By Ven Venkatachalam
and Lennie Kaplan
Canadian Energy Centre
British Columbia has been producing oil and natural gas since 1952. As of 2018, B.C. produced 32 per cent of Canada’s natural gas and two per cent of Canada’s conventional daily oil production. The government collects royalties from oil and gas development, supporting economic prosperity in the province.
So how important is the oil and natural gas industry to the B.C. economy?
Using customized Statistic Canada data from 2017 (the latest year available), it turns out oil and gas in B.C. generated about $18 billion in outputs. That consists primarily of the value of goods and services produced, as well as gross domestic product of $9.5 billion.
The B.C. oil and gas industry was responsible for nearly 26,500 direct jobs and more than 36,100 indirect jobs (62,602 in total) in 2017. The sector paid more than $3.1 billion in wages and salaries to B.C. workers that year.
In 2017, the B.C. oil and gas industry purchased $5.6 billion worth of goods and services from other sectors. That included $600 million from the finance and insurance sector, $770 million in professional services and $2.8 billion from the manufacturing sector, to name just three.
Spending by the oil and gas sector in B.C. isn’t the only way to consider the industry’s impact. Given that a large chunk of the sector is next door in Alberta, let’s look at what Alberta’s trade relationship with its westerly neighbour does for B.C.
B.C.’s interprovincial trade with all provinces in 2017 amounted to $39.4 billion. Alberta was responsible for the largest amount at $15.4 billion, or about 38 per cent.
That 38 per cent Alberta share of B.C.’s trade exports is remarkable, given that Alberta’s share of Canada’s population was just 11.5 per cent in 2017. Alberta consumers, businesses and governments buy far more from British Columbia in goods and services than its population as a share of Canada would suggest. Alberta’s capital-intensive, high-wage-paying oil and gas sector is a major reason.
If Alberta were a country (and no, we’re not suggesting it should be), the province’s $15.4 billion in trade with B.C. would come in behind only the United States (about $22.3 billion in purchases of goods and services from B.C.) in 2017.
Alberta’s importance to B.C. exports was ranked far ahead of China ($6.9 billion), Japan ($4.5 billion) and South Korea ($2.9 billion) – the next biggest destinations for B.C.’s exports.
B.C. has a natural advantage for market access in some respects when compared to the United States. B.C.’s coast is nearer to many more Asian-Pacific markets than are U.S. Gulf Coast facilities. The distance between the U.S. Gulf Coast and the Japanese ports of Himeji and Sodegaura is more than 9,000 nautical miles, compared to less than 4,200 nautical miles between those two ports and the coast of B.C.
The recent demand for natural gas in Asia, especially Japan (the largest importer of liquefied natural gas or LNG), and price increases for natural gas present an exciting opportunity for B.C. industry. The International Energy Agency predicts that, by 2024, natural gas demand in Asia will be up seven per cent from 2019’s pre-COVID-19 levels.
Be it in employment, salaries, GDP, or the purchase of goods and services, the impact of oil and natural gas (and Alberta) on B.C.’s economy and trade is significant.
Ven Venkatachalam and Lennie Kaplan work for the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of $18 billion and 62,000 jobs: The impact of oil and gas (and Alberta) on B.C.’s economy.
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