Gilbertson President CEO Edmonton Economic Development ... · • Asia, not U.S., will likely drive the recovery • Expect low interest rates and inflation to continue for some time

Ron Gilbertson

President and CEOEdmonton Economic Development Corporation

• Edmonton and Alberta Today

• Short to Medium Term Outlook

• Long Term Outlook

• The Challenge

EEDC 2010 Economic Outlook LuncheonNovember 24, 2009

Where We Are TodayWhere 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


2.

Edmonton and Alberta continue to have better economic fundamentals

than most3.

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


Edmonton’s Economic Dashboard

Income / GDP Retail Sales

Office

Vacancy

InsolvencyUnemployment

Housing Air Service Inflation

Where We Are Today Where We Are Today ––

GDP per CapitaGDP per Capita

Edmonton – Calgary2009 – Calgary +16%

Edmonton – Calgary1992 – Calgary +36%

Edmonton – Toronto2009 – Edmonton +14%

Edmonton – Toronto1992 ‐

Two Cities Equal

Source: Conference Board of Canada


Retail SalesRetail Sales



Consumer InsolvencyConsumer Insolvency

Source: Statistics Canada


UnemploymentUnemployment


Edmonton Unemployment Rate

0123456789

Jan-08

Mar-08

May-08Jul-0

8Sep

-08Nov-08Jan

-09Mar-

09May-09

Jul-09

Sep-09Nov-09Jan

-10


Office VacancyOffice Vacancy

6.9%

10.4%

Source: Avison Young


HousingHousing

Source: RBC Economics Research


HousingHousing

Source: Edmonton MLS

MLS Sales - Edmonton

0

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


Air ServiceAir Service

Source: Canadian Airport Authorities

Annual Passenger GrowthMajor Canadian Airports

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2006 2007 2008 2009

Ann

ual P

asse

nger

Gro

wth

Calgary Edmonton MontrealOttawa Toronto VancouverWinnipeg

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 2009Ann

ual E

npla

nem

ents

and

Dep

lane

men

ts

(Per

Cap

ita)

Calgary Edmonton


InflationInflation


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%

Jan1993

Jan1994

Jan1995

Jan1996

Jan1997

Jan1998

Jan1999

Jan2000

Jan2001

Jan2002

Jan2003

Jan2004

Jan2005

Jan2006

Jan2007

Jan2008

Jan2009

Jan2010

Ann

ual C

PI In

crea

se




Office

Vacancy






Office

Vacancy



Key Economic Drivers

Short to Medium Term OutlookShort to Medium Term Outlook

• Energy prices

• Value of the Canadian dollar

• Global economic growth

• Alberta and Canadian economies


Source: Energy Information Administration


Source: Energy Information Administration


Source: Pacific Currency Exchange


Source: International Monetary Fund


Source: BMO Capital Markets

‐2.5%

2.8%

4.3%


3.9%


4.1%

‐1.8%

3.0%



• 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



• 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 Economic Drivers

Longer Term OutlookLonger Term Outlook

• Global Oil and Gas Markets

• Creating a Value‐Added Economy

• Diversification of Edmonton’s Economy

• Emphasis on Quality of Life


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 MarketsWorld Oil Demand by Region

0

20

40

60

80

100

120

2000 2008 2015 2030

Prod

uctio

n (m

b/d) Other/Misc.

Non-OECD China/India

Non-OECD Other

OECD North America

OECD Other

Change in Oil Demand by Region(2008-2030)

-2 0 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


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


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

0

50

100

150

200

250

300

billi

on b

arre

ls

Saudi A

rabia

Canada

Iraq

Venez

uela

Russia

Mexico

Alb

erta

0

50

100

150

200

250

300

billi

on b

arre

ls

Saudi A

rabia

Canada

Iraq

Venez

uela

Russia

Mexico

Alb

erta

0

50

100

150

200

250

300

billi

on b

arre

ls

Saudi A

rabia

Canada

Iraq

Venez

uela

Russia

Mexico

Alb

erta

Proven Oil Reserves

Alberta’s Reserves 174 Billion Barrels


Value Added from Oil Sands

From bitumen production to value added processing Fuel Products

DieselKeroseneGasolineFuel Oil

PetrochemicalsEthylene

PropyleneButadieneSynGas

HydrogenNaphtha

FertilizersAmmonia

Ammonium SulphateElemental Sulphur

Urea


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


Core Sectors in the Future

Transportation& Logistics

Retail

Real Estate

Manufacturing

Forestry

ProfessionalServices

Entertainment

Construction

Agriculture

Engineering

Hospitality

Utilities

Education

Tourism

Energy &

Petro‐

chemicals

F.I.R.E.

HealthCare

Advanced

Technology

F.I.R.E.

Health Care

Education

Advanced TechnologyEnergy &

Petro‐ Chemicals

Tourism



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

phenomenon




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

phenomenon


Overall Status

Short to Medium Term

EdmontonToday

LongerTerm

The ChallengeThe Challenge

Setting a Goal

To have Edmonton become recognized as one of the world’s top 5 mid‐sized cities


Environment

External

Transport

Places to Live

Social

ConscienceUrban

Transport

Health

Safety

Economy

Recreation

EducationCulture

Image

Great Cities

Focus on establishing Edmonton as one of the world’s great mid-size cities

Quality of Life


City Type and Size Number of CitiesType Population North

AmericaRest of World

Total

Mega 20.0 M Plus 2 5 7Very Large 10.0 – 20.0 M 1 17 18Large 5.0 – 10.0 M 11 28 39Intermediate 2.5 – 5.0 M 11 86 97Mid-Size 1.0 – 2.5 M 43 264 307Total 68 400 468

The World’s Largest Cities


MunichLyonOrlandoSan AntonioAbu DhabiPretoriaStockholmVancouver

New OrleansCologneCalgaryAmsterdamXiamenGlasgowDubaiCopenhagen

Who are the Benchmarks?Who is our Competition?

The HagueAucklandMemphisOsloOttawaFukuokaColumbusBrisbane


A

B

C

D


Calgary and Edmonton are

rated #1 and #3 in the world



Prosperity Index VariablesEconomy 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

Documents

Gilbertson President CEO Edmonton Economic Development ... · • Asia, not U.S., will likely drive the recovery • Expect low interest rates and inflation to continue for some time