does, the likelihood of hitting the 2008 highs is vanishingly small.

There's no plan and has never been a plan to manage the resources of the province, so even the hint of a boom will distort wages up and down the ecosystem for a short period, followed by the waves of layoffs once that hint disappears and massive damage to every industry in the province.

I joined the board of the Alberta tech ecosystem for a term in the late 2010s while angel investing locally, and the picture was dismal but there were sparks of a revival. The current government that took power a few years ago completely ignored the new reality of the province and stomped on the ashes of the ecosystem.

Alberta is unfortunately heading towards Detroit-level dysfunction. There will still be activity, but the Alberta of the past is gone forever.

The only hope Alberta has is to switch government tracks and spend a real decade rebuilding from the continual societal damage that energy has impacted on it. And I'm not even talking about the environment yet. There is a real risk that Alberta will hollow-out and become little more than a slightly richer Saskatchewan.

As someone that grew up very close to Detroit, I’m afraid your analysis will be right. Sometimes you stop going from boom to bust to boom, and you just stay at bust.

At lest I hope Albertans will get enough transfers from the fed to run decent medical and education systems, I wouldn’t wish on anyones children the things I’ve seen young people in Detroit have to live through.

IMO, Detroit is at the peak of a boom cycle at the moment. Parks being filled out everywhere, Gilbert is in the middle of constructing his opus, grand central station is almost done(!), even the Illitch's are slowly building out district Detroit and fulfilling their obligation. The biggest problem at the moment for the mayor is deciding who to rain Biden bux on. Crazy to think about

Interestingly I found out yesterday that a fairly large tech conference plans to hold its North America event in Detroit next year. In all my time in the tech industry, I have never seen or heard of a tech event, except for maybe some local company thing, being held in Detroit.

I live an hour away from Detroit and drove a friend into the city a couple of years ago to show her around. At some point she said something like "This city looks normal, like any other city. I can see living here." Then I drove her off of Woodward, one of the main thoroughfares that's been rebuilt and looks great. Within about two blocks going perpendicular to Woodward the scenery changed into what people think of Detroit. So you can have a conference and it will be just fine for those visiting. Just stay within the pretty area, which is coincidentally where the police patrol all the time.

Even that isn't necessarily the case anymore. growth has spread out past Woodward

Where I live in the northeast US, it's pretty much the pattern with a lot of old industrial and/or port small cities. There's maybe a couple handfuls of gentrified blocks with restaurants, twee shops, entertainment venues, etc. Go a half dozen or so blocks and things get sketchier or at least a lot more rundown, albeit not historical Detroit levels.

But you need to start somewhere.

This shouldn't shock anyone. This is nearly every major city in America. You often have very nice areas directly next to crappy areas.

The "core" of downtown Detroit is now very nice and very enjoyable to spend time in.

Sounds like the 'hologram highway' sequence from https://en.wikipedia.org/wiki/Incorporated_(TV_series)

The show is watchable btw. for the somehow cyberpunky feeling. Unfortunately canceled after 1 season only, in spite of favourable reviews. Strange.

Anyways, the most memorable thing for me was the part where the protagonist hops into his self-driving e-car to commute from the gated community he lives in, to work in downtown.

There is a sequence where it zooms out, to behind the car and then upwards, like filmed from a quadcopter, or so.

And then you see all the nice trees next to the highway are just fakery, hiding the ghettos next to it, by holographic walls :-)

> Office space vacancies in Calgary are nothing new. The economy will recover, people will forget the hard times, new buildings will go up and we'll do it all over again.

This mentality is why the current recession that started in 2015 hasn't turned around yet. The major oil and gas companies aren't coming back this time. It's time for the city to invest in something else instead of pandering to an industry that will drop them like a bad habit the moment the barrel drops below a certain price.

Tech can always an option. I mean we are entering WFH being the normal so office spaces aren't exactly what is required but once you start building Tech everything comes along with it (schools, stores,tech law firms etc) that supports Tech and in general people move where the money is.

I think the “difference” now is that efficiency capabilities are such that you come back with less people.

If you had 200 people last boom, you’ll have 80 the next.

That and oil and gas is heavily fragmented. Every bust leads to consolidation of the weaker players by the bigger players.

> Oil and gas dying is part of the problem, but ask many new grads from local universities why they are leaving and the answer is mainly that this is just not the place for them. That's a terrible sign for the future

I am a young guy in Calgary and from Calgary. More than half my high school classmates are gone. Packed up to Vancouver or Toronto, with a few stateside.

Most came back after university for a bit, but then departed.

I had the same experience, nearly all the people I knew from high school left Calgary/Alberta. Including myself. The few people who stayed work in oil and gas.

Also from Calgary and just graduated, all of the people I knew from my group have moved to the states. Not really sure what I’m doing here but I enjoy my job so I don’t think I’ll move anytime soon.

This is true a lot of places though. The minute people finish high school or post secondary they leave.

I guess the difference is most people are moving from smaller places to cities for work and Calgary in theory should be a city where people would want to stay.

Not only that, but Calgary was the place young people were coming just 5-10 years ago. We were (and in many ways still are) a really young city.

I left Alberta (Edmonton) in 1996 for much the same reasons. Moved to Toronto to take part in the .com thing. It's an ongoing cycle and seems to get worse on the downside of every bust.

Sometimes I imagine going back, because my elderly parents are there and my brother is there and I still have lots of friends there. But I can't imagine transplanting my children into that province.

Like you said, the politics are toxic.

I usually think of politics as a country-level issue, so it's hard for me to understand your point - can you elaborate on how does "toxic politics" on a city level look like that would make me not want to live there?

Poor quality of municipal services caused by e.g. waste and corruption; or something entirely different?

You're missing a level with this - the provincial government is the issue. If you're American, think of how Florida has been dealing with COVID or how Texan electricity policies have affected things lately - it's that sort of thing. The provincial government launched us into the #1 COVID spot in Canada (we were competing with some of the worst America states for a while) and they have consistently doubled down on bad bets and bad policies focusing on what used to be rather than accepting the new reality that Alberta needs to start planning for the future.

They likely mean Alberta provincial politics, which are kind of a mess. The current provincial government has done poorly with the COVID situation, and has spent as much effort battling cartoons on Netflix for being too "anti oil & gas" as anything.

Canada is a highly federal country. In some ways even more so than the US. The political situation differs a lot between provinces, and the provincial governments have a lot of power.

And Alberta has essentially been a one party state under conservative rule for the last 50+ years (minus one 4 year term where a nominally left wing party took power by "fluke" because of a feud/split in the conservative vote). Every position of consequence there is connected to the conservative party, which is connected in turn to the oil and gas industry.

And they have bungled COVID badly.

Municipal politics aren't toxic in Edmonton and Calgary, they've largely managed to avoid the partisan divide that has poisoned discourse at the provincial level.

Timely article today in CBC News: https://www.cbc.ca/news/canada/calgary/young-albertans-leavi...

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