Locals lose out in Alberta's oil boom
By Ian McKinnon and Reg Curren Bloomberg News
Published: June 12, 2007
http://www.iht.com/articles/2007/06/11/bloomberg/bxoil.php
CALGARY: Marilynn Sjulstad says she is experiencing the pain of an oil-fueled economic boom in Alberta while deriving little benefit from it.
Sjulstad, a 57-year-old Edmonton resident who has arthritis and fibromyalgia, says her rent will soon jump 27 percent - five times the increase in her monthly disability check.
"When I got the notice under the door, I didn't know whether to cry or throw up," she said in a telephone interview. "You can't live when you're paying 80 percent of your income for rent."
The economy of Alberta is forecast to expand almost twice as fast as that of the rest of Canada this year, pushing unemployment to a 30-year low. The growth is bringing surging housing costs, a shortage of hospital beds, and a lack of schools and recreation facilities for a population that has gained 10 percent in five years.
Demand for apartments has squeezed vacancy rates in Calgary to 0.5 percent, causing some rents to more than double. Sjulstad said that in October the rent on her two-bedroom apartment would rise to 800 Canadian dollars, or about $750, eating up most of her monthly disability income , 1,050 dollars.
Her landlord, William Begley, chief financial officer of Inland Property Management, declined to comment.
The soaring rents and lack of affordable housing prompted more than 200 people to protest in front of the Alberta Legislature in Edmonton last month to demand rent control. A law passed this month limits rent increases to one a year. But the size is not capped.
Some rents are being raised to force tenants out, so owners can convert buildings to condominiums, said Madeleine King, a Calgary City Council member. Condo prices have surged 30 percent this year, to an average of 332,000 dollars, according to the Calgary Real Estate Board. "What developers are telling me is that the condo sales are so outstanding at the moment that it doesn't make sense to hang on to rental properties," King said.
Edmonton and Calgary each have more than 2,000 applicants on lists for subsidized housing, and there is a two-year wait, according to their city housing agencies.
The economic pressure may not ease for people like Sjulstad, who cannot work because of her illnesses, as newcomers flock to the province for jobs. Alberta will probably lead Canada's economy for the next five years, helped by rising global demand for energy, said Warren Jestin, an economist at Bank of Nova Scotia.
Energy drives the economy of Alberta, generating about a third of the revenue of the provincial government and employing one out of six workers, according to government statistics.
Oil companies like Suncor Energy will invest an estimated 45.2 billion dollars this year in oil, natural-gas and tar-sands projects, according to FirstEnergy Capital, a brokerage company in Calgary. The economy of Alberta is forecast to grow 4.5 percent this year, almost double the national average, after expanding 6.8 percent in 2006, Bank of Nova Scotia said.
Housing prices in the province jumped 30 percent in April from a year earlier, more than triple the national average, according to the Canadian Real Estate Association.
The price of homes rose 23 percent to an average of 421,000 dollars in Calgary, where Suncor, EnCana and Petro-Canada are based. In Edmonton, the city closest to the oil sands and site of many refineries, the average price surged 52 percent to 343,000 dollars. Both cities have about a million residents.
Hospitals and recreational facilities are straining to meet the needs of the 3.29 million residents. The province is short more than 1,000 doctors, a deficit that may increase 50 percent in the next five years, the Alberta Medical Association said.
Youths looking for a place to play sports are finding overcrowded fields, gymnasiums and ice rinks, said Tim Bjornson, executive director of the Calgary Sport Council, an advisory group.
Youth hockey associations like Midnapore and Shaw Meadows have been forced to limit the number of participants next autumn, Bjornson said.
"We could have another 10 arenas and still fill those facilities," he said.
The government's handling of the boom is eroding the popularity of Ed Stelmach, who became provincial premier in December. A poll by Cameron Strategy showed that 39 percent of Calgary's residents disapproved of his performance, double the rate in January. The survey was based on 913 telephone interviews in mid-May.
"The gold standard used to be, can you buy a house?" said David Taras, a professor at the University of Calgary. "For many Albertans, they are very worried that they can't reach that standard. The irony is that as Alberta gets richer, it gets poorer."
That is how Sjulstad says she feels. Soaring rent is pushing her to share meals with friends and consider taking in a roommate. "There just aren't cheaper places to rent," she said. "I'm just trying not to panic. And I pray a lot."
