Canada’s natural gas and oil industry generated $105 billion to Canada’s gross domestic product (GDP) and supported almost 400,000 Canadian jobs across the country in 2020. The industry also provided $12 billion in average annual revenue to governments through tax, leases and royalty payments for the period 2019 to 2021. This revenue helps pay for things like roads, schools and hospitals in every part of Canada.
Economic Contribution to Canada
As the fifth-largest producer of natural gas and the fourth-largest producer of oil in the world, Canada must lead the world with to provide responsibly produced oil and natural gas to meet demand while driving job creation and economic growth here at home.
Oil Sands Supply Chain
A strong oil sands sector drives a strong national economy by attracting capital, creating jobs and supporting public services. While the oil sands are located in Alberta, in 2019, the oil sand industry invested more than $4 billion into the Canadian economy by purchasing supplies and services from companies outside of Alberta–across all the other nine provinces.
CAPP has conducted a bi-annual survey of oil sands and service companies across Canada since 2012 to estimate the value of the oil sands supply chain. The data serves to highlight the numerous commerce and trade relationships between oil sands producers and companies across Canada, resulting in jobs and economic growth well beyond the oil sands region.
NATURAL GAS AND CANADA’S ECONOMY
The upstream natural gas industry contributes to Canada’s overall economic health through jobs, and taxes and royalties paid to provincial and federal governments.
The industry contributes to Canada’s overall economic health through jobs and taxes and royalties paid to the provincial and federal governments. This revenue can be used to help pay for health care, education, infrastructure and other social programs.
THE FUTURE OF CANADIAN NATURAL GAS IS LNG
Canada has natural gas resources well in excess of domestic demand—meaning we can export natural gas which creates jobs and generate economic growth and revenues for Canada.
Currently, almost all Canadian natural exports go to the United States; however, this market has been challenged by growing US production—meaning U.S. customers don’t need as much Canadian natural gas. A saturated market also means Canadian producers receive lower prices for their products.
Canada’s natural gas industry has a bright future if it begins exporting to more markets, helping countries in Asia and Europe meet their energy security needs, reduce reliance on coal for energy and displace natural gas from authoritarian regimes. To export natural gas overseas, Canada must build a strong liquefied natural gas (LNG) industry.
ATLANTIC CANADA’S OFFSHORE AND THE ECONOMY
Atlantic Canada’s offshore oil and gas industry provides many benefits to the country’s economy:
- It employs approximately 6,000 people directly, and thousands more indirectly.
- It supports more than 600 supply/service companies.
- The cumulative expenditures by the producing sector in Atlantic Canada from 1999 to 2021 total almost $57 billion. (Source Statistics Canada & CAPP)
- The cumulative royalties paid to the Governments of Nova Scotia and Newfoundland and Labrador from 1999 to 2019 total more than $25 billion.
- More than $506 million has been spent on research and development, and education and training.
What are Royalties?
Most of the natural resources in Alberta, B.C. and Saskatchewan belong to the provinces (Crown). In exchange for the right to develop these resources, companies pay the government a royalty. This is a percentage of revenues generated from the sale of oil and natural gas products, or in some cases takes the product in-kind for the government to sell. Royalties are just one way oil and natural gas producers contribute to government revenues. Many different government taxation policies affect exploration and development of Canada’s natural resources.
Is Canada’s oil and gas industry subsidized?
While definitions of subsidies may differ, there’s no question that Canada’s natural gas and oil industry is a net positive contributor to the Canadian economy in terms of jobs, economic growth, productivity and tax revenues. Canadian producers do not need and do not receive government production subsidies to compete.