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March 28, 2019 | DATA: Latest Statistics Confirm That Crude Oil Still Pays The Rent For Canada

Stewart Muir is founder and executive director of the Resource Works Society, a Vancouver-based group open to participation by British Columbians from all walks of life who are concerned about their future economic opportunities. He is an author, journalist and historian with experience on three continents including a financial editor of The Vancouver Sun responsible for mining and markets coverage. Since Resource Works was established in 2014, the group has gained international recognition for its practical approach to the public challenges of responsible natural resource development and use.

Western Canada’s oil sector continued in 2018 to be the foundation stone of national prosperity. That’s why innovation is so important for our future.

When economists say that crude oil exports “pay the rent” for Canada, this is another way of stating that there is no greater source of trade revenue and surpluses.

Sure enough, new data from Statistics Canada shows that up until the end of the fourth quarter of 2018, crude oil and crude bitumen continued to bring in greater export revenues than any other goods product category.

energyexports-2018-2.gif

Here are some observations that spring from this information:

  • Those who advocate “getting off fossil fuels” are not facing up to the realities of our human use of energy-dense fuel sources like petroleum and natural gas. Trying to wish away these dependencies might feel good, but it’s not going to provide the solutions we need as quickly as they’re needed.
  • Worse yet, if we overcommit to idealistic climate solutions that subsequently do not pan out as hoped, time will have been lost and greater environmental harms will be the result. Any responsible decision making needs to factor in this risk.
  • Innovation in crude oil technology is clearly key.
  • How do we decarbonize the most important parts of the economy? Focusing on marginal areas will produce mostly marginal results. If the climate needs a Marshall Plan approach, as some argue, the most beneficial thing we can do is innovate, for example by pursuing the decarbonization of our crude oil and crude bitumen exports, while preserving their economic benefits.
  • The need is clear that we need to develop carbon capture, usage and storage (CCUS), meanwhile continuing to reduce the energy intensity of upstream production is clear. Yet there is a very determined effort by renewables lobbies to thwart innovation in both of these areas because they are seen as obstacles to transition, but those fears are unfounded. There ought be a transparent public conversation, led by industry, politicians and advocates, about this conflict.
  • Apart from the immense technical, social and political challenges of a wholesale and rapid “switch” to non-emitting fuel sources, we can’t overlook the impact on Canada’s economy of not exporting our energy resources. These exports bring in dollars that are used to build hospitals, fund First Nations reconciliation, secure our borders, and perform a thousand other tasks that cumulatively add up to Canadianness. Crude oil and bitumen created $109 billion in export value in 2018, and it was also one of the largest growth sectors over the previous five years.
  • Over the past five years, despite the Fall 2014 global oil price crash and the continuing dearth of Canadian tidewater pipelines, somehow our oil industry has managed to grow export revenues by 23.6 per cent (Q1 2014 to Q4 2018). This was due to increased volume, since we did not see value growth in this period. Once the Trans Mountain pipeline is complete, a huge amount of latent commodity value is waiting to be realized.

The data used for these charts is at this Google Sheet document. For multi-year data and further options check out the source, Statistics Canada online table 12-10-0134-01.

EnergyExports2018-1.png

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March 28th, 2019

Posted In: Resource Works

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