There is a standing joke that in Saskatchewan, billed by its license plates as the land of open skies, you can watch your dog run away for days. But you see few dogs nowadays. Maybe the dogs, like their owners, no longer run off because times are good. What you do see while driving across the rural landscape are oil derricks and abandoned, old homesteads. The scene provides a picturesque glimpse into the province’s economic realities.

Although agriculture drives only eight per cent of Saskatchewan’s economy, it is often said to inspire 95 per cent of the psychology. Arising in part from its agrarian history and its proximity to Alberta, the province has never been considered – or thought of itself – as an energy powerhouse. Yet resource extraction makes the largest contribution to the gross domestic product, more than double the share of agriculture.

Saskatchewan resources, enhanced by record commodity prices in the past few years, have lured interest and investment into the mining and extraction sectors.

The boom still has legs, says University of Saskatchewan economist Eric Howe. “By adopting a lower growth rate, the province has postponed when a resource bust will occur, since a somewhat lower growth rate is more sustainable,” he says.

Rising oil and gas revenues made Saskatchewan a “have” province as of 2005, when economic observers started making the place sound like another Alberta. “You began hearing about stories of housing shortages and worker shortages,” says Regina historian and statistician Doug Elliot. Rising prices, labor demand and infrastructure gaps made headlines.

But Saskatchewan’s “have” status is still new enough to attract investors looking for bargains, says Howe. “The discounted value of rapid growth hasn’t had time to make it into prices. In an economic climate in which firms are being very careful about their burn rates – the rates at which they go through their available cash – a firm’s money will go further here,” he explains. “Saskatchewan’s economy is being insulated by the newness of its prosperity. The world’s economic woes would be hurting Saskatchewan more if they had begun five years from now.”

Most analysts predict growth for Saskatchewan in 2009 because several provincial characteristics offset the current slump. “Ironically, one of Saskatchewan’s principal advantages is that it continues to have an excess demand for labor – more jobs than people – so employers are holding onto their employees rather than risk not having them when the economy begins to recover,” says Howe.

The surplus of jobs keeps luring people in from other provinces and off the farms, contributing to sustained growth of the Saskatchewan construction sector, he notes. But Saskatchewan’s advantage is also a problem. Even in the land of open skies, economic opportunities are not boundless.

“Our biggest constraint is our sheer size; we’re just too small. Alberta is 3.5 million, we’ve got 1 million,” says Elliot.

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