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Conventional oil and gas could be the solution to our economic woes

By Perrin Beatty
and Lisa Baiton

A cursory glance at most of Canada’s economic indicators reveals a troubling reality – our great nation is on the cusp of decline. Per capita GDP has stagnated, showing less than one percent growth between the beginning of 2018 and the end of 2023. According to the OECD, Canada is projected to have the lowest real GDP per capita growth among all 38 advanced countries over the next four decades.

Additionally, over the past seven years, Canada has ranked 44th out of 47 countries in investment growth rates tracked by the OECD. The Bank of Canada has issued warnings, citing weak productivity and low business investment as a national emergency.

Perrin Beatty

Perrin Beatty

Lisa Baiton

Lisa Baiton

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As a result, Canada’s living standards are slumping. A recent poll by Pew Research found that 75 percent of Canadians believe that our children will have a lower standard of living than we do. Moreover, amidst rapid and tumultuous geopolitical transitions in trade, economics, and energy, Canada’s longstanding relationships with trading partners and our reputation as a G7 member and NATO partner are at risk.

Canada’s economic challenges are large and many and easily identifiable.

But where are the solutions? A recent report on the economic impact of Canada’s conventional oil and natural gas sector unequivocally points to some.

The study, conducted by the Canadian Chamber of Commerce’s Business Data Lab, illuminates the often-underestimated potential of Canada’s conventional oil and gas sector to address our most pressing economic and social issues.

The conventional sector (which excludes the oil sands) represents about two-thirds of total oil and gas investment in the country. It contributes significantly to Canadian prosperity while also playing a vital role in environmental stewardship and energy security. Plus, it operates extensively across the nation, serving as the economic backbone of numerous communities.

The sector is deeply undervalued. Consider the Canadian Chamber’s findings on industry employment: Canada’s conventional oil and gas sector supports 493,000 direct, indirect and induced jobs nationwide, accounting for three percent of total national employment. And for every million dollars spent in the sector, nearly five jobs are supported, a ratio that compares favourably to other sectors of the economy.

These are well-paying jobs, too. At $90 an hour, the average conventional oil and gas industry worker earns over twice the national average wage for other occupations.

The industry’s total economic contribution extends to government revenues as well. In 2022, the conventional sector and the oil sands contributed $45 billion to government coffers in the form of tax and royalty payments, enabling funding for essential services and infrastructure benefiting all Canadians.

Additionally, the conventional sector plays a pivotal role in maintaining a positive balance of trade for Canada. Without conventional oil and gas exports, Canada would face a significant trade deficit, which would impact economic stability, currency value, and international competitiveness.

The solution to our challenges is staring us in the face. And unlocking Canada’s energy advantage and maximizing the benefits of our natural resources requires just four steps – steps we truly can follow.

First, we can adopt a pragmatic approach to energy transition, investing in technology, facilities and infrastructure on an unprecedented scale.

Second, we can streamline our approach to major projects, ensuring timely approvals and permitting processes.

Third, we can create an attractive investment climate by reforming our regulatory regime and actively promoting major investment opportunities.

Finally, we can capitalize on the opportunity presented by liquefied natural gas (LNG), one of the most promising avenues for sectoral growth and a significant contributor to global emissions reduction.

Canada’s conventional oil and natural gas sector is more than just an industry; it is a cornerstone of our economy, providing livelihoods for countless Canadians and showcasing our nation’s ingenuity and resilience. However, to unleash its full potential, we must embrace innovation, foster collaboration, and advocate for policies that forward both prosperity and environmental stewardship.

The road ahead is challenging, but the potential rewards are immense. Together, policymakers and industry can harness Canada’s energy advantage and lead the world towards a more prosperous, equitable and sustainable future.

Perrin Beatty is President and CEO of the Canadian Chamber of Commerce, and Lisa A. Baiton is President and CEO of the Canadian Association of Petroleum Producers.

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