The recent drop in oil prices—a barrel of West Texas Intermediate crude closed at US$84.15 on November 9 compared to US$66.18 yesterday—helps explain* why oil and gas capital spending in Canada remains relatively low. This isn’t the only reason, but companies have been hesitant to increase investment due to the uncertainty generated by the ongoing pandemic.

That oil and gas capital expenditures in Canada are low is evinced by the most recent quarterly statistics that show spending over the first three quarters of 2021 was 32% ($8.25 billion) below the same nine months in 2019.

On the bright side, at $17.66 billion, year-to-date spending in 2021 is still a significant driver of the Canadian economy and is about 6% higher than at the same point in 2020. And, as we saw in yesterday’s Owl, current spending (combined with past investments) has been enough to push crude production in Alberta higher than it has ever been.

At the same time, this year’s outlay is less than a third of what was spent over the first three quarters of 2014 when capital investment reached a record high. Lower oil and gas capital spending, moreover, means fewer jobs and muted activity in other industries.

*Other reasons why oil and gas investment is not on par with previous years include current and future transportation challenges (especially out of the Alberta oil patch), concerns that OPEC+ could change course and once again flood the market with oil and climate change policy aimed at limiting future production and demand.

Answer to the previous trivia question: Gibraltar consumes the most oil per person.

Today’s trivia question: Agricultural products accounted for what portion of total global merchandise exports in 2019?