Assessing the Economic Impact of an Oil and Gas Firm’s Head Office Relocation to Calgary, AB

Abstract

Corporate head offices serve as the figureheads and decision-making cores of firms. For a variety of reasons, these head offices tend to locate in major cities. Cities themselves compete to attract head offices for their presumed positive economic impact, but what is the impact? Calgary, Alberta, is Canada’s energy centre and an emerging leader in head office counts that is expected to further grow its share of Canadian corporate head offices. This report seeks to estimate the economic impact of an oil and gas (O&G) firm relocating to Calgary, AB. Based on decades of theory and using data from a variety of sources, two multipliers are calculated: the economic base multiplier and the H.C. Davis income multiplier. By applying these multipliers to data regarding head office employment and O&G industry wages, estimates of the employment and income effects of the relocation are found. The results emphasize the importance of both the O&G industry and attracting head offices to Calgary. Based on these conclusions, two key policy avenues are recommended to encourage further expansion of Calgary’s head office counts.