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Why oil and gas matters to Ontario

Many Canadians may not be aware that the first commercial oil production in North America started in Ontario in 1858.

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By Ven Venkatachalam and Lennie Kaplan

The headline screamed: “The end of oil age” in the Economist in 2003. Fast forward 18 years and that still doesn’t make sense in many ways. The demand for oil is increasing across the globe. Even U.S. President Joe Biden is now asking OPEC to produce more oil.

You don’t have to go far to fill your gas tank to see the rise in fuel prices in recent months. Who says oil is dead? Just look at the growing global disconnect between supply and demand, where the need for natural gas threatens all sorts of shortages.

Many environmental groups have been calling for divestment from oil and gas, yet, they ignore the realities on the ground. Divestment from oil and gas harms not only the many energy companies that are creating jobs in the economy, but also investors, such as the middle-class and seniors, and other value chain sectors that depend on oil and gas.

Let’s look at Ontario, as a prime example.

Many Canadians may not be aware the first commercial oil production in North America started in Ontario in 1858. Since then, the oil and gas sector has played a significant role in the provincial economy. Though Ontario is not a major producer of oil and gas, there are still some 3,000 oil and gas wells active in the province.

There are many ways the oil and gas sector benefits the Ontario economy, in addition to reliable energy supply. Thousand of kilometres of pipelines in Ontario move oil and gas to the U.S., creating many jobs in Ontario. The refining industry also creates employment and contributes to the provincial economy. And many value chain sectors in Ontario supply goods and services to oil and gas companies.

Looking at the most recent (2017) comprehensive data available from Statistics Canada, it turns out the oil and natural gas industry was responsible for adding $7.7 billion in nominal GDP to Ontario’s economy and more than 71,000 jobs. Many of these jobs are indirect, but just as critical to the oil and gas sector. Think of oil and natural gas employment in Ontario as engineers and manufacturers hired to design and build oil and gas operating equipment and facilities, a building in Edmonton or in downtown Toronto, or an investment firm tasked with raising capital for a natural gas company operating in northern Alberta or B.C. Also think of an Alberta oil sands company whose local spending on office furniture results in jobs created in the Ontario firm that produces that furniture. 

In 2017, the oil and gas industry purchased $7.3 billion worth of goods and services in Ontario, including $4.3 billion from Ontario’s manufacturing sector alone. Other “big ticket” purchases include $700 million from the Ontario finance and insurance sector, $600 million from the professional, scientific and technical services sector, and $300 million from transportation and warehousing. Overall, $2.1 billion in salaries and wages were generated as the result of oil and gas industry spending in Ontario. 

Beyond the impact of the oil and gas sector, let’s widen the look at Alberta’s impact on Ontario’s economy. In 2017, Alberta’s population was 11.6% of the national total, while Alberta’s share of purchases from Ontario’s manufacturing sector was 21% of Ontario’s total interprovincial trade in manufacturing. That’s nearly twice Alberta’s share of Canada’s population. In fact, Alberta’s consumers, businesses, and governments were responsible for nearly 24%, or $32.5 billion, of Ontario’s total interprovincial trade in 2017. This was second only to Ontario’s next-door neighbour, Quebec.

Now consider Alberta’s share of Ontario’s interprovincial and export trade and how it compares to selected countries. Alberta’s $32.5 billion in purchases from Ontario in 2017 was behind only the United States ($197 billion), but ahead of the United Kingdom ($14.7 billion), China ($3.4 billion), Mexico ($3.2 billion), and Germany ($1.9 billion), among others. Add up the goods and services purchased by Alberta consumers, businesses, and governments from Ontario firms between 2012 and 2017, and the total value was about $193 billion.

Economies may be locally based, but local businesses and jobs are impacted by investment and trade flows from other places. Whenever someone says oil and gas doesn’t matter to Ontario, tell them to look at the “on the ground” realities. From Bay Street to Yonge Street to Main Street, people living across Ontario benefit from a thriving oil and gas sector.

Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded by carbon taxes. They are authors of $193 billion and 71,000 jobs: The Impact of Oil and Gas (and Alberta) on Ontario’s Economy.    

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3 Comments

3 Comments

  1. Ben Wilson

    December 1, 2021 at 9:48 am

    Western Standard: Why no article on all the things that have happened with UCP the last 2 months:
    1. Allen report hardly mentioned… this is the biggest story in 10 years and all Albertans need to be educated about this. It’s sick that foreign billionaires run our country. And Media says little. Are all media controlled. I am thinking this is possible.
    2. Alberta diversifying economy (as critics have been saying for years needs to happen) Movie industry booming, IT booming, 8% Corp tax rate is working, Red water upgrades now operational, Alberta processing businesses booming rather than just drilling.

    3. Hydrogen Announcements game changing. No article. Wow!

    Western Standard, time to pick up your game on reporting on all the great things that are going on.

  2. Non-Compliant Alberta Separatist

    November 29, 2021 at 7:28 pm

    Shut off the taps, and let the “Woke” and climatards get a taste of their future uptopia.

    Several of the Southern BC and Island BC climatards are starting to question their convictions, and it has only been one week.

    I say we shut off the energy supply to Queefbec, Ontario for at least one winter season.

    Let’s see how their “alternative energy” plans work then when mother nature throws a few storms at them, and the Queefbec power lines snap from all the ice storms. No Coal, No Oil, No Natural Gas. Nothing but your “hot air” to heat your homes.

    You’re not allowed to have diesel trains parked and hooked to the grid to generate electricity like last time.
    No power lines to bring it to your home when they break because of the weight of ice
    Wind turbines have to be shut off and not allowed to turn in the storm or ice the builds upon their blades, they get off balance and wreck themselves.
    No solar panels can handle huge ice buildup (they crack from the weight, trust me)

    Let’s put their “Climate Theory” to a real test, just like Southern/Island BC is testing their “No Oil” future this last week.

  3. Deb

    November 29, 2021 at 7:19 am

    It makes total sense when you know the global agenda’s and policy written by The World Economic Forum.
    How else can we get to, “You will own nothing and be happy.” The economy must be killed. Everyone must be on Universal Basic Income and government control. All information except the government narrative must be illuminated. Every man, women and child must be inoculated. Everyone must have a vaccine passport. The monetary system must collapse and digital currency must be established to implement the social credit system so that all purchases can be monitored and approved by your government. Carbon Credits will be attached to the digital passport making travel limited. If you use up your credits you will have to purchase more carbon credits. Will you be able to do that on UBI.

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Energy

Energy report tells feds to incentivize moves away from oil

The IEA calls for the Canadian government to creating transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

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A new report says Canada should further invest in clean in electricity and that our country is already among the cleanest energy production in the world.

The International Energy Analysis (IEA) came out with a report outlining recommendations for Canada’s energy future, including balanced decarbonization across the country.

That means higher coordination between federal, provincial and territorial levels to set clear targets for energy efficiency in buildings, transport and industry sectors.

The IEA calls for the Canadian government to create transparent changes to the oil and gas industry but incentivizing technology changes and creating emergency oil stocks.

Canada’s electricity system is one of the cleanest globally according to the IEA report, as 80% of supply is from non-emitting sources such as hydropower and nuclear power.

“Canada’s wealth of clean electricity and its innovative spirit can help drive a secure and affordable transformation of its energy system and help realize its ambitious goals,” said IEA Executive Director Fatih Birol.

“Equally important, Canada’s efforts to reduce emissions — of both carbon dioxide and methane — from its oil and gas production can help ensure its continued place as a reliable supplier of energy to the world.”

The report follows Environmental Minister Steven Guildbeault’s announcement for Canada to be ready to eliminate fossil fuels in 18 months, with zero-emission cars and stricter methane regulations.

Conservative leader Erin O’Toole expressed concern on Twitter with the zero emission plans, calling attention to the need to invest in the oil sector rather than turn away from it.

Energy makes up over 10% of Canada’s GDP, being a major source of capital investment, export revenue and jobs, making the net-zero goals both a challenge and opportunity.

Since the last IEA review in 2015, Canada has made international and domestic commitments dedicated to transforming the energy sector, including a target to cut greenhouse gas emissions by 40‑45% by 2030.

Canada is also a part of the United Nations zero-emission 2050 target that involves over 130 countries worldwide.

Ewa Sudyk is a reporter with the Western Standard.
esudyk@westernstandardonline.com

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Energy

O’Toole mocks Guilbeault’s two-year fossil fuel plan

Full implementation of this ethanol use would create a 60% increase in heating a home, according to the advocacy group Canadians for Affordable Energy.

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The federal cabinet is planning to phase out the use of fossil fuels in the next 18 months, but didn’t mention how much Canadians rely on fossil fuels and what costs this initiative entails.

According to Blacklock’s Reporter, Environment Minister Steven Guilbeault said in the next two years Canadians should also see more stringent methane regulations and zero-emission vehicle standards.

Conservative leader Erin O’Toole was opposed to the proposition, and highlighted the need for using Canada’s fossil fuel industry and supporting those who work in it.

“Canada is a cold country. We need fossil fuels, natural gas, to heat our homes,” said O’Toole in a video standing in front of a freezing cold House of Commons.

O’Toole tweet

“Someone so disconnected from reality that he’s making policy that will hurt our country. Division and absolute disconnect from reality.”

Guilbeault stressed the need for faster action on environmental initiatives by the Liberal government.

“I mean, maybe 2024, but that’s the type of time frame we have to work with and it’s going to be tough because on the one hand, some people are going to criticize us for not giving them enough time to be consulted, but the state of climate change is such that we need to learn to do things faster and that’s certainly true of us as a government,” he said.

Guilbeault acknowledged many of his proposed environmental actions will cause significant costs to consumers, but stated the luxury of waiting to make environmental changes is something Canadians don’t have any more.

The Clean Fuel Standard, implemented in 2021, mandated higher use of renewable energy in everyday consumption which includes tripling expensive ethanol content in gasoline and increasing carbon taxes.

Full implementation of the ethanol use would create a 60% increase in heating a home, according to the advocacy group Canadians for Affordable Energy.

Guilbeault complained about regulators taking too long to finalize the Clean Fuel Standard, as the regulation took five years to finalize and implement.

“One of the things I told stakeholders when I was in Toronto recently and then in Calgary, one of the things I told the department as well is we don’t have that luxury anymore,” said Guilbeault.

“We don’t have five years to consult every time we want to introduce a new measure.”

Canada’s two major parties are opposing on the matter.

O’Toole ended his statements on Twitter saying the Conservative party will keep fighting to keep Canadians warm and fossil fuel jobs safe.

Ewa Sudyk is a reporter with the Western Standard
esudyk@westernstandardonline.com

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Energy

Energy report says fossil fuel usage set to plunge in Canada

The news was met with glee from Canada’s Environment Minister Steven Guilbeault.

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The use of fossils fuels in Canada is set to drop drastically in the next three decades, says a new report.

The Canada Energy Regulator predicts fossil fuel use will fall by 62% by 2025.

The forecast predicts Canadians will use significantly less gasoline and diesel over coming years, resulting in a 43% decline in the use of refined petroleum products by 2050.

Electricity use could rise by as much 45% as people change over to electric vehicles.

The report predicts wind and solar power will be used to help meet the rise in demand.

The news was met with glee from Canada’s Environment Minister Steven Guilbeault.

“Some welcome news from The Canada Energy Regulator: fossil fuel use will fall by 62% in Canada by 2050. We’re making progress, the work continues!” he tweeted.

The forecast calls for Canadian crude oil production to peak at 5.8 million barrels per day in 2032, and then to decline to reach 4.8 million barrels per day in 2050.

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