Deja Vu all over again?

The world price of oil languished through the 1980’s and 90’s
The great events ending the millennium left Edmonton and the rest of Alberta mostly unmarked, North American free trade agreements, bursting dot com bubbles, Y2K came and went.
But then the price of oil climbed to over $100 a barrel.

The memory of the oil price crash of the 80’s was still fresh, but Alberta happily went back to work. Price of homes went up, along with the price of everything else. This time the world’s central bankers decided to battle inflation by lowering interest rates, for reasons every armchair economist could explain, but no one understood. This meant the world could borrow to buy more stuff because loan payments were lower. The world decided to buy real estate. When USA speculation in high risk mortgages ended in the usual way in 2008, it took some financial institutions, the world’s stock markets and all of Iceland with it.

But the crash of 2008 passed Alberta by, Canadian banks had stayed away from approving mortgages to those who could not afford them and selling them on, they were too busy putting the loan shark industry out of business by handing out unlimited 20% annual interest credit cards and stealing loose nickels and dimes out of every bank account every month.

Real estate was rising to spectacular levels in Toronto and Vancouver, supposedly because off shore investors were buying up real estate in cities that were being touted the best places in the world to live. Edmonton failed to make any of these lists, which meant that Edmonton real estate had get along on inflation driven housing prices. Once more inflated wages kept up with inflated prices, every Edmontonian who wanted to work could get one or more jobs in the early oughties. By the late teens a skilled trade worker or teacher salary was edging towards $100,000 a year, and average Edmonton home prices to the mid $300K range, so not much had changed.

The price of oil also survived the stock market crash of 2008, briefly falling to about fifty bucks, but just as quickly rising back to the magic 100 dollar plus mark, and staying above that until 2014.

Then Alberta’s oil industry was besieged from without once again, but not from Ottawa this time. This time Alberta oil had managed to anger the entire world, in particular an angry young woman from Sweden who had appointed herself the international spokesperson for the stop global warming movement.

Turns out that Alberta oil was pretty much entirely responsible for causing global warming, or climate change if you prefer. This might be because people here spend 6 months of every year removing snow from their walks and driveways, but whatever the reason, the world is no longer interested in Alberta’s oil. OPEC and the USA fracking industry had been flooding the same world with cheap oil, back to early 90’s 20 bucks a barrel prices as this is written, not helped by everyone having to stay home to avoid catching a disease given to the world by Chinese bats.

In many ways what is happening to the Alberta oil industry is looking very much like the 1980s, but something is different. So far Edmonton real estate is weathering the storm. Prices have fallen somewhat, a fairly nice apartment condo can be had for the price of a new 4X4 pickup truck with all the options, but mostly real estate values are holding. People continue to come to Edmonton to live and work. The city population grew from 660,000 in 2000 to nearly a million (972,000) in 2019. More homes needed.

The incoming population is less from other parts of Canada and more from other parts of the world, Africa, the Middle East, Asia, Malaysia, Latin America, the Philipines. They are not coming here to make a killing in the oil patch, they are here for a diverse range of jobs, starting new businesses, feeding their families and buying a house. If there is a historical precedent, it won’t be found in the last 50 years, we need to go back a little farther.

In 1868, the Canadian Bureau of Statistics predicted the Canadian population would reach 109 million in 1972. In 1868 35% of the Canadian population were immigrants. The population had increased by 24% since the census of 1861. If the population had continued to grow at that rate Canada would have passed the hundred million mark by 1972.

At the turn of the previous Century, Prime Minister Wilfred Laurier proclaimed the 20th Century would belong to Canada. It started out that way at first. Desperate to fill the empty west with farmers, Interior Minister Clifton Sifton realized that expecting established farmers in the UK or USA, ‘desirable immigrants’ who had the skills and would fit in, to come to an empty land that had never seen a plow was not going to work, nor would persuading British city dwellers they could become successful farmers. On the other hand, in Eastern Europe and Central Asia, under the thumb of decaying empires an oppressed population of peasant farmers could be an ideal source of men and women used to working very hard just to survive. Sifton deployed an army of agents to bring people to Western Canada from the Ukraine, Russia, Poland, Germany, and Lebanon.

Once in Canada they not only survived but prospered. Canada’s west became the “bread basket of the world”. In 1905 Sifton was replaced as interior minister by Edmonton pioneer Frank Oliver . Oliver was not happy with Sifton’s immigration policy, and tried to reverse the Eastern European immigration flow in preference to to Brits, Western Europeans and white Americans. The first world war followed by a depression and another war did not help immigration until the 1950’s when Canada opened its doors once more.

There is a renewed call to boost Canada’s population to 100 million by 2100. Unlike the 1900’s the people coming to Canada in the 21st century will not be coming here to carve farms out of prairie or search for under ground wealth in the hinterlands, just the opposite. The demographic trend of the later half of the twentieth century to the present is people leaving the country for cities.

It is not oil, mines, trees or acres that make a country rich. Those things just end up benefiting a small group of people who snatch up all the stuff lying on or under the ground before anyone else realizes it is gone. What makes a place rich is people who spend their days doing things or making things for other people doing similar things. There is a nearly unlimited supply of people who only want a chance to come to a stable orderly nation that will not blow up or steal everything they work for.

Given this, can Edmonton still be the world’s last best west? One hundred years ago people were lured to Edmonton by promises of great weather, coal below ground, lumber and agriculture above, and gold in the river banks and “Homes for Millions”. Why would anyone come to Edmonton today? The answer to that question will determine the next one hundred years.

Room to grow?