Ron Gilbertson President and CEO Edmonton Economic Development - - PowerPoint PPT Presentation

Ron Gilbertson President and CEO Edmonton Economic Development Corporation

• Edmonton and Alberta Today
• Short to Medium Term Outlook
• Long Term Outlook
• The Challenge

EEDC 2010 Economic Outlook Luncheon

November 24, 2009

Where We Are Today Where We Are Today

1.

Technically the recession is over in most parts of the world – but the pace of recovery is tentative

• Corporations and governments generally entered the

recession in better shape than in past downturns

• Asia, not U.S., will likely drive the recovery
• Expect low interest rates and inflation to continue for some

time

• Concern about debt levels and double dip recovery

Where We Are Today Where We Are Today

2.

Edmonton and Alberta continue to have better economic fundamentals than most

3.

Key issue going forward will be need for improved productivity

• Alberta has become a high cost location
• Concern about increasing value of Canadian $
• Concern about future labour shortages

4.

Uneven impact on energy sector

• Expect growing role of heavy oil, and impact on royalties
• Concern about long term surplus in natural gas – negative

impact on prices, drilling activity, and service sector

Where We Are Today Where We Are Today

Edmonton’s Economic Dashboard

Income / GDP Retail Sales Office Vacancy Insolvency Unemployment Housing Air Service Inflation

Where We Are Today Where We Are Today – – GDP per Capita GDP per Capita

Edmonton – Calgary 2009 – Calgary +16% Edmonton – Calgary 1992 – Calgary +36% Edmonton – Toronto 2009 – Edmonton +14% Edmonton – Toronto 1992 ‐ Two Cities Equal

Source: Conference Board of Canada

Where We Are Today Where We Are Today – – Retail Sales Retail Sales

Source: Conference Board of Canada

Where We Are Today Where We Are Today – – Consumer Insolvency Consumer Insolvency

Source: Statistics Canada

Where We Are Today Where We Are Today – – Unemployment Unemployment

Source: Statistics Canada Edmonton Unemployment Rate

1 2 3 4 5 6 7 8 9 J a n

• 8

M a r

• 8

M a y

• 8

J u l

• 8

S e p

• 8

N

• v
• 8

J a n

• 9

M a r

• 9

M a y

• 9

J u l

• 9

S e p

• 9

N

• v
• 9

J a n

• 1

Where We Are Today Where We Are Today – – Office Vacancy Office Vacancy

6.9% 10.4%

Source: Avison Young

Where We Are Today Where We Are Today – – Housing Housing

Source: RBC Economics Research

Where We Are Today Where We Are Today – – Housing Housing

Source: Edmonton MLS

MLS Sales - Edmonton

500 1000 1500 2000 2500 3000

Jan-86 Jan-87 Jan-88 Jan-89 Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Where We Are Today Where We Are Today – – Air Service Air Service

Source: Canadian Airport Authorities Annual Passenger Growth

Major Canadian Airports

• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 2006 2007 2008 2009

Annual Passenger Growth

Calgary Edmonton Montreal Ottawa Toronto Vancouver Winnipeg

Airline Passengers

0.0 2.0 4.0 6.0 8.0 10.0 12.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 A n n u a l E n p la n e m e n ts a n d D e p la n e m e n ts (P e r C a p ita )

Calgary Edmonton

Where We Are Today Where We Are Today – – Inflation Inflation

Source: Statistics Canada

Consumer Price Index - Edmonton

• 5.0%
• 4.0%
• 3.0%
• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% Jan 1993 Jan 1994 Jan 1995 Jan 1996 Jan 1997 Jan 1998 Jan 1999 Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Annual CPI Increase

Where We Are Today Where We Are Today

Edmonton’s Economic Dashboard

Income / GDP Retail Sales Office Vacancy Insolvency Unemployment Housing Air Service Inflation

Where We Are Today Where We Are Today

Edmonton’s Economic Dashboard

Income / GDP Retail Sales Office Vacancy Insolvency Unemployment Housing Air Service Inflation

Key Economic Drivers

Short to Medium Term Outlook Short to Medium Term Outlook

• Energy prices
• Value of the Canadian dollar
• Global economic growth
• Alberta and Canadian economies

Short to Medium Term Outlook Short to Medium Term Outlook

Source: Energy Information Administration

Short to Medium Term Outlook Short to Medium Term Outlook

Source: Energy Information Administration

Short to Medium Term Outlook Short to Medium Term Outlook

Source: Pacific Currency Exchange

Short to Medium Term Outlook Short to Medium Term Outlook

Source: International Monetary Fund

Short to Medium Term Outlook Short to Medium Term Outlook

Source: BMO Capital Markets

‐2.5% 2.8% 4.3%

Short to Medium Term Outlook Short to Medium Term Outlook

3.9%

Source: Conference Board of Canada

4.1% ‐1.8% 3.0%

Short to Medium Term Outlook Short to Medium Term Outlook

Source: Conference Board of Canada

• Strength of the economic recovery
• Value of the Canadian and U.S. $
• Oil and natural gas prices
• Alberta’s fiscal situation
• Economic growth and the Goldilocks

phenomenon

Key Issues and Concerns

Short to Medium Term Outlook Short to Medium Term Outlook

Source: Conference Board of Canada

• Strength of the economic recovery
• Value of the Canadian and U.S. $
• Oil and natural gas prices
• Alberta’s fiscal situation
• Economic growth and the Goldilocks

phenomenon

Key Issues and Concerns

Key Economic Drivers

Longer Term Outlook Longer Term Outlook

• Global Oil and Gas Markets
• Creating a Value‐Added Economy
• Diversification of Edmonton’s Economy
• Emphasis on Quality of Life

Longer Term Outlook Longer Term Outlook

• 1. In spite of energy conservation and alternative

fuels, over the foreseeable future the world remains committed to oil and gas

• World oil demand expected to rise an additional 25%

by 2030 (from 85 to 106 million barrels daily)

• Demand in industrialized nations expected to decline
• Major growth in developing nations (China, India,

Middle East) as they “join the club”

Global Oil and Gas Markets

World Oil Demand by Region

20 40 60 80 100 120 2000 2008 2015 2030 Production (mb/d) Other/Misc. Non-OECD China/India Non-OECD Other OECD North America OECD Other

Change in Oil Demand by Region (2008-2030)

• 2

2 4 6 8 10 China India Middle East Other Asia Latin America Africa

• E. Europe/Eurasia

OECD North America OECD Europe OECD Pacific mb/d

Longer Term Outlook Longer Term Outlook

• 2. Production from existing sources expected to decline

by over 50% by 2030

• To offset production declines and meet increases in world

demands, IEA projects that oil supply equivalent to “6 new Saudi Arabia’s” must be found by 2030.

• The cost of exploration and production rising rapidly (95%

increase since 2000)

• Long term pricing expected to be in the $100 - $120 a barrel

range

*Source: International Energy Agency – World Energy Outlook 2009

6 Saudi Arabia’s

Global Oil and Gas Markets

Longer Term Outlook Longer Term Outlook

• 3. Alberta’s oil sands are increasingly being

viewed as the world’s largest and most politically stable source of oil

• Alberta is second only to Saudi Arabia in terms of

total proven reserves

• Alberta represents over 50% of the world’s privately

developable oil reserves

• Cost escalation and environmental issues are

critical to the long term development potential of heavy oil

Global Oil and Gas Markets

50 100 150 200 250 300 billion barrels

S a u d i A r a b i a C a n a d a I r a q V e n e z u e l a R u s s i a M e x i c

• Alberta

50 100 150 200 250 300 billion barrels

S a u d i A r a b i a C a n a d a I r a q V e n e z u e l a R u s s i a M e x i c

• Alberta

50 100 150 200 250 300 billion barrels

S a u d i A r a b i a C a n a d a I r a q V e n e z u e l a R u s s i a M e x i c

• Alberta

Proven Oil Reserves Alberta’s Reserves 174 Billion Barrels

Longer Term Outlook Longer Term Outlook Value Added from Oil Sands

From bitumen production to value added processing

Fuel Products Diesel Kerosene Gasoline Fuel Oil Petrochemicals Ethylene Propylene Butadiene SynGas Hydrogen Naphtha Fertilizers Ammonia Ammonium Sulphate Elemental Sulphur Urea

Longer Term Outlook Longer Term Outlook Value Added from Oil Sands

Bitumen Synthetic Crude Oil Fuels and Petrochemicals Consumer and Industrial Products

Products Processes

Oil Sands Plants Upgraders Refineries and Petrochemical Plants Downstream Industries

Longer Term Outlook Longer Term Outlook Core Sectors in the Future

Transportation & Logistics Retail Real Estate Manufacturing Forestry Professional Services Entertainment Construction Agriculture Engineering Hospitality Utilities Education Tourism Energy & Petro‐ chemicals F.I.R.E. Health Care Advanced Technology

F.I.R.E. Health Care Education Advanced Technology Energy & Petro‐ Chemicals Tourism

Longer Term Outlook Longer Term Outlook

Source: Conference Board of Canada

• Changing structure of the global economy
• Environmental protection and backlash
• Productivity and competitiveness
• Population and work force growth
• Economic growth and the Goldilocks

phenomenon

Key Issues and Concerns

Longer Term Outlook Longer Term Outlook

Source: Conference Board of Canada

• Changing structure of the global economy
• Environmental protection and backlash
• Productivity and competitiveness
• Population and work force growth
• Economic growth and the Goldilocks

phenomenon

Key Issues and Concerns

Overall Status

Short to Medium Term Edmonton Today Longer Term

The Challenge The Challenge Setting a Goal

To have Edmonton become recognized as

• ne of the world’s top 5 mid‐sized cities

Longer Term Outlook Longer Term Outlook

Environment External Transport Places to Live Social Conscience Urban Transport Health Safety Economy Recreation Education Culture Image

Great Cities

Focus on establishing Edmonton as

• ne of the

world’s great mid-size cities

Quality of Life

The Challenge The Challenge

City Type and Size Number of Cities Type Population North America Rest of World Total Mega 20.0 M Plus 2 5 7 Very Large 10.0 – 20.0 M 1 17 18 Large 5.0 – 10.0 M 11 28 39 Intermediate 2.5 – 5.0 M 11 86 97 Mid-Size 1.0 – 2.5 M 43 264 307 Total 68 400 468

The World’s Largest Cities

The Challenge The Challenge

Munich Lyon Orlando San Antonio Abu Dhabi Pretoria Stockholm Vancouver New Orleans Cologne Calgary Amsterdam Xiamen Glasgow Dubai Copenhagen

Who are the Benchmarks? Who is our Competition?

The Hague Auckland Memphis Oslo Ottawa Fukuoka Columbus Brisbane

Where We Are Today Where We Are Today

A B C D

Source: Conference Board of Canada

Calgary and Edmonton are rated #1 and #3 in the world

Where We Are Today Where We Are Today

Source: Conference Board of Canada

Prosperity Index Variables

Economy Overall Labour Attractiveness

• GDP per capita
• GDP growth
• Productivity growth
• Employment growth
• High tech employment
• Disposable income per capita
• Knowledge employment
• Residential building permits
• Total tax index
• Population 25‐34
• Immigrant population
• Teachers per 1,000
• Population with bachelor’s degree
• Homicide crime rate
• Cultural occupations
• Comfortable climate
• Housing affordability
• Domestic water usage

Conclusion

• Thank you for the opportunity to speak

today

• EEDC would be pleased to provide any

follow‐up information or a copy of this presentation