Contributor to the Second Edition of Primer on Energy Systems in Canada. This is the first in a series of blogs based on Energy Exchange’s new Primer on Canadian Energy Systems. Canada is a key actor in the production and distribution of energy commodities, ranking third in the world in terms of proved oil reserves, fourth in installed hydroelectric capacity, and fifth in overall energy production. But how much does the energy sector in Canada contribute to the country’s GDP and employment? You might be surprised by the answers.
The production and transportation of oil products, natural gas, and electricity in Canada contributes around $170 billion, or little under 10%, of the country’s $1.8 trillion GDP.
As seen in the graph, traditional oil and gas production (4%), oil sands (2%), and the electric power industry (2%) provide the highest contributions.
The figures on the graph are from 2012, although little has changed since then.
In reality, despite low natural gas prices and the recent turbulence in the oil market, the fossil fuel industry’s GDP growth outpaced the rest of the economy from 2012 to 2015, owing partly to the U.S. dollar exchange rate raising the Canadian dollar value of oil exports.
Although there are major refining, pipeline, and distribution industries across the country, the fossil fuel industry accounts for a higher share of the GDP of oil-producing provinces, up to 25%.
The electric power industry’s 1.9 percent contribution to Canada’s GDP is more evenly distributed across the country, while there is still significant provincial fluctuation.
The electric power sector contributes one percent of Alberta’s GDP, with energy being used mostly for end applications when no other option exists (lighting, appliances, small motors, telecommunications, and information technology).
In Quebec, on the other hand, where electricity is widely used for space and water heating and accounts for around 40% of all energy end uses in the province, the industry contributed 3.4 percent to provincial GDP.
Employment
The Primer on Energy Systems in Canada introduces learners to fundamental concepts, practices, and vocabulary that will aid in energy education and discussion. The linkages that make up the networks of technology and infrastructure that link end-users and energy sources, as well as the social, economic, and environmental interrelationships that define Canada’s energy systems, may be seen when looking at energy challenges via a systems lens.
What percentage of Canada’s GDP does oil contribute?
In 2020, Canadian oil and natural gas contributed $105 billion to the country’s GDP and supported about 400,000 employment across the country. It also provides governments with an average annual revenue of $10 billion from 2017 to 2019. This money is used to fund roads, schools, and hospitals.
The oil sands industry is forecast to pay $8 billion in provincial and federal taxes over the next six years (CERI’s Economic Recovery Pathways For Canada’s Energy Industry 2020-2025).
Oil sands development has benefited almost every region in Canada in terms of employment generation and economic activity.
How much of Canada’s GDP is made up of oil and gas?
The oil and gas industry in Canada has both direct and indirect effects on the national and provincial economy, including GDP, jobs, and output from other vital industries.
GDP and output
The GDP of Canada’s oil and gas sector was $128 billion in 2017, accounting for 6.4 percent of the entire Canadian economy.
The value of goods and services produced by Canada’s oil and gas sector and supply chain totaled $241 billion in 2017, accounting for around 6.4 percent of the country’s overall output (see Table 1).
Jobs
In 2017, the Canadian oil and gas sector employed 611,362 people 216,285 directly and 395,077 indirectly accounting for around 3.2 percent of all jobs in the country (see Table 2).
The total compensation paid to workers in the oil and gas extraction business in 2017 was approximately $13.3 billion (Statistics Canada, 2021f).
GDP
The oil and gas industry in Canada accounts for a considerable amount of GDP in major industries across the country. They range from about $370 million in GDP, or 4.1 percent of GDP, in the North American Industry Classification System (NAICS) sector categorized as office administrative services, to nearly $3.2 billion, or 11.4 percent of GDP, for machinery, equipment, and supplies merchant wholesalers, according to Statistics Canada (see Table 3).
Output (value of goods and services produced)
Nearly $139 million in products and services were acquired by the oil and gas industry and its supply chain from Canada’s NAICS general merchandise stores sector, accounting for 0.8 percent of that sector’s total production. Over $7.1 billion in goods and services were acquired by oil and gas producers and suppliers from the architectural engineering and allied services sector in Canada, accounting for 19% of the industry’s total production (see Table 4).
In 2017, the Canadian oil and gas sector created jobs in a variety of industries, ranging from just over 1,658 jobs in the telecommunications sector (or 1.3 percent of all jobs in that industry) to 33,467 jobs in the architectural engineering and related services sector (or 15.2 percent of all jobs in that industry) (see Table 5).
Conclusion
The oil and gas industry in Canada as a whole is responsible for a significant amount of GDP, employment, and output in important industries across the country. The overall impact of the Canadian oil and gas sector on the Canadian economy, which includes both direct and indirect effects
Even with the 2017 energy price drop, the direct and indirect effects of oil and gas extraction and investment are significant. The wide sector accounted for 3.2 percent of all direct and indirect jobs in Canada that year, and contributed 6.4 percent of Canada’s total GDP and total output, or the acquisition of goods and services, directly and indirectly. In 2017, the narrower direct oil and gas extraction sector accounted for around 3.2 percent of GDP.
What accounts for Canada’s high GDP?
Real estate, mining, and manufacturing are the three main businesses, and it is home to some of the world’s largest mining corporations. International trade accounts for a major share of its GDP, with the United States, China, and the United Kingdom as its top trading partners.
What is the largest oil firm in Canada?
Enbridge is Canada’s largest oil and gas corporation. It had made 33.7 billion dollars in revenue in the previous fiscal year as of 2021. Enbridge, situated in Calgary, Alberta, is the country’s largest midstream firm.
How much of Canada’s GDP is accounted for by housing?
Without context, numbers this huge are difficult to comprehend, so let’s provide some. The housing market in Canada is worth more than 300 percent of the country’s GDP (GDP). During the same time period, however, housing in the United States was only worth 170 percent of the country’s GDP. Despite the high cost of real estate in the United States, the value of property prices in relation to the country’s economy is nearly half that of Canada.
Is oil the world’s largest industry?
The petroleum industry, sometimes known as the oil patch, encompasses the global processes of petroleum product exploration, extraction, refining, transportation (typically via oil tankers and pipelines), and marketing. Fuel oil and gasoline are the industry’s most popular goods (petrol). Many chemical products, such as medications, solvents, fertilizers, insecticides, synthetic perfumes, and plastics, are made from petroleum as a raw source. Upstream, middle, and downstream are the three key components of the sector. Upstream is concerned with crude oil exploration and extraction, whereas midstream is concerned with crude oil transportation and storage, and downstream is concerned with crude oil refining into various end products.
Petroleum is essential to numerous industries and is required for the continued existence of industrial civilisation in its current form, making it a major issue for many countries. Oil contributes for a significant portion of global energy consumption, with Europe and Asia accounting for 32% and the Middle East for 53%, respectively.
South and Central America (44 percent), Africa (41 percent), and North America (41 percent) are the other geographic regions with similar consumption habits (40 percent ). Oil is consumed throughout the world at a rate of 36 billion barrels (5.8 km3) per year, with industrialized countries being the major consumers. In 2015, the United States consumed 18% of all oil produced. Petroleum production, distribution, refining, and retailing as a whole is the world’s most valuable industry in terms of dollar value.
Governments such as the United States give substantial public subsidies to oil corporations, including significant tax discounts at practically every stage of the oil exploration and extraction process, including the expenses of oil field leases and drilling equipment.
Enhanced oil recovery techniques, such as multi-stage drilling and hydraulic fracturing (“fracking”), have risen to the forefront of the business in recent years, since this new technology plays a critical and divisive role in new oil extraction processes.
Where does Canada’s oil come from?
Despite having the third-largest oil reserves in the world, Canada buys oil from other countries. More than half of the oil used in Quebec and Atlantic Canada is currently imported from countries such as the United States, Saudi Arabia, Russia, the United Kingdom, Azerbaijan, Nigeria, and the Ivory Coast. Canada spent $18.9 billion on foreign oil imports in 2019. In 2019, Canada imported over 660,000 barrels per day of oil.
In Canada, how much tax does the oil business pay?
The oil and gas industry, like the rest of the energy industry, pays taxes to the government in five ways: indirect taxes, crown lease payments, personal income taxes, corporate income taxes, and rents and royalties (see Figure 3).
Indirect taxes: $14 billion
The oil and gas industry in Canada pays indirect taxes on a yearly basis as a result of its operations. Federal and provincial sales taxes, federal and provincial gas taxes, federal excise taxes, federal import charges, and other indirect taxes are among them.
Between 2000 and 2018, the energy sector in Canada paid approximately $14 billion in indirect taxes to the federal government, provinces, and municipalities, an average of about $730 million per year.
Crown lease payments: $45 billion
The crown lease payments that go to governments are solely funded by the Canadian oil and gas industry. Between 2000 and 2018, the Canadian oil and gas industry paid out $45.3 billion in crown lease payments to provincial governments, an average of $2.4 billion per year.
Federal and provincial corporate incomes taxes: $60 billion
Between 2000 and 2018, the oil and gas industry paid about $59.9 billion in federal and provincial corporate income taxes, or $3.2 billion each year.
$38.7 billion in federal company income taxes and $21.2 billion in provincial corporate income taxes were paid out of the $59.9 billion total.
Federal and provincial personal income taxes: $68 billion
Between 2007 and 2018, Canadians working in the oil and gas industry paid $68.1 billion in federal and provincial income taxes on salaries, wages, and commissions, or $5.7 billion a year. This figure excludes federal and provincial personal income tax collected from the sector between 2000 and 2006 since Statistics Canada does not have those data at this time.
Federal personal income tax receipts were $42.1 billion, while provincial personal income tax revenues were $26.1 billion, for a total of $68.1 billion.
Rents and royalties: $306 billion
On the production of natural resources such as conventional oil, natural gas, and oil sands, Canada’s oil and gas industry pays rents and royalties to provincial governments.
Between 2000 and 2018, the oil and gas industry paid $305.8 billion in rents and royalties to provincial governments, an average of $16.1 billion each year.
Canada produces more oil than it can consume. As a result, Canada is a significant net exporter of crude oil.
Canada exported 2.85 million barrels of crude oil per day in 2014. The majority (97%) went to the United States, while the remaining 3% went to Europe and Asia.
Due to the regional nature of Canadian refining markets, Canada also imports some crude oil.
Canada imports crude oil from a variety of countries, including the United States (54%), Saudi Arabia (11%), Iraq (8%), and Norway (8%). (5 percent ).
In NRCan’s Energy Market Fact Book 2015-2016, you may learn more about the Canadian crude oil trade.
Is Canada wealthier than the United States?
Because both Canada and the United States are developed countries, their economies are similar. While both countries will be in the top ten economies in the world in 2022, the United States will be the largest, with a GDP of US$24.8 trillion, and Canada will be ninth, with a GDP of US$2.2 trillion.