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Robert McGarveyAlbertans have long memories, and one of their fairest is almost a century old. It’s a highly emotional tale, filled with swaggering oilmen and wildcatters from places like Oklahoma and Texas bringing their wide-eyed optimism and their money to Alberta during the Great Depression. When the bottom fell out of the Alberta economy in the ‘30s and our national banks vanished into the night, the oil business rode in like the 7th Calvary to save the day.

Albertans have never forgotten that history, and a special bond has been built between the energy industry (foreign and domestic) and the people of Alberta.

But, today, that bond and the public support that has endured for decades are being severely tested. The energy sector in Canada is dumping tens of thousands of its most dedicated employees in its scramble to protect its bottom line. It’s a crass betrayal by the industry that will – likewise – not be forgotten or forgiven.

Cenovus Energy is only one of many companies “fundamentally changing the way we work”. What does this mean in practice?

2015 has been a bloodbath. Cenovus alone has cut thousands of jobs, Husky, roughly the same. Both have more and deeper cuts planned for 2016. It is an all too common tale and the hallways of downtown Calgary office buildings are beginning to resemble ghost towers in a living breathing Halloween nightmare. The oil field service sector, including the drilling industry and a host of support services, are being gutted throughout the province, with many businesses closing their doors for keeps.

Of course, this is the bust part of ‘boom and bust’ cycle. Modern business logic stipulates that “the only stakeholders that matter are stockholders,” so the losses and layoffs are the only reasonable course of action to take. By this logic, employees are not assets to be protected, but cost centres that must be managed in good times and cut ruthlessly in bad.

It’s no secret that the cancellation of major projects, the layoff of staff and the general panic to reduce operating costs is a choice, not a necessity. In the face of falling oil prices and revenues, the energy sector is desperate to protect its dividends.

Why? Simple: dividends (unlike employees) are sacred.

After all, dividends reward and protect (passive) investors, which in turn support the companies’ share price and (not unrelated) senior management bonuses. These days, senior managers in the energy sector are making the choice to defend these financial metrics at the expense of vulnerable families in Alberta.

It puts a chill into the phrase ‘fundamentally changing the way we work” for it implies that the industry believes low oil prices are here to stay. Further, it implies that the senior management will pull out all the stops to protect shareholders, while slashing staff and operations as the industry abandons Alberta in a panic.

This is a very short-sighted, maybe fatal mistake for an already embattled industry.

Let’s face it, we’ve been through these busts before. Once the dust settles, there will be a need for oil in a world with upwards of seven billion people and rising global standards of living. In other words, oil prices will stabilize, growth and optimism will return and a much different industry will pick up the pieces in future.

And what are the assets this industry is going to need in future? Senior managers might think for a moment about their human capital and the value of their highly qualified workforce. Furthermore they might also consider just how valuable the loyalty of Albertans might be for an industry under constant attack. Basically, they’re going to need all the goodwill they can muster.

If the oil and gas industry squanders its special relationship with the people of Alberta, there’ll be no morally charged vanguard in this province to defend the industry’s interest on the inevitably day when government ratchets up royalties, imposes higher and (much needed) environmental standards and/or ramps up the levels of public scrutiny.

This generation of oil and gas executives will have made their choices and the industry’s foundational myths will be jettisoned. We’ll all have to live with the consequences.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

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