How Important are Oil & Natural Gas to the Canadian Economy?

Key Takeaways

• Oil and gas are a major pillar of Canada’s economy, contributing 7.2% of nominal GDP and supporting 900,000 direct, indirect, and induced jobs across the country.
• The sector’s benefits are national, not just regional; oil and gas activity in Western and Atlantic Canada also supports manufacturing, services, wages, and supply chains in provinces like Ontario and Quebec.
• Energy exports are one of Canada’s greatest economic strengths; in 2024, oil exports reached $147 billion in crude oil and crude bitumen, making the sector a major source of income from abroad.
• Oil and gas revenues help fund the country; between 2022 and 2024, the industry generated $116 billion in taxes and royalties, helping governments pay for healthcare, education, infrastructure, and social programs.
• Large-scale oil and gas projects bring enormous private investment into Canada; projects like LNG Canada and continued oil sands development create jobs, expand the tax base, and generate long-term economic benefits for communities and governments.

1. Oil & Gas Supports a Strong Economy

Oil and gas accounted for 7.2% of Canada’s nominal GDP, or $218.1 billion, in 2025 ^[4]. The sector also supports 900,000 direct, indirect, and induced jobs across Canada ^[3] – from British Columbia’s natural gas fields, to Alberta’s oil sands, to offshore production in Atlantic Canada.

The industry doesn’t just benefit the provinces where most production is located. Drilling activity in Alberta or British Columbia, for example, supports supply chains in Quebec, Ontario, and other parts of the country.

The impact of Canada’s oil and gas sector on Ontario, for example, a province without any substantial oil and gas production, is huge, adding $7.7 billion in nominal GDP, generating $15.3 billion in outputs of goods and services, supporting over 71,000 direct and indirect jobs, and paying over $2.1 billion in wages and salaries to workers in Ontario (2017) ^[5].

Why It Matters

When Canada’s oil and natural gas sector is strong, the benefits reach far beyond the producing regions. It supports jobs, incomes, and business opportunities across the country, including in provinces that do not produce much oil and gas themselves. That’s because the sector relies on an integrated national supply chain for equipment, manufacturing, transportation, engineering, construction, financial services, and many other goods and services.

In simple terms, oil and natural gas help keep Canadians working, help businesses grow, and help strengthen the overall economy. For Canadians, that means more jobs, more paycheques, and a stronger economic foundation from coast to coast.

2. Trade Value of Canada’s Oil & Gas Exports

Canada’s total exports were valued at approximately $780 billion in 2024, with energy accounting for the largest share by sector, at $197 billion ^[1]. Crude oil and crude bitumen alone were responsible for nearly 19% of Canada’s total exports in 2024:

$197 billion – Energy (TOTAL)

• $147 billion – Crude oil & crude bitumen
• $20 billion – Refined energy products
• $10 billion – Coal
• $8 billion – Natural gas
• $5 billion – Natural gas liquids and liquid petroleum gases
• $3 billion – Electricity
• $3 billion – Asphalt and petroleum coke

Why It Matters

Canada’s oil and natural gas sector is the country’s most valuable export industry. A significant share of the money Canada earns from selling goods to the world comes directly from oil and gas. As an export-based economy, these exports do far more than just support healthy trade balance sheets – they bring investment into the country, strengthen Canada’s trade position, and generate the revenues that support jobs, businesses, governments, and communities across the country.

Oil and gas also reinforce Canada’s role as a major global energy supplier, providing the country with an important source of economic strength in international markets. In simple terms, when Canada exports more oil and gas, it earns more income abroad, which can support economic growth and opportunity here at home.

3. Oil & Gas Exports Help Canada Pay for Imports

To truly grasp the importance of oil and gas to the Canadian economy, we need to look no further than Canada’s net exports by type. As of March 2026, Canada’s net exports based on a 12-month moving total were as follows:

• Energy Products: $123.9 billion
• Mining: $54.5 billion
• Agriculture: $23.3 billion
• Travel: $11.4 billion
• Forestry & Paper: $8.7 billion
• Other: $4.8 billion
• Aircraft & Parts: $4.6 billion
• Services ex Travel: -$9.3 billion
• Chemicals & Plastics: -$22.2 billion
• Machinery & Equipment: -$41.5 billion
• Vehicles & Parts: -$53.5 billion
• Electronic Equipment: -$58.1 billion
• Consumer Goods: -$75.5 billion

Why It Matters

In case you don’t know already, “net exports” is defined as follows:

Net Exports = Exports - Imports

The chart above, created by Richard Dias at IceCap Asset Management, shows how Canada pays for a large share of its imports by exporting natural resources. The country runs its largest net trade surpluses in energy products (mainly oil and gas), mining, agriculture, and forestry, while posting substantial deficits in categories such as consumer goods, electronics, vehicles, and machinery. In other words, Canada buys a wide range of manufactured products from abroad and finances those purchases by selling the commodities it can produce abundantly at home.

This trade data shows that oil and natural gas aren’t peripheral to Canada’s economy; rather, they are foundational to the country’s ability to pay its bills.

4. Oil & Gas Generates Immense Public Revenues

Oil and natural gas generated $116 billion in taxes and royalties for Canadian governments between 2022 and 2024 ^[3]. The industry contributed more than $578 billion in taxes, royalties, and other payments to Canadian governments between 2000 and 2021, and is expected to generate an additional $594 billion between 2023 and 2032, totalling more than $1.1 trillion in funds that support Canadian families.

Why It Matters

Canada’s oil and natural gas sector generates billions in taxes and royalties, benefitting families nationwide. That revenue helps fund the public services Canadians count on every day, including healthcare, education, infrastructure, social programs, and community services across the country.

A strong oil and gas sector does more than create jobs and exports – it also helps pay for the things that support our quality of life. Every public dollar generated by the sector for municipal, provincial, and federal governments provides greater capacity to invest in Canadians, strengthen communities, and support the services families rely on.

In other words, when oil and natural gas are strong, Canadians see the benefits not only in the economy but also in public services and opportunities that help maintain prosperity for all.

5. Oil & Gas Supports Equalization Payments

Alberta’s economic success – stemming largely from the development of oil and natural gas resources – has also been Canada’s success. According to Heather Exner-Pirot of the Macdonald-Laurier Institute, Albertans contributed $285.1 billion more to the federal government between 2007 and 2024 than they received back from Ottawa ^[2]. This was four times as much as British Columbians or Ontarians over the same time period ^[2].

Alberta’s historical net contribution to equalization is largely due to its high “fiscal capacity,” which is significantly bolstered by its job-creating, prosperity-generating oil and natural gas sector.

Why It Matters

When Alberta’s oil and natural gas sector succeeds, the benefits are felt across the country. The wealth generated by the energy-producing province strengthens Canada’s overall fiscal capacity, making more money available to support public services across the country.

In simple terms, the success of Alberta’s energy sector has helped generate federal revenues that benefit Canadians far beyond the producing regions. That matters because a strong oil and gas industry does not just create prosperity locally – it helps support a stronger, more financially resilient Canada for everyone.

6. Oil & Gas Supports the Canadian Dollar

Canada’s oil and natural gas sector helps support the value of the Canadian dollar by bringing export revenue into the country from the United States. Because crude oil exports account for a significant portion of the U.S. currency earned by Canada, movements in oil prices and the volume of crude oil traded can have a significant impact on the flow of USD into the Canadian economy ^[10]. Therefore, when oil prices are high, more USD flows into Canada relative to the supply of CAD, increasing the value of the loonie ^[10].

The Bank of Canada has noted that the Canadian dollar often moves with oil prices, underscoring how closely the sector is tied to Canada’s broader economy ^[6][7]. The Bank of Nova Scotia has noted that the strength of the Canadian dollar remains inextricably linked to oil ^[9], despite limited performance during the latest supply crisis in the Middle East.

Why It Matters

When the loonie is stronger, it usually means Canadians have more buying power when purchasing imported goods, such as food, electronics, vehicles, machinery, tools, and other products. When the dollar weakens, those imports become more expensive, which can raise costs for families and businesses across the country.

Statistics Canada has shown that when the Canadian dollar depreciated, import prices increased sharply, highlighting how exchange rates can directly affect affordability in Canada ^[8][9]. In simple terms, a strong oil and gas sector can support a stronger dollar, helping Canadians’ money go further – but most importantly, helping to keep life affordable.

7. Oil & Gas Projects are the Most Impactful

Oil and gas projects represent some of the largest private capital investments in Canada. The LNG Canada project, for example, at $40 billion, is the single largest investment in the country’s history.

Energy Minister Tim Hodgson has stated that LNG projects are among the most “economically impactful” that Canada can undertake. In testimony to the Standing Committee of Natural Resources in February, he said:

“What is very clear from the economic analysis that we do is that the royalty streams, the tax streams, and the good-paying jobs that come with these LNG facilities are amongst the most significant contributors to provincial budgets in terms of added revenues. And they are major, major contributors to tax bases. And so, from a Canadian perspective, just from an economic perspective, they're amongst the most impactful projects we can do.”

Additionally, the oil sands sector at large reached $1 trillion in cumulative capital spending as of 2024. Outside of Alberta, where the oil sands are located, more than 2,300 companies have engaged in direct business dealings with the oil sands sector, including 1,300 in Ontario and almost 600 in Quebec.

A recent study found that building 1.5 million barrels of additional oil pipeline export capacity could add more than $282 billion to Canada’s economy and create 112,000 jobs between 2027 and 2035. New pipelines like Coastal GasLink, the Trans Mountain Expansion, or a new pipeline to the West Coast are among the most economically impactful projects Canada can undertake. Today, the Trans Mountain Expansion is showing its worth, with a significant impact on national GDP, reducing the oil price discount, and generating tens of billions of dollars in additional economic impact for Canadians.

Why It Matters

Oil and gas projects attract enormous amounts of private capital into Canada, investment which spreads through the economy well beyond the project site itself. When oil and gas companies spend billions on LNG plants, oil sands development, equipment, construction, transportation, and services, they create demand for workers, suppliers, contractors, and businesses across the country.

In practical terms, that private-sector spending helps create good-paying jobs, generates business activity in many industries, broadens the tax base, and produces royalty and tax revenues that support provincial budgets and public services. Put simply, when oil and gas companies invest at scale, that spending translates into jobs for Canadians, income for businesses, and broader prosperity for communities and governments.

The World Needs More Canadian Oil & Gas

Canada’s oil and gas sector does far more than produce energy – it helps support prosperity across the entire country. From jobs and exports to public revenues and major investment, its economic footprint is broad, deep, and deeply connected to Canadians’ quality of life.

As global demand for reliable energy continues to grow, Canada’s oil and gas industry remains an important source of national strength and opportunity.

Canada has what the world needs.

By exporting our energy and natural resources globally, we can unlock massive economic opportunities and build real prosperity for all Canadians. pic.twitter.com/3110sU4VMr

— Canada Action (@CanadaAction) June 6, 2026

_SOURCES:

_{1 - https://www.capp.ca/wp-content/uploads/2025/11/Canadian-Exports-of-Crude-Oil-and-Natural-Gas-October-17-2025.pdf}

_{2 - https://macdonaldlaurier.ca/heres-how-to-make-canada-wealthy-again-heather-exner-pirot-in-the-hub/}

_{3 - https://www.capp.ca/en/our-priorities/energy-and-the-canadian-economy/}

_{4 - https://energy-information.canada.ca/sites/default/files/2026-05/energy-fact-book-spring-2026.pdf}

_{5 - https://www.canadianenergycentre.ca/wp-content/uploads/2021/11/CEC-Fact-Sheet-47-Impact-Oil-Ontario-FINAL.pdf}

_{6 - https://www.bankofcanada.ca/2017/02/staff-analytical-note-2017-1/}

_{7 - https://www.bankofcanada.ca/2015/01/drilling-down-understanding-oil-prices/}

_{8 - https://www.canadaaction.ca/oilsands-one-trillion-spending-canadian-economy-milestone}

_{9 - https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.insights-views.cad-and-oil-decoupling--april-16--2026-.html}

_{10 - https://www.investopedia.com/articles/investing/021315/how-why-oil-impacts-canadian-dollar-cad.asp}