Energy exports continue to fuel the Canadian economy

Without exports of oil, natural gas and other energy goods, Canada’s cumulative trade deficit with the rest of the world—which stood at $130 billion in the decade ending in 2023—would have ballooned to $1 trillion.

Energy sits at the heart of Canada’s export economy, even though some federal policymakers and provincial governments appear to be discomfited by that fact.

In recent years, energy has supplied 20–25 percent of Canada’s total international exports (goods plus services combined), with crude oil, refined petroleum products, and natural gas making up the lion’s share of our energy-related shipments to other countries. Canada’s energy export basket also includes coal, uranium, and electricity.

In the last two decades, energy has become Canada’s leading export sector, mainly owing to higher oil production volumes, rising hydrocarbon exports, and still-robust global demand for fossil fuels (which provide 80 percent of the world’s primary energy). Measured in millions of barrels of oil equivalent (BOE), Canadian conventional oil and gas production rose from 4.5 million BOE per day in 2015 to 5.4 million/day last year, with most of the additional output destined for the United States. With the completion of pipeline expansion projects and the looming start-up of liquefied natural gas (LNG) production on the West Coast, oil and gas are set to play an even bigger role in Canada’s economy and export portfolio in the coming years.

A May 2024 modelling study by S&P Global Commodity Insights predicts a further jump in conventional oil and gas output of between 0.5 and 1.0 million BOE/day by 2035, assuming the federal government doesn’t impose draconian caps on production in the sector as part of its shambolic climate policy agenda. Based on that scenario, S&P estimates that production, capital and operating spending in Canada’s conventional oil and gas industry will add up to $1.3 trillion to Canada’s gross domestic product by 2035. This forecast is premised on a modest (8 percent) increase in output and further declines in the sector’s greenhouse gas emissions intensity due to efficiency measures, advances in technology, greater use of carbon capture, and other factors.

To illustrate the contribution that energy makes to Canada’s prosperity, the Coalition for A Better Future recently estimated that without exports of oil, natural gas and other energy goods, Canada’s cumulative trade deficit with the rest of the world—which stood at $130 billion in the decade ending in 2023—would have ballooned to $1 trillion.

Thanks to energy production, Canada garners up to $200 billion of additional export receipts each year—and the figure is set to rise significantly in the next decade. This outsized stream of export earnings furnishes the means to pay for imports, supports hundreds of thousands of high-paying jobs, and generates tens of billions of dollars of extra revenues for Canadian governments.

In Canada’s case, it is also worth noting that energy reliably produces the largest trade surplus of any sector, by a wide margin. And, as noted above, that surplus will increase in size over the rest of this decade and possibly beyond, mainly due to oil and gas output and exports climbing from current levels.

Averaged over the period 2022-23, Canada’s two-way trade in energy goods yielded a net annual surplus of almost $150 billion. This dwarfs the surpluses posted in other natural resource-based sectors such as metal ores, non-metallic minerals, agri-food, and forest products. Large trade surpluses in energy—and, to a lesser extent, in other natural resource industries—offset chronic Canadian trade deficits in consumer goods, machinery and equipment, electronic products, and other high-tech goods. Canada also runs a trade deficit of $35-40 billion in motor vehicles and parts.

Trudeau government ministers are fond of talking up (and subsidizing) Canadian non-fossil fuel energy industries, like (carbon-free) electricity, biofuels, hydrogen (production of which currently is almost non-existent in Canada) and the “clean tech” sector. However, except for electricity, these segments of the Canadian energy sector are very small in size and export little. And while the “clean tech” industry does hold considerable promise over the medium term, today it accounts for less than one percent of Canada’s international exports.

When it comes to energy exports, the reality for Canada is that oil, natural gas, and other fossil fuel products dominate the picture—and will continue to do so for the foreseeable future.

Author:

Jock Finlayson

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Debunking the myth of the ‘new economy’

Published on January 22, 2025

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From Resource Works

Where the money comes from isn’t hard to see – if you look at the facts

In British Columbia, the economy is sometimes discussed through the lens of a “new economy” focused on urbanization, high-tech innovation, and creative industries. However, this perspective frequently overlooks the foundational role that the province’s natural resource industries play in generating the income that fuels public services, infrastructure, and daily life.

The Economic Reality

British Columbia’s economy is highly urbanized, with 85% of the population living in urban areas as of the 2021 Census, concentrated primarily in the Lower Mainland and the Capital Regional District.
These metropolitan regions contribute significantly to economic activity, particularly in population-serving sectors like retail, healthcare, and education. However, much of the province’s income—what we call the “first dollar”—originates in the non-metropolitan resource regions.

Natural resources remain the backbone of British Columbia’s economy. Industries such as forestry, mining, energy, and agriculture generate export revenue that flows into the provincial economy, supporting urban and rural communities alike. These sectors are not only vital for direct employment but also underpin metropolitan economic activities through the export income they generate.

They also pay taxes, fees, royalties, and more to governments, thus supporting public services and programs.

Exports: The Tap Filling the Economic Bathtub

The analogy of a bathtub aptly describes the provincial economy:

Exports are the water entering the tub, representing income from goods and services sold outside the province.
Imports are the water draining out, as money leaves the province to purchase external goods and services.
The population-serving sector circulates water within the tub, but it depends entirely on the level of water maintained by exports.

In British Columbia, international exports have historically played a critical role. In 2022, the province exported $56 billion worth of goods internationally, led by forestry products, energy, and minerals. While metropolitan areas may handle the logistics and administration of these exports, the resources themselves—and the wealth they generate—are predominantly extracted and processed in rural and resource-rich regions.

Metropolitan Contributions and Limitations

Although metropolitan regions like Vancouver and Victoria are often seen as economic powerhouses, they are not self-sustaining engines of growth. These cities rely heavily on income generated by resource exports, which enable the public services and infrastructure that support urban living. Without the wealth generated in resource regions, the urban economy would struggle to maintain its standard of living.

For instance, while tech and creative industries are growing in prominence, they remain a smaller fraction of the provincial economy compared to traditional resource industries. The resource sectors accounted for nearly 9% of provincial GDP in 2022, while the tech sector contributed approximately 7%.

Moreover, resource exports are critical for maintaining a positive trade balance, ensuring that the “economic bathtub” remains full.

A Call for Balanced Economic Policy

Policymakers and urban leaders must recognize the disproportionate contribution of British Columbia’s resource regions to the provincial economy. While urban areas drive innovation and service-based activities, these rely on the income generated by resource exports. Efforts to increase taxation or regulatory burdens on resource industries risk undermining the very foundation of provincial prosperity.

Furthermore, metropolitan regions should actively support resource-based industries through partnerships, infrastructure development, and advocacy. A balanced economic strategy—rooted in both urban and resource region contributions—is essential to ensure long-term sustainability and equitable growth across British Columbia.

At least B.C. Premier David Eby has begun to promise that “a new responsible, sustainable development of natural resources will be a core focus of our government,” and has told resource leaders that “Our government will work with you to eliminate unnecessary red tape and bureaucratic processes.” Those leaders await the results.

Conclusion

British Columbia’s prosperity is deeply interconnected, with urban centres and resource regions playing complementary roles. However, the evidence is clear: the resource sectors, particularly in the northern half of the province, remain the primary engines of economic growth. Acknowledging and supporting these industries is not only fair but also critical to sustaining the provincial economy and the public services that benefit all British Columbians.

Sources:

Statistics Canada: Census 2021 Population and Dwelling Counts.
BC Stats: Economic Accounts and Export Data (2022).
Natural Resources Canada: Forestry, Mining, and Energy Sector Reports.
Trade Data Online: Government of Canada Export and Import Statistics.

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Undemocratic tax hike will kill hundreds of thousands of Canadian jobs

Published on January 22, 2025

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From the Canadian Taxpayers Federation

By Devin Drover

The Canadian Taxpayers Federation is demanding the Canada Revenue Agency immediately halt enforcement of the proposed capital gains tax hike which is now estimated to kill over 400,000 Canadian jobs, according to the CD Howe Institute.

“Enforcing the capital gains tax hike before it’s even law is not only undemocratic overreach by the CRA, but new data reveals it could also destroy over 400,000 Canadian jobs,” said Devin Drover, CTF General Counsel and Atlantic Director. “The solution is simple: the CRA shouldn’t enforce this proposed tax hike that hasn’t been passed into law.”

A new report from the CD Howe Institute reveals that the proposed capital gains tax hike could slash 414,000 jobs and shrink Canada’s GDP by nearly $90 billion, with most of the damage occurring within five years.

This report was completed in response to the Trudeau government’s plan to raise the capital gains inclusion rate for the first time in 25 years. While a ways and means motion for the hike passed last year, the necessary legislation has yet to be introduced, debated, or passed into law.

With Parliament prorogued until March 24, 2025, and all opposition parties pledging to topple the Liberal government, there’s no reasonable probability the legislation will pass before the next federal election.

Despite this, the CRA is pushing ahead with enforcement of the tax hike.

“It’s Parliament’s job to approve tax increases before they’re implemented, not the unelected tax collectors,” said Drover. “Canadians deserve better than having their elected representatives treated like a rubberstamp by the prime minister and the CRA.

“The CRA must immediately halt its plans to enforce this unapproved tax hike, which threatens to undemocratically take billions from Canadians and cripple our economy.”