Connect with us
[bsa_pro_ad_space id=12]

Energy

Natural resources remain backbone of Canada’s trade and prosperity

Published

6 minute read

From the Fraser Institute

By Jock Finlayson and Elmira Aliakbari

It’s hard to overstate the importance of energy to our economy. In its latest “scorecard” report, the Coalition for a Better Future notes that “over the past decade, Canada recorded a cumulative trade gap of $130 billion. Had it not been for energy, our trade gap would have been about $1 trillion.” By any measure, the energy sector punches above its weight when paying Canada’s bills.

Canada is a mid-sized economy accounting for roughly 2 per cent of global production. Within North America, we represent less than one-tenth of the collective output of the three national economies. Canada is also an “open” economy that relies on cross-border flows of trade, investment and knowledge to sustain our high living standards.

To pay our way in an unforgiving and very competitive world, Canada must produce and sell exports to customers in other markets. Among other benefits, these exports furnish the financial means to pay for the vast array of imports that enhance the wellbeing of Canadian households and allow many of our businesses to operate efficiently and grow.

In 2022, Canada exported $779 billion of goods to other countries, and $161 billion of services, for a total of $940 billion. About three-quarters of Canada’s exports are destined for a single market—the United States. Canada also sources the bulk of imports from the U.S.

A hard truth about Canada’s trade is the outsized role of natural resource-based products in the export mix. Added together, energy, non-metallic minerals (and related products), metal ores, forest products and agri-food (i.e. food produced from agriculture) comprise roughly half of Canada’s international exports of goods and services—a notably larger share than in other countries with advanced economies (apart from Australia and New Zealand).

Energy alone accounted for 27 per cent of Canada’s merchandise exports in 2022, generating $212 billion for Canadian businesses, workers and governments. Mining contributed $85 billion in export revenues, followed by forest products ($60 billion) and agri-food ($57 billion).

Within the broad energy basket, oil and oil-based products dominate, accounting for more than three-quarters of all energy-based export revenues. Despite innumerable speeches and press releases issued by the federal government, energy’s contribution to Canada’s exports is poised to increase in the next few years—due not to growing exports of “clean tech” goods, carbon-free electricity or hydrogen, but to pending liquefied natural gas (LNG) production in British Columbia coupled with rising volumes of Western Canadian oil shipments following the completion of pipeline expansion projects.

It’s hard to overstate the importance of energy to our economy. In its latest “scorecard” report, the Coalition for a Better Future notes that “over the past decade, Canada recorded a cumulative trade gap of $130 billion. Had it not been for energy, our trade gap would have been about $1 trillion.” By any measure, the energy sector punches above its weight when paying Canada’s bills. The same is true, albeit to a lesser extent, for the other major resource sectors.

Many Canadians, huddled in increasingly unaffordable urban communities that have few evident connections to the country’s natural resource economy, may be puzzled by the continued vital importance of resource extraction and processing to Canada’s prosperity.

Ultimately, any trading country has a ledger showing the trade surpluses and trade deficits of its industry sectors. In Canada’s case, a handful of sectors generate significant trade surpluses, which help finance the large trade deficits incurred in other parts of the economy.

The story is a simple one—positive trade balances in the energy, mining, forestry and agri-food sectors offset chronic—and in some cases fast-growing—trade deficits in consumer goods, chemicals and plastics, motor vehicles/parts, and industrial and electronic goods. Canada also runs a smallish deficit in our overall services trade.

The sectoral trade data are informative. Among other things, they tell us where Canada has a “comparative advantage” in the global context. For a market economy, a pattern of positive trade balances is evidence that it has a comparative advantage in industries that reliably report trade surpluses.

Armed with such information, smart policymakers should create and sustain a business and investment climate that champions and bolsters the commercial success of industries that underpin the export economy. This is a message the Trudeau government has had trouble digesting, perhaps because it relies heavily on the votes of a few large metropolitan areas while most rural and resource-dependent regions remain a political afterthought.

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

More from this author

Carbon Tax

Don’t be fooled – He’s Still Carbon Tax Carney

Published on

CAE Logo Dan McTeague

Carney and the Trudeaupians in his cabinet haven’t had some kind of massive conversion. They’ve not done any soul searching. There’s no repentance here for having made our lives harder and more expensive. They remain ideologically opposed to Affordable Energy.

Over the next several days you will see headline after headline proclaiming that the Carbon Tax is old news, because Mark Carney has repealed it. ‘Promises made, promises kept!’ will be the line spouted by our bought-and-paid-for media, desperate to prevent Pierre Poilievre from winning the election.

Of course, this will be the same media who has spent the past few years declaring that Canadians love, are positively infatuated with, Carbon Taxation. So forgive me for scoffing at their sudden about-face, clapping like trained seals when Justin Trudeau’s newly anointed heir waives his pen and proclaims to the electorate that the Carbon Tax is dead.

The thing is, it’s not. It’s still there. And it will still be there as long as Mark Carney is running the show.

And of course it will. Mark Carney is an environmentalist fanatic and lifelong Apostle of Carbon Taxation. Just listen carefully to everything he’s said since he threw his hat in the ring to take over as PM. He’s said that the Carbon Tax “served a purpose up until now,” but that it’s become “too divisive.” He was careful to always pledge to repeal the Consumer Carbon Tax, rather than the entire thing. And in the end he didn’t even do that, just zeroed it out for the time being.

Carney and the Trudeaupians in his cabinet haven’t had some kind of massive conversion. They’ve not done any soul searching. There’s no repentance here for having made our lives harder and more expensive. They remain ideologically opposed to Affordable Energy.

The fact is, the only reason they’re changing anything is because we noticed.

They’re determined that that won’t happen again. The Carbon Tax will live on, but as hidden as it can possibly be, buried under every euphemism and with every accounting trick they can think of.

Trust me, we at CAE would be taking a victory lap if the Carbon Tax were really dead. We did as much as anyone – and more than most! – to wake Canadians up to what it was doing to our quality of life, our ability to gas up our cars, heat our homes, and afford our groceries. When the day comes that this beast is actually slain, we will have quite the celebration.

But that day is not today.

What happened, instead, was that an elitist Green ideologue shuffled the deck chairs on the Titanic in the hopes that the working people of Canada would miss the Net-Zero iceberg bearing down on us.

Don’t be fooled!

Continue Reading

Energy

OPEC Delivers Masterful Rebuke To Global Energy Agency Head

Published on

 

From the Daily Caller News Foundation

By

Some readers will remember the infamous May 2021 report from the International Energy Agency (IEA) titled ‘Net Zero by 2050: A Roadmap for the Global Energy Sector.’ The report projected a roadmap for transforming the world’s $300 trillion oil-and-coal-based energy system into one that runs on unreliable, intermittent alternatives like wind and solar.

Most educated observers viewed the report as a piece of propaganda coming from an agency then in the process of transforming itself from a historically reliable source of real data and analysis into just another advocate for the climate alarm narrative. It surprised no one when, just a few years later, Fatih Birol, head of the IEA, publicly boasted about that exact transformation as being the agency’s overt mission now.

One passage in the report’s set of recommendations immediately caught everyone’s eye due to its boldness and transparent illogic. That passage says, “There is no need for investment in new fossil fuel supply in our net zero pathway.”

To reinforce this stunningly absurd notion, Birol, in an interview published by the Guardian upon the study’s release, insisted that, ”If governments are serious about the climate crisis, there can be no new investments in oil, gas and coal, from now – from this year.”

It was a moment when the formerly respected agency shed a great deal of its credibility.

Making matters worse for Birol and IEA, barely a month later a spokesperson for the IEA urged OPEC to “open the spigots” to raise oil production to meet rising global demand that was outstripping the agency’s forecasts as the world recovered from the COVID-19 insanity. Three months after that, Wood MacKenzie, Rystad, and Moody’s had all issued studies directly contradicting IEA’s absurd assessment, and Birol was joining former President Joe Biden in calling for U.S. oil producers to drill more wells and produce more oil.

This sort of ill-advised posturing and self-contradiction is what happens when a scholarly enterprise consciously lurches into advocacy.

At this past week’s CERAWeek conference in Houston, Birol contradicted himself one more time, telling attendees, “I want to make it clear … there would be a need for investment, especially to address the decline in the existing fields. There is a need for oil and gas upstream investments, full stop.”

This latest impulse to respond to the next new thing surely surprised no one. But it was a bridge too far for officials at OPEC to sit by and absorb silently. In a March 13 statement posted on the OPEC website, the cartel reviewed Birol’s and IEA’s recent history of inconsistency and urged Birol to take a step back and consider the impacts it has had and will continue to have on investments for the future.

“Aside from the risk of whiplash that such severe yo-yoing between positions could cause, a serious point needs to be stressed,” OPEC writes. “The world needs unambiguous clarity on the realities of the future of supply and demand. Agencies that recognize the responsibility that comes from offering analysis of the long-term perspectives of the industry should not be shifting positions or mixing messages and narratives every couple of years on this matter, particularly ones that were founded to ensure the security of oil supplies.”

Oof. Blunt, but true. It is a dressing down that is well-deserved and long overdue.

Does Birol’s latest shift signal a recognition that the energy transition for which it has advocated has failed? It’s hard to know.

Regardless, once an agency like IEA makes a public decision to transform itself away from sterile analysis into the realm of advocacy, going back will be hard. Aside from the loss of credibility, which has only increased as Birol has lurched from one position to another and back again, such a transformation completely shifts the organization’s culture. Going back now will require time and a great deal of organizational pain.

Here, another obvious question arises: Is Fatih Birol the right person for this job? It is a question that should have arisen before the loss of so much credibility and trust. For the 32 member countries who subscribe to the agency and pay its bills, there is no time like the present to determine the answer.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

Continue Reading

Trending

X