Canada’s oil sands industry provides economic benefits to Alberta, Canada and across North America.
Oil sands development creates a significant number of jobs outside Alberta. In fact, more than 3,400 Canadian companies outside of Alberta supplied the oil sands with good and services in 2014 and 2015. The goods, materials and services used to construct and operate in situ oil sands projects, mines and upgraders come from across Canada. Many of the components – trucks, gauges, valves, pumps – are produced in Central and Eastern Canada.
Direct employment in Canada as a result of oil sands investment is expected to grow from 151,000 jobs in 2014 to over 225,000 jobs in 2038 (CERI, 2014). When including indirect jobs, employment numbers almost double across Canada in both years. Many of these jobs will be created in provinces outside of Alberta.
According to the Canadian Energy Research Institute (CERI), almost every region in Canada has been stimulated by oil sands development through job creation and economic activity.
Investment and tax revenue
The oil and natural gas industry is Canada’s largest private sector investor, with oil sands alone injecting almost $23 billion into the economy in 2015. The oil sands industry and its suppliers contribute to government revenues through corporate taxes, personal income taxes, property taxes, royalties, land sales and other costs. Over the next 20 years, the oil sands industry is expected to pay $1.2 trillion in provincial and federal taxes – including royalties. These revenues contribute to government spending on infrastructure, social services and other important programs. A healthy oil sands industry results in higher revenues for governments.
Over the next 20 years, oil sands operators, including their suppliers and employees, are projected to pay:
- $285 billion in provincial and personal income taxes
- $464 billion in federal and personal income taxes
- $490 billion in royalties paid to provincial governments
Keeping our industry competitive
Canada’s oil and natural gas industry needs support for more infrastructure development in order reach more customers – within Canada, across North America, and around the world. Access to domestic and offshore oil and natural gas markets with greater pipeline capacity remains vital to the long-term success of Canada’s industry and the economic benefits.
Industry revenues are forecast to fall more than $60 billion (40%) in 2016; that is about the same as Quebec’s entire aerospace industry ($25 billion) or 75% of Canada’s automotive manufacturing sector ($80 billion).
What is a royalty?
Alberta’s natural resources belong to Albertans. In exchange for the right to develop these resources, companies pay the government a royalty. This is a percentage of revenues generated from the sale of oil and natural gas products, or in some cases takes the product in-kind for the government to sell.
Royalties are just one way oil and natural gas producers contribute to government revenues. Many different government taxation policies affect exploration and development of Alberta’s natural resources.
Partners in America’s future
Canada and the U.S. share the world’s largest trading relationship – and energy is no exception. As a result, increasing economic activity in the oil sands benefits Americans. More investment and production in the oil sands leads to higher demand for U.S. goods and services, which helps generate jobs and revenues south of the border. Canadian oil sands producers look to their U.S neighbours for construction, electrical engineering and equipment services. Furthermore, the dollars paid for Canadian crude oil are largely reinvested to help drive the North American economy.