Why Is The Northern Alberta Oil Patch Dead Despite High Oil Prices?

At first glance this might seem like whining and complaining on the part of subcontractors making too much money. But consider that the rate a welder receives is not his or her personal wage--it is the money that is paid to his company, out of which he in turn draws a wage after paying his expeneses. This is far different than receiving $100 an hour as a 9-5 wage.

Such subcontractors also face extremely difficult work conditions. They literally sacrifice any normal family or regular life to work in the field, where limits on hours worked don't seem to exist and it's common to be called out at 3 am or work 28 hours straight in a place hours away from what could be considered civilization. The toll this takes on family life explains why most welders and oilfield workers are single or divorced. In turn this places stress on these workers, who may well be forced into the field in the first place to support their family as cost of living in Alberta (esp rent and housing prices) continues to climb, only to lose that same family due to the crazy schedule they must maintain to work. Lack of time off also leads to increased stress and mental and emotional problems.

Oilfield workers also often work in dangerous conditions, and injuries and deaths are all too common. Recent well-publicized accidents are just the most tragic examples, while few hear about the smaller injuries and illnesses experienced by many more workers. Exposure to dangerous chemicals, harsh conditions like extreme cold and heat, and NORMS (naturally occurring radiation), not to mention improper food, high pressure and stress and lack of sleep can also damage health cumulatively over time even when obvious injuries and deaths don't happen. Simple exhaustion can have far-reaching health consequences.

And then there is the fact that oil companies frequently don't pay subcontractors for up to three months (the standard is 60-120 days), which can be long enough to bankrupt small companies that still need to pay high bills, which include gas, supplies, safety equipment, and insurances among other costs. Banks are hardly sympathetic to small businesses attempting to survive, and who don't have the size or resources to go after large or multinational oil companies that owe them money. Welding equipment and the welding truck that is needed to haul it is expensive, especially for individual welders who must carry these costs on their own.

It is also important to remember that many oilfield workers such as welders are actually farmers, who work in the oilfield in the winter to support their farm for the rest of the year. These family farmers are far more likely to lose their farms if they can't make money over winter.

Ultimately, it is not the large oil companies who are likely to go bankrupt if rates are high, but the small contractors who do most of the actual work in the field who will go bankrupt if rates are low--and if work is stopped and delayed in a sort of corporate gang-up on subcontractors in an effort to "teach them a lesson" and bring rates down.

It is a sort of unionizing in reverse, an agreement between giant (and U.S.-owned) companies to stop work until they can get the cheap rates they want rather than an agreement between workers to demand better conditions and good wages. As a result, work is not going forward.

This is common knowledge in the field, where people such as Husky Oil VPs will talk about it openly, but nowhere else. The large oil companies have the money to keep the PR engine churning about royalties, and the news that they are intentionally starving out Albertan workers is hardly good PR for them.

It might not seem to make sense with oil prices the way they are--at least not until you remember that the demand will keep increasing, and limiting the supply by not rushing to get that precious black gold out of the ground means prices will keep rising. That's great for the oil companies, bad for your average consumer and bad for your small welding subcontractor. In the midst of a supposed labour shortage, skilled labour such as journeymen welders should not be sitting idle. The economic consequences will catch up with the province soon enough, because bankrupt small businesspeople aren't going to be able to pay their mortgages and their bills, let alone buy more things.

Those seeking to make a quick buck, or even a good living, in northern Alberta's oilfield should also be aware that the situation is not as rosy as the press and the country's economists would have us all believe. Competition is fierce for the crumbs of work that remain.

If nothing else, more light needs to be shed on this trend in the mainstream press. And we all need to take the griping of the oil companies with a grain of salt, and remember that their whole concern is their own bottom line, not the disposable people at the bottom of the pyramid, like you and me.

**Note: The situation is very different in Fort Mac, where rates have always been much lower and the majority of work is unionized.

Note: Parkland Institute