Oil price plunge flipping migration patterns with people leaving Alberta

The slump in oil prices is starting to reverse migration patterns among the provinces.

Mass layoffs in the energy sector are leading people to move from Alberta to British Columbia and Ontario, bucking a decades-long trend of people flocking to the western province.

“There is a very clear correlation between migration and oil prices,” said Benjamin Tal, deputy chief economist with Canadian Imperial Bank of Commerce. “When oil prices go up, everybody is going to Alberta. When [oil] goes down, they leave. And that is exactly what we are seeing.”

When oil was steadily climbing from 2000 through 2014, Alberta experienced large waves of migration from other provinces. For five of those years, Alberta saw net inflows topping 30,000 people. Now, far fewer people are moving to the province, following oil’s precipitous drop. According to the Bank of Canada’s Monetary Policy Report, net interprovincial migration to Alberta in the third quarter of 2015 was at its lowest since 2010.

Since crude started plunging in the summer of 2014, Alberta has shouldered the highest number of job losses in the resources sector. More than 30,000 natural resources jobs have vanished in the past year, sending job seekers fleeing to other parts of Canada. Migration out of the province is expected to accelerate this year amid the weakened jobs market.

“Migration flows tend to lag changes in the labour market,” said Robert Kavcic, senior economist with Bank of Montreal. “We are probably going to see net outflows out of Alberta and back to B.C. and then back to Atlantic Canada, Quebec and Ontario.”

Oil is trading close to $28 (U.S.) a barrel compared with $100 about 18 months ago. Other resource-rich provinces, Saskatchewan and Newfoundland and Labrador, have also seen substantial job losses owing to the slump in commodity prices.

Unsurprisingly, Ontario experienced the largest inflow of migrants from other parts of Canada, according to the most recent Statistics Canada data. The province’s economic output is expected to grow more than 2 per cent this year, higher than the national average.

According to the Bank of Canada, the ratio of unemployment to job vacancies has “risen sharply in the energy-producing provinces” since oil started to plummet. In comparison, the same measure was relatively stable for the rest of Canada.

The central bank said labour market indicators improved for British Columbia, Ontario, Quebec and New Brunswick, while they deteriorated for the energy-producing provinces of Alberta, Saskatchewan, and Newfoundland and Labrador.

The jobless rate in those three provinces jumped last year with Alberta’s reaching the highest since the Great Recession.

“All the decline has been in the oil-producing provinces. It is obvious that the oil prices and other commodity prices has led to economic deterioration in those provinces. That means people leaving those areas to [go to] Ontario and other provinces,” said Andrew Sharpe, executive director with the Centre for the Study of Living Standards.