On a recent flight from Moncton to Toronto, I sat next to two men heading to jobs in the oilsands. They were scaffolders. (I didn’t realize that was a full-time profession.) I asked who they worked for. They knew they were heading to Canadian Natural Resources Ltd.’s Horizon project, but couldn’t recall the subcontractor they had signed up with. One of the men had to look it up in his notebook.

It’s a familiar story: three weeks in and one week out, leaving friends and family and community behind for an excellent paycheque. Take advantage of the overheated Alberta economy and the wealth generated gets spread across the country.

But is the Alberta economy still so overheated? Are the good times bound to last? Despite some data showing things clipping along at a relatively solid pace, there is evidence of storm clouds gathering.

Alberta and Saskatchewan remain the hot job markets in the country, with employment growing by 3% and 3.9%, respectively, over the past 12 months. The national rate over the same period was just 1.3%. Alberta gained 16,600 new jobs in July alone (89% of those were full-time), bringing its unemployment rate down to 4.5%, compared with the national average of 7.2%.

But what is surprising in Alberta is where the jobs have come from – or, rather, where they haven’t come from. The oil and gas sector, which drives the province’s economy, lost 9,500 jobs year-over-year; the construction sector, which is closely tied to oil and gas development, lost 4,900 jobs. The actual growth areas have been in professional and technical services, retail and wholesale trade, and information technology.

With oil at more than US$100 a barrel and natural gas prices 86% higher than they were a year ago, we might have expected something different. We might have expected the job gains to be in the oilpatch, at the Horizon project that generated the jobs for the scaffolders I met and at other energy-sector projects across Alberta.

But there’s lots of evidence of a slowdown in the oil and gas sector, beginning with the job numbers mentioned above and continuing with the inability of junior oil and gas producers to raise the cash they need to fund their ongoing exploration and development activities. Blackpearl Resources Inc., for instance, tried to raise US$350 million through the debt market this summer but, faced with financing costs that were rumoured to be in the double digits, abandoned the effort.

Analysts say the capital markets recently have been burned by too many companies not meeting their production targets and not making good on promises of solid returns, so investors are taking their cash elsewhere.

Many Alberta-based juniors have been forced to raise money by putting their assets up for sale, creating a buyer’s market. And keep in mind that all of this is happening despite years of record-low interest rates. When rates inevitably rise, watch for more funding woes within the junior sector. And if the juniors can’t raise the money, they need to prove up their reserves and boost their production. Then, the ripple effects will be felt throughout Alberta’s energy sector and its broader economy.

© 2013 Investment Executive. All rights reserved.