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Spoiler alert – we are a top 5 producers of both
By William Lacey
Some days I feel like I am just yelling into the wind. It seems that every day I hear more calls that Canada needs to transition away from primary energy (oil and natural gas, specifically) and pivot into the “new economy.” As someone who has spent a lifetime in the energy sector, either in investment banking or on the producer side of the equation, I continually get flummoxed by these statements. We could get into the details of why renewables are a challenging investment in the land of higher interest rates and inflating commodity prices (yes, I used to cover this sector), or the fact that Canada is a resource based economy, with a basket of goods that is truly the envy of the rest of the world. But I won’t, this time, but will rather focus on a couple of statistics that many people may not be aware of, the best of which is saved for last.
Previously I have spoken about the material contributions that the oil and gas sector make to the Canadian economy, solely focused on the royalty and cash taxes paid to provincial and federal governments. In 2024, Canada’s Big Four Energy Companies paid $22 billion, while in comparison, the Big 4 banks paid $14 billion in taxes. This ignores all the payroll taxes generated from high paying jobs and the material capital investment (over $27 billion in 2024) these companies undertake on an annual basis.
Moreover, as we have become aware of late, energy is our largest net export by far to the United States, the result of lazy federal policy where we relied on the assumption that our neighbour to the south would always be a reliable one, who would play by the rules…until they didn’t.
United Nations COMTRADE Database
I dug into this a little more to help frame to people the magnitude of the importance of our energy industry to the people of Canada in my post Before Trudeau blames Alberta, perhaps he should look in the mirror where you can see the size of the export picture this sector represents as well as the poor choices in terms of policy and the resulting infrastructure picture that we have to work with today.
So, with all of this in mind, it frustrates me to no end when I hear the comment from people that they have “no stake in the energy sector” and that all the benefits accrue to shareholders and executives. First, based on the data above, taxes and royalties paid in 2024 amounted to approximately $600 for every person that lived in Canada. That is not insignificant. Moreover, in terms of production, Canada is in the Top 5 producers of both crude oil (#4) and natural gas (#5), the vast majority of which is desired for use by the rest of the world. In terms of exposure, if you look at production rates from 2023, Canada produced ~52 barrels of oil and 28 Boe of natural gas, or almost 81 boe total, for each person in this country. Other than Saudi Arabia, no other country is more levered to energy production on a per capita basis than Canada is.
So, rather than throwing the proverbial golden goose through the wind turbine, we should be embracing that which we are exceptionally good at. Can we do better? Absolutely we can. But if you want to have the ability to manage our bloated balance sheet, continue to support out social safety net and not continue to see our tax system explode, we need to get behind the sectors that we are known for, including uranium, forestry, mining etc., and stop bleating about what could be. We should be doing both.
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