Energy production and the Canadian economy
All sectors of the economy are important sources of economic activity, but some loom larger than others
By ATB Economics 26 October 2020 1 min read
If you’ve been following the news lately, you’ve no doubt come across stories outlining some of the challenges facing Canada’s energy sector. From Joe Biden’s pledge to cancel the Keystone XL pipeline to soft oil prices to public policies encouraging more electric cars, there is no shortage of dark clouds out there.
This leads to a key question that is not always clearly answered in these stories: what—economically speaking—is at stake?
Given this, it’s useful to review a few facts.
According to Statistics Canada, Canada’s energy sector* generated $178 billion in real GDP last year or about 9.0 per cent of the country’s total economic output. Oil and gas** on its own generated $146 billion of output or 7.4 per cent of the national economy.
Manufacturing (less petroleum refining) generated $191 billion or 9.7 per cent of Canada’s GDP.
The auto sector accounted for a comparatively small amount of output at $16 billion or 0.8 per cent of total GDP in 2019.
Interestingly, the largest sector of the Canadian economy is real estate and rental and leasing at 12.7 per cent ($251 billion) of total GDP in 2019.
At the end of the day, it’s not a competition—all sectors of the economy are important sources of economic activity, jobs, investment and potential growth. Still, some sectors loom larger than others and this is definitely true when it comes to energy.
*Includes oil and gas (see below), coal mining, uranium ore mining, and electric power generation, transmission and distribution.
**Oil and gas includes extraction, support services such as contract drilling, pipeline transportation, natural gas distribution and petroleum refineries.