National oil and gas extraction spending continued to improve for the sixth straight quarter.

Seasonally-adjusted capital expenditures in Canada’s oil and gas extraction sector came in at $9.3 billion in the second quarter of 2022, the highest since Q4 2018. As oil prices jumped from US$94 in Q1 to over US$108 in Q2, spending grew by $1.3 billion (+16.8%) during the same timeframe and posted the largest quarterly increase seen in seven years.

Over the first half of the year, total oil and gas extraction capital expenditures in Canada stood at $17.0 billion (unadjusted). This was $4.9 billion (+40.6%) above 2020 and $6.3 billion (+58.6%) above 2021 levels.

While spending has finally surpassed pre-pandemic levels, it is important to highlight that it remains markedly below levels seen in the early 2010s. Despite the strong increase, capital spending in the second quarter of 2022 was less than half of what it was in Q4 2014 (the historical peak).

The oil and gas extraction sector is experiencing an influx of revenue with elevated commodity prices and steady production. However, companies remain cautious about new spending in given volatile market conditions, limited transportation capacity and global efforts to lower carbon emissions.

With that said, the higher prices create both the capacity and incentive for more capital spending and ATB’s latest economic forecast projects a modest uptick in oil and gas investment this year.

Answer to the previous trivia question: The modern concept of gross domestic product was developed by the American economist Simon Kuznets in the 1930s.

Today’s trivia question: True or false? Used goods are included in the calculation of gross domestic product.