A Matter of Fact: Oil and gas jobs deliver high value for Canada

Workforce provides an outsized contribution to national finances

By Deborah Jaremko
Photo courtesy Ensign Drilling

There is a false narrative being circulated by anti-oil and gas groups that because Canada’s oil and gas workforce represents a relatively small portion of the population, these jobs aren’t significant to the Canadian economy and can be easily transferred to other sectors should Canada phase out fossil fuels.

Canada’s oil and gas workforce provides an outsized and high-value contribution to national finances compared to other sectors, and the industry provides more prosperity and opportunity for employees.

As global oil and gas demand continues to grow, so too does the potential for more high quality jobs in Canada, developing environmentally and socially responsible resources.

Higher value work

According to Statistics Canada, in 2020 upstream oil and gas extraction alone generated $104 billion, or 5.6 per cent of Canada’s GDP, with a direct workforce of less than 230,000 people.

In contrast, the accommodation and food services sector, for example directly employed far more people — approximately 942,000 — but contributed just $29 billion, or less than two per cent of Canada’s GDP.

The key difference is labour productivity, or how much financial value is generated by a given amount of work. In oil and gas, productivity is high because the sector is capital-intensive and value-added, meaning it takes fewer people to generate higher returns.

According to CEC research, in 2019 the labour productivity rate of Canada’s oil and gas extraction sector was approximately $700 per hour, nearly 12 times higher than the overall industry labour productivity rate of $60 per hour.

As a result, Canada’s oil and gas workforce contributed $493 billion to federal, provincial and municipal governments from 2000 to 2018, helping pay for critical social infrastructure and services like roads, schools and hospitals.

Ripple effect

Oil and gas jobs have a ripple effect across other sectors. Statistics Canada estimates that every direct job created in oil and gas creates two indirect jobs in businesses that sell to oil and gas producers and three “induced” jobs in sectors where oil and gas workers spend their money, like accommodation, retail, education and medical services.

Job losses

A study published by the North American Building Trades Union found that many of the trades that work on oil and gas projects are not as prevalent on renewables projects, indicating that skilled trade jobs are not highly interchangeable between industries.

Promises of plentiful, great new jobs being created in renewable energy have been proven false right here at home. Ontario’s government promoted that its Green Energy Act in 2009 would lead to 50,000 new jobs, but the province’s auditor general found in 2011 that 30,000 of those jobs were likely to be short-term construction roles of one to three years.

The auditor general also noted that other jurisdictions have shown that for each job created through renewable energy programs, about two to four jobs are often lost in other sectors of the economy because of higher electricity prices.

The International Energy Agency’s conceptual roadmap to take the world to net zero greenhouse gas emissions by 2050 includes the loss of around five million oil and gas related jobs worldwide. The IEA acknowledges this would result in lasting challenges for affected communities.

“Most of those jobs are located close to fossil fuel resources, and many are well paid, meaning structural changes can cause shocks for communities with impacts that persist over time,” the IEA said.

While the pathway envisions increased jobs in non-fossil fuel resources, “these opportunities are often in different locations, skill sets and sectors than the jobs that will be lost.”

The unaltered reproduction of this content is free of charge with attribution to Canadian Energy Centre Ltd.