When Canada does well, so too does our neighbour. Our country’s economy isn’t the only one to benefit from Canada’s oil and gas sector; it also contributes to economic growth and employment in the U.S., according to an August study by the Canadian Energy Research Institute (CERI).
“There’s a strong economic relationship between Canada and the United States, and the work that’s done in Canada has a positive economic impact on a state, and it’s not just related to our selling the commodities to the U.S.,” says Allan Fogwill, CERI’s president and chief executive officer. “It’s also related to the investment and development of our resources."
With the North American Free Trade Agreement renegotiations now in full swing, the study is a timely reminder of what Canada means to the U.S. “We thought that would be important just to give people a better understanding of just how the various aspects of Canadian oil and gas activity, including the production and investment areas, have an impact on one of our major trading partners,” Fogwill says.
The study, Economic impacts of Canadian oil and gas supply in Canada and the U.S. (2017-2027), forecasts that in Canada, the capital investment of $380 billion and operational revenues of $1.8 trillion from all oil and gas projects over the 11-year period will generate $2.7 trillion in Canadian GDP and 6.57 million person-years of employment. In the U.S., that same investment and revenues are expected to generate US$45.6 billion in U.S. gross state product (GSP) and 406,000 jobs. Those aren’t numbers to laugh at.
Canadian oil and gas firms also purchase goods and services from U.S. companies, which has a “positive and significant” economic impact, according to the study. Prior to the 2014 price collapse, the Canadian oil and gas production sector imported $6.5 billion in goods and services from the U.S.
CERI also looked at the U.S. economic benefits on a state-by-state basis. “The costs and benefits are not shared equally, whether in the Canadian provinces or in the U.S. states,” says Fogwill. “I think this just adds information to the discussions to allow for a more informed debate.”
The top ten states that will benefit most from Canadian oilsands development are Texas, California, Illinois, Oklahoma, Ohio, Pennsylvania, Colorado, Wisconsin, Florida and Michigan. The impact on Texas’ GSP alone is estimated to total nearly US$5 billion over the 11-year forecast, approximately 30.5 per cent of the total GSP impact. Employment in the Lone Star State is expected to double to just under 5,000 jobs in 2027 from 2,000 in 2017.
Having all the information is vital to ensuring Canada isn’t overlooked in the agreement renegotiations. “I think it’s important for us to identify those facts and do what we can to bring them to people’s attention,” says Fogwill. “That doesn’t necessarily mean that should change their mind or suggest a change in policy, but it’s important to have a complete understanding of the issues before decisions are made about how policies are put in place.”