Stay the Course or Seize an Opportunity? Options for Alberta's Post-Secondary Institutions in a Period of Uncertainty About the Rebound of the Oil Economy

The School of Public Policy Publications, Volume 10:20, September 2017

24 Pages Posted: 5 Dec 2017

See all articles by Kenneth Norrie

Kenneth Norrie

University of Strathclyde

J. C. Herbert Emery

University of Calgary - Department of Economics

Date Written: September 7, 2017

Abstract

Colleges and universities in Alberta feel the booms and busts of the oil-driven economy, too. When oil prices are high, and oil exploration and new project construction are booming, post-secondary institutions will often find themselves unable to keep up with the demand for the education and skills-training programs that employers are clamouring for, with fewer spots available for students than there are students eager to fill them. When oil prices drop, and exploration and construction dry up, the schools face the opposite problem: They have too much capacity in the kinds of programs for skills that traditionally serve those sectors directly connected to oil, or closely linked to them, where there is suddenly a glut of available labour.

Making matters particularly complicated is that when oil prices fall, there is never any certainty of when they will rebound. If the lower oil prices are short lived like after 2009, colleges and universities have needed only to be patient and ride out shortterm disruptions, without the need to restructure their program offerings. However, that was not the case after 1985, where oil prices stagnated for an extended period of time. Now, some observers project that the decline in oil prices that began in 2014, with prices yet to fully recover, could last even longer, perhaps with oil becoming the “new coal” and remaining in glut indefinitely.

Not knowing whether oil prices will rebound sooner, later, or never puts Alberta’s post-secondary institutions in a tricky situation. Their programs providing skilled workers to the province’s oil-based economy are longstanding and well-respected and the prospect of shrinking them or dismantling them, and shifting a school’s focus to different programming priorities, should not be taken lightly as it could be very expensive to reverse if oil prices do indeed end up rebounding. But if they do not, they will nevertheless face pressure to do so, anyway, due to the considerable resources being tied up by programs that are not in high demand. If post-secondary administrators and governors cannot know when oil prices will rebound, if ever, they are even less able to predict what sectors Alberta’s future economy will shift toward as it diversifies away from its energy export reliance.

Whatever decision is made, to stay the course or shift to exploit expected opportunities, university and college leaders are taking risk where the consequences will be borne across the institutions’ students and faculty and the Alberta taxpayer. In that light there is a larger, existential question that must be addressed when considering Alberta post-secondary education institutions and how they respond to the slumping energy sector. What is the mission of PSE institutions in the Alberta economy? Are they instruments of economic adjustment, providing education and skills training that allow Albertans to be mobile across jobs, employers, industries and regions? Or, are they instruments for fostering economic diversification, where research, education and skills training are oriented toward meeting the needs of a targeted or emerging economic opportunity?

Suggested Citation

Norrie, Kenneth and Emery, J. C. Herbert, Stay the Course or Seize an Opportunity? Options for Alberta's Post-Secondary Institutions in a Period of Uncertainty About the Rebound of the Oil Economy (September 7, 2017). The School of Public Policy Publications, Volume 10:20, September 2017, Available at SSRN: https://ssrn.com/abstract=3080728

Kenneth Norrie (Contact Author)

University of Strathclyde ( email )

16 Richmond Street
Glasgow 1XQ, Scotland G1 1XQ
United Kingdom

J. C. Herbert Emery

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
403 2205489 (Phone)
403 2825262 (Fax)

HOME PAGE: http://econ.ucalgary.ca/emery.htm

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