Oilsands to Reach $1 Trillion Milestone of Spending in the Canadian Economy

Oilsands to Reach $1 Trillion Milestone of Spending in the Canadian Economy

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Canadian oilsands hit 1 trillion dollars of spending, injected into Canadian economy over 25 years

Canada’s oilsands sector will reach a massive milestone sometime in the fourth quarter of 2024: $1 trillion in cumulative spending injected into the Canadian economy.

According to Heather Exner-Pirot, the Director of Energy, Natural Resources and Environment at the Macdonald-Laurier Institute, and Bryan Remillard, Senior Advisor with the Pathways Alliance, this figure does not represent dividends or profits. Rather, it is the capital, operating expenses, royalties and taxes that Canada’s most important industrial sector is responsible for over a period of roughly 25 years.

In the authors' words: “The oilsands are Canada’s winning lottery ticket.”

Oilsands spend 1 trillion in Canadian economy, to hit 2 trillion in 12.5 years

Courtesy of Macdonald-Laurier Institute

Undoubtedly, the oilsands sector’s spending has bolstered the Canadian economy to the tune of a trillion dollars, supporting families and governments in countless ways. However, a few are worth highlighting, as noted by the authors:

Royalties & Taxes

The oilsands sector has generated over $186 billion in royalties and taxes for Canadian governments, equivalent to more than Canada’s previous five years of national defence spending.

Indigenous Economic Reconciliation

Billions of dollars in goods and services have been procured from Indigenous-owned businesses, meaning job opportunities and economic stimulus for First Nations communities looking to generate own-source revenues and advance economic reconciliation.

Manufacturing in Central Canada

Far from just a benefit for Alberta, the oil sands has also spent tens of billions of dollars with the manufacturing sector in central Canada.

Outside of Alberta, more than 2,300 companies have had direct business with the oilsands industry, including 1,300 in Ontario and nearly 600 in Quebec.

A Conservative Estimate

The $1 trillion in spending is likely a conservative estimate, as it does not include tankage, third-party handling, or pipeline spending (like the cost of the Trans Mountain Pipeline Expansion, for example).

It also does not include spending on corporate, research and development, information technologies, diluent costs or the indirect costs of procuring services from countless companies across Canada – amounting to tens of billions of dollars of more economic activity to pay workers and small businesses/service providers, and the generated taxes from such activities.

Canada Needs a Stronger Economy

Economists and business leaders nationwide often call Canada’s oil and natural gas sector our country’s “golden goose.” However, despite the sector’s oversized and irreplaceable contribution to the economy and prosperity of all Canadians, federal regulations often impede its development.

The oil and gas emissions/production cap, for example, is just one of many instances where, instead of supporting the energy sector and its economic prowess when Canadians need it the most, we’re seeing the opposite.

According to various reports, the oil and gas cap could force a reduction in output of well over 1 million barrels of oil equivalent per day for compliance, leading to a massive decrease in exports to the United States. Lower production levels could cost Canadians hundreds of thousands of jobs and up to $1 trillion in economic activity. Furthermore, as an export-based economy, this would lead to significantly larger trade deficits and a weakened dollar, affecting the purchasing power of Canadians nationwide – essentially making us all poorer.

The authors also found that, based on the last three years of oilsands expenditures, the sector would hit the $2 trillion mark in half the time it took to hit the first — in about 12 and a half years. But, if Canadian energy producers are forced to cut production, investors will likely put their money into more attractive jurisdictions, and the economic benefits will go elsewhere.

Will Canada implement supportive policies to help one of our most valuable and productive industries flourish? Or will we continue to shoot the oil and gas sector in the foot, hampering its development and the massive economic opportunities it creates for Canadian families nationwide?

The World Needs More Canadian Energy

Canadians can no longer afford to miss out on job-creating, prosperity-generating resource development. Since 2015, for example, more than $670 billion of natural resource projects have been suspended or cancelled nationwide.

It’s time we work together and support our energy, forestry, mining, and agriculture industries for a stronger and more prosperous future for our families and country as a whole.

Global oil and gas demand is growing and will for years to come. As long as the world needs these commodities, they should be produced by Canada. 

It’s time to build Canada up. No more roadblocks for our resource workers.

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