This morning the Canadian Energy Centre (CEC) released the latest in its research and data series – an analysis of government subsidies to Canada’s oil and gas sector.
The Fact Sheet (see attached PDF) used the most recent data available from Statistics Canada on operating subsidies to various Canadian industries including oil and natural gas extraction. The data show that sector received far less in subsidies than various claims made over the last decade.
Statistics Canada data shows the oil and gas industry received approximately $1.9 billion in subsidies from federal, provincial and local governments between 2010 and 2016, an average of $271 million per year. This is far less than various claims that have relied on questionable methodologies to estimate annual subsidies for the Canadian industry as high as $2.8 billion annually.
Other highlights from the CEC analysis based on Statistics Canada data include:
- Government subsidies for private sector businesses and government business enterprises totaled $131.8 billion from 2010 to 2016, or $18.8 billion per year.
- The top three recipients of government subsidies were urban transit systems ($27.8 billion), crop production ($12.8 billion) and the motion picture industry ($12.6 billion). The least subsidized industries were the aerospace sector ($0.7 billion) and the automotive sector $(0.6 billion) though those latter figures do not account for the 2009 federal-Ontario $13.7 billion automotive sector bailout as that disbursement falls outside of the 2010-2016 “window” of comparable data provided by Statistics Canada. There are other limitations to the Statistics Canada data as outlined in the Fact Sheet.
- Looking at subsidies by sector in-province, (with payments from federal, provincial and local governments), subsidies for the oil and gas industry in Alberta amounted to $1.7 billion between 2010 and 2016 inclusive. This is lower than the subsidies received by the motion picture and video production industries in Quebec ($3.1 billion) and British Columbia ($3.2 billion), and the electricity generation sector in Ontario ($6.2 billion).
- The recently announced $1.7 billion subsidy to the oil and gas industry for inactive and orphan well clean-up is not yet captured in Statistics Canada data.
- The most comprehensive analyses of the claims of annual multi-billion-dollar subsidies to the oil and gas sector over the past decade have come from economists Kenneth McKenzie, Jack Mintz and Ross McKitrick. In 2017, Prof. McKitrick noted the following, which sums up the problem with assumptions behind multi-billion-dollar figures:
“For the purpose of determining the actual size of subsidies to fossil fuels it would appear that conventional subsidies, that is actual payments to consumers and firms, are at the low end of the range of past estimates and are only a small percentage of the large numbers that have sometimes been put forward. To the extent we include indirect or notional concepts the numbers get dramatically higher but they also become meaningless and potentially misleading.”
A PDF of the fact sheet “Analyzing claims about oil and gas subsidies” is also available on the Canadian Energy Centre’s website at: https://www.canadianenergycentre.ca/analyzing-claims-about-oil-and-gas-subsidies/
The CEC’s Executive Director of Research Mark Milke is available for interviews or to answer questions about the analysis.
For more information or to arrange an interview, please contact:
Director of Content & External Relations
Canadian Energy Centre