By Mark Milke
and Lennie Kaplan
Canadian Energy Centre
One critical problem for political and business leaders is getting people to think outside their local box.
While many people might prefer a local restaurant or coffee shop to a national chain, international trade is the very reason a Canadian restaurant can offer inexpensive vegetables in winter. Vegetables from Mexico, for example, are fresh and cheap. Providing greenhouse vegetables for all Canadians for six months a year would be exorbitant.
Similarly, your neighbourhood café can serve you coffee because the beans are planted, grown, harvested and shipped from hot-climate countries worldwide.
Vegetables and coffee help show why international trade matters. No country possesses every type of product every day of the year. Even if they did, some products, companies and countries are better at producing some goods than others. This is known as comparative advantage.
What’s true of a globalized world for food and drink is also true of oil and natural gas, which some nations produce while other nations are mostly or solely consumers.
Canadians have a significant stake in the United States oil and gas industry. That’s a reality Americans and Canadians should be aware of. Americans should also know how much tax revenue flows to U.S. governments and how many jobs the U.S. oil and gas sector provides to their fellow Americans.
Between 2000 and 2019, the total trade in energy products between Canada and the United States was nearly $2 trillion, including $138 billion in 2019 alone. Crude oil (including bitumen) was the commodity with the highest value, at $1.1 trillion over 20 years examined. That includes nearly $102 billion in crude oil in 2019.
Natural gas has the second highest value among the cross-border energy products, representing more than $426 billion over two decades and more than $12 billion in 2019.
Canadian heavy oil matters a lot to U.S. refineries. Canadian heavy oil shipped to U.S. refineries has more than doubled over the past two decades, from just over 25 per cent of all Canadian oil exported in 2000 to almost 56 per cent in 2019. Canadian exports of crude oil to the U.S. for processing have risen from nearly 1.3 million barrels a day in 2000 to more than 3.8 million barrels a day in 2019, an increase of over 194 per cent.
Here are some direct benefits for Americans that flow from their oil and gas sector.
The U.S. oil and gas industry provided five million jobs in 2019 (the most recent data). Two million jobs are created directly by the oil and gas industry and another three million are indirect jobs.
In 2019, those 343,000 programming jobs came with $31.2 billion in compensation, or an average income of $90,966.
Tax revenues to governments should matter to Americans as well. In 2019, U.S. taxes ranged from almost $44 billion at the sub-county level, to $14.8 billion in county taxes, to more than $63 billion in oil and gas revenues to state governments.
The oil and gas industry also paid more than $116 billion to the U.S. federal government. In total, the oil and gas industry sent cheques worth more than $238 billion to American governments of all levels in 2019.
The economic impact of oil and gas and the shared nature of the sector in North America matters to millions.
Believing otherwise is akin to a coffee-lover thinking their coffee beans magically appear at the grocery store rather than originating in Central or South America.
The interconnected world of oil and natural gas matters for Canadians and Americans.
Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of the report Enhancing North American Energy Security: Analyzing the Economic Impacts of the U.S. Oil and Gas Industry.
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