It often seems that Canadians view the oil and gas industry as an Alberta only issue. The oil is in the ground there, the companies are based there, and there’s always talk of pipelines to take the oil from Alberta to somewhere, almost anywhere it seems.

Problems in the oil and gas industry mean problems for Canada’s economy. This was true well before the current challenges and will be the case long after.

  • In 2019, the economic contribution of Canadian oil and natural gas was $108 billion in direct GDP.
  • In 2017, Canadian oil and natural gas created 528,000 direct and indirect jobs across the country.
  • In each year from 2016 to 2018, Canadian oil and natural gas provided $8 billion annually in average revenues to government.
  • In 2017, oil sands companies purchased supplies and services from 2,230 companies in all nine provinces and three territories outside of Alberta.

This is Canada’s industry.

And with oil contracts driving the price of a barrel of oil into negative numbers briefly yesterday, Canada’s industry is in dire straights.

The revenue from the energy sector drives Canada. The taxes, royalties, salaries, and pension plan benefits pay for roads, schools, and hospitals across the entire country, it supports thousands and thousands of Canadian households and underwrites the quality of life of all Canadians in a myriad of ways. Canadians seem genuinely unaware that petroleum not only heats our homes and powers our vehicles but makes possible the products that fill our kitchens and bathrooms, the materials used to make our clothing, the components of critical medical equipment and the basis for virtually every electronic device we use every day.

Simply put, if Canada is to be successful in its recovery then Canadian oil and gas must be supported in a meaningful way. To date, it has not seen the same level of support as other industries. Nor did it gain the support of our government during the Saudi-Russia price war. Nor did the industry’s pleas for support before these two events land on sympathetic ears.

There is precedent for the levels of support the oil and gas industry needs. Ottawa has done this before. In 2009, $13.7 billion was injected into the auto sector following the global financial meltdown.  Similarly, through the years major federal aid packages have been provided to a range of Canadian industries and companies when major job losses were at stake. Regardless of partisan stripe and setting aside disputes about how it is done, federal governments have stepped up and provided significant support when Canadian companies and jobs were sideswiped by events and circumstances well beyond their control.

Alberta’s Energy Minister estimates the investment required in measures of support would be $20 to $30 billion. While that sounds large, remember The Parliamentary Budget Office forecast of a COVID-19 driven federal deficit of $184 billion in 2021. It would seem reasonable to support one of the largest parts of our economy in a more meaningful way in the context of these massive, unpredicted amounts.

The long-promised aid package unveiled last week simply does not reflect the importance of the sector to the national economy.

  • $1.7 billion to support additional orphan well clean-up in B.C., Alberta and Saskatchewan.
  • $750 million to assist with further methane reduction including $75 million targeted at offshore operations in Newfoundland.
  • A credit program – with details still be disclosed – through BDC and EDC to help medium-sized energy companies

In the midst of the economic storm, any shelter is welcomed. More support for orphan wells, additional methane reduction and greater access to credit are worthwhile steps. It is difficult though to comprehend how such modest measures can be regarded as sufficient for an industry of such economic importance to Canada. The cost to Canadian jobs, taxes, and investment along with our own energy self-sufficiency and security appears to have been disregarded entirely. And, there have been weeks to figure it out.

Unless there is more – dramatically more – to come and very soon, it is hard to see how the economy will recover from these difficult times.

The consequences for Canadians are substantial. Whether they are aware of it today or not, the potential failure of the country’s largest industry will damage Canada’s quality of life from coast to coast. We should all watch with great concern.