It's a small world after all.



    By Ted Chambers

    EDMONTON, Dec. 17 /CNW/ - Fifteen years of uninterrupted growth is an
economic record that Albertans can rightly view with pride. During that time
the province has become a magnet for capital investment across a whole range
of activities. Entrepreneurial activity is everywhere. Population, employment,
income and retail sales have all surged as the per capita income of Albertans
became the highest in Canada and one of the highest in any political
jurisdiction in North America. And, beyond all this, the province's endowment
of natural resources has permitted the lowest tax rate in the country.
    Sometimes we become so absorbed in the present circumstances of a buoyant
economy that we lose our perspective - we fail to relate what is taking place
in our little world to what is happening in the bigger world around us. In our
little world during the two and half years commencing in 2005 Alberta has had
boom conditions imposed on an already fully employed economy. The large
increases in the price of crude accelerated the interest in, and expansion of,
the oil sands. Capital investment and capital spending intentions soared and
with them the demand for labour as that Alberta employment expanded at an
annual rate more than double the long term growth of 2.5%. We have all had
direct contact with the resulting pressures on housing and on transportation,
health and social service infra-structures. All this has occurred despite
reduced intentions - in the face of sluggish prices and boom generated cost
pressures - on natural gas drilling activity.
    Our current measure of the Alberta business outlook - the Business
Sentiments Index (BSI) - indicates that the provincial economy is returning to
more moderate and sustainable levels of growth. That is good news for both
households and business firms. The challenge in Alberta will be to maintain
that growth in the face of what is going on in that big world around us
including the potential not simply for stagnant growth in the North American
economy but for outright recession. The oil sands will continue to be for some
time one of the foundations of Alberta's economic growth. But here is the
issue: the oil sands have attracted massive capital investment but, as they
increase in importance and their role is more widely understood, they have
also become of central interest and critical concern to perhaps the most
compelling movement in the big world around our little world -
environmentalism. And let's not delude ourselves: that movement is for real
and it is powerful. What does this imply for Alberta and for the future rate
of development of the oil sands? It means that though Canada's willingness to
take on, for example, carbon dioxide emissions is subject to debate, there is
little doubt that the new American Administration taking office in 2009 will
have the oil sands in its sights. I leave it to you as to what is the rational
course of action in these circumstances.





For further information:

For further information: Western Centre for Economic Research, School of
Business Building, University of Alberta, Edmonton, Alberta, Canada, T6G 2R6,
Phone: (780) 492-2235, Fax: (780) 492-4631, fcentres@ualberta.ca,
www.bus.ualberta.ca/wcer


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