The TSX30—the annual ranking of the top-performing stocks on the Toronto Stock Exchange—was recently released and, once again, oil and gas companies made up the lion’s share of the list.

Half of the top companies (11 producers and four energy service companies) are in the oil and gas sector.

Share prices have been driven up due to energy supply and security concerns and ever-increasing demand for oil and gas. The industry and its investors have enjoyed extraordinary three-year returns. The average share price return for the 15 oil and gas companies in the TSX30 was 210 per cent.

But what about the large endowment funds, pension plans, institutional funds and, more recently, banks that have bowed to pressure from divestment-promoting activists to stop investing in the natural resource sector?

In removing oil and gas from their investment pool, they have ignored their responsibility to their beneficiaries, who have missed out on these remarkable returns.

Trustees have a fiduciary duty to act in the best interest of their beneficiaries, which in this case means maximizing the risk-adjusted return for their clients.

But for ideological reasons, oil and gas companies are often being left out of the investment equation.

What’s more, the divestors aren’t even achieving their ideological goal.

Abundant energy is the prerequisite for modern life. Divestment does not stop oil and gas production because it does nothing to reduce demand. After more than a decade of divestment pledges, demand for oil and gas has only continued to go up. This demand is projected to continue to grow for years to come.

If Canada does not supply the oil and gas the world wants and needs, it will be supplied from elsewhere, including by authoritarian regimes in poorly regulated, undemocratic countries that are less responsible and less environmentally friendly.

It would be better if Canadian companies like those on the TSX30 were the ones to step up and meet the world’s ever-growing energy needs.

It would be better for Canadians as well. Canada is blessed with abundant natural resources, and oil and gas is central to our prosperity. All of the companies on the TSX30 list rely on the oil and gas sector to fuel their business, from industrials to mining, to aviation, technology and yes, even to renewable energy.

Investing in the Canadian oil and gas sector means investing in energy companies that can and should be the suppliers of the energy demanded by our power-hungry world.

These companies have high environmental and governance standards, are driven to innovate—an essential process for emissions reduction—and have had some of the strongest returns on the TSX in recent years.

Can our banks and fund managers possibly continue to ignore the significant value in the energy space? Only time will tell.

Gina Pappano is the former head of market intelligence at the Toronto Stock Exchange and TSX Venture Exchange and executive director of InvestNow, a non-profit dedicated to demonstrating that investing in Canada’s resource sectors helps Canada and the world. Join the movement and pass the InvestNow resolution at investnow.org.

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That Germany has given up on Canada to supply liquefied natural gas (LNG) and instead signed a massive multi-year LNG purchase agreement with Qatar has left many angry and disappointed.  

Investment manager and perennial oil bull Eric Nuttall recently visited Qatar and Saudi Arabia and wrote an opinion piece for the Financial Post titled, “Canada could be as green and wealthy as Qatar and Saudi Arabia if government wakes up – Instead of vilifying the oil and gas sectors, Canada should champion them.” 

Nuttall described how Saudi Arabia and Qatar are investing their enormous energy wealth to make life better for their citizens. This includes decarbonizing future domestic energy supplies and making large investments in infrastructure.   

Nuttall concludes, “Why is it that Qatar, a country that embraced its LNG industry, has nearly three times the number of doctors per capita than Canada? We can do it all: increase our oil and natural gas production, at the highest environmental standards anywhere in the world, thereby allowing us to help meet the world’s needs while benefiting from its revenue and allowing for critical incremental investments in our national infrastructure…This could have been us.” 

The country most often mentioned that Albertans should emulate is Norway. 

Alberta’s Heritage Savings and Trust Fund has been stuck below $20 billion since it was created by Premier Peter Lougheed in 1976.  

Norway’s Sovereign Wealth Fund, which started 20 years later in 1996, now sits at US$1.2 trillion. 

How many times have you been told that if Alberta’s politicians weren’t so incompetent, our province would have a much larger nest egg after 47 years?  

After all, Canada and Alberta have gobs of natural gas and oil, just like Qatar and Norway. 

Regrettably, that’s all we have in common.  

That Qatar and Norway’s massive hydrocarbon assets are offshore is a massive advantage that producers in the Western Canada Sedimentary Basin will never enjoy. All pipelines are submerged. There are no surface access problems on private property, no municipal property taxes or surface rights payments, and there are no issues with First Nations regarding land claims, treaty rights and constitutional guarantees. 

Being on tidewater is a huge advantage when it comes to market access, greatly reducing operating and transportation costs. 

But it’s more complicated than that, and has been for a long time. In 1990, Olympic athlete and businessman William G. Gairdner wrote a book titled, “The Trouble with Canada – A Citizen Speaks Out.” It takes Gairdner 450 pages to explain how one of the most unique places in the world in terms of resource wealth and personal and economic opportunity was fading fast. 

That was 33 years ago. Nothing has improved. 

As I wrote in my own book about the early days of settlement and development, citizens expected little from their governments and got less. 

Today politics increasingly involves which party will give the most voters the most money.  

The book’s inside front cover reads how Gairdner was concerned that Canada was already “caught between two irreconcilable styles of government, a ‘top down’ collectivism and a ‘bottoms-up individualism;’ he shows how Canadian society has been corrupted by a dangerous love affair with the former.”  

Everything from the constitution to official bilingualism to public health care were identified as the symptoms of a country heading in the wrong direction. 

But Canadian “civil society” often regards these as accomplishments. 

The constitution enshrines a federal structure that ignores representation by population in the Senate thus leaving the underpopulated regions vulnerable to the political desires of central Canada. This prohibited Alberta’s closest access to tidewater for oil through Bill C48. 

Official bilingualism and French cultural protection has morphed into Quebec intentionally blocking Atlantic tidewater access for western Canadian oil and gas.  

In the same country! 

Another election will soon be fought in Alberta over sustaining a mediocre public health care system that continues to slide in international rankings of cost and accessibility. 

What’s remarkable about comparing Canada to Norway or Qatar for missed hydrocarbon export opportunities is how many are convinced that the Canadian way of doing things is equal, if not superior, to that of other countries. 

But neither Norway or Qatar have the geographical, jurisdictional, regulatory and political obstacles that impair resource development in Canada. 

Norway has over 1,000 years of history shared by a relatively homogenous population with similar views on many issues. Norway has a clear sense of its national identity. 

As a country, Canada has only 156 years in its current form and is comprised of Indigenous people and newcomers from all over the world who are still getting to know each other.  

In the endless pursuit of politeness, today’s Canada recognizes multiple nations within its borders.  

Norway and Qatar only have one. 

While relatively new as a country, Qatar is ruled by a “semi-constitutional” monarchy where the major decisions about economic development are made by a handful of people.  

Canada has three layers of elected governments – federal, provincial and municipal – that have turned jurisdictional disputes, excessive regulation, and transferring more of everything to the public sector into an industry.  

Regrettably, saying that Canada should be more like Norway or Qatar without understanding why it can’t be deflects attention away from our challenges and solutions. 

David Yager is an oilfield service executive, oil and gas writer, and energy policy analyst. He is author of  From Miracle to Menace – Alberta, A Carbon Story.  

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From Europe to Africa to Asia, demand for oil and natural gas is soaring, pushing crude oil and natural gas prices to levels not seen since the middle of the last decade. As a result, Canada’s crude oil and natural gas exports have increased; between July and September 2021, Canada exported $31.9 billion of oil and natural gas, primarily to the United States, a rise of $6.1 billion or 19 per cent from the same period in 2019.  

According to a recent customized Statistics Canada analysis prepared for the Canadian Energy Centre, it turns out that the impacts to the Canadian economy from a $100 million surge in crude oil and natural gas exports — about one per cent of total annual oil and gas exports — are substantial.   

A simulation found that each $100 million increase in Canadian oil and gas exports in 2022 leads to an estimated 289 direct and indirect jobs and $40 million in labour income. And each $100 million increase in oil and gas exports expands the Canadian economy by $86 million. 

Canadian oil and gas exports not only support direct jobs and income in the oil and gas industry but also support indirect jobs and income across Canada in such diverse areas as architectural engineering and related services, machinery, equipment and supplies, merchant wholesalers, employment services, computer system design, repair construction, truck transportation, and food services, just to name a few.  

Exports of oil and gas products are the life blood of the Canadian economy. In fact, the cumulative value of Canada’s oil and natural gas exports is over $1.94 trillion between 1988 and 2019 (in real dollars). 

According to the Canada Energy Regulator, crude oil has continually been one of the top five commodities exported from Canada, often alternating with passenger cars and light trucks as the top exported product. 

Increasing Canadian oil and gas exports is critical to our nation’s recovery from COVID-19, creating jobs and income for Canadians from coast to coast to coast. 

Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded by carbon taxes. They are authors of the fact sheet Projected Impact of Increased Oil and Gas Exports.    

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There has been lots of talk about Canada’s so-called “Just Transition,” but so far little comprehensive analysis of its impact on the national economy and workforce. One of the most controversial elements of the “Just Transition” are calls by some for a shutdown of Canada’s oil and gas industry to curb the country’s 1.6 percent contribution to global GHG emissions.

Those who support turning off Canadian oil and gas either fail to appreciate or purposely want to ignore the direct impacts and, just as importantly, the indirect impacts that the industry has on supporting jobs, GDP and the purchase of goods and services (output) across various industries in Canada.

Some of those supporting Canada’s “Just Transition” believe that these benefits can easily be replaced by a swift move to the “green economy.” But can they? Let’s dig into the numbers.

The Canadian Energy Centre (CEC) recently examined the direct and indirect impacts of the oil and gas sector on the national economy, using Statistics Canada’s Supply and Use Tables (SUTs). The SUTs represent the most coherent and detailed accounting of the Canadian economy available, according to Statistics Canada.

The direct and indirect GDP associated with Canada’s oil and gas sector was $128 billion in 2017 (the most recent year for which detailed data is available). The direct and indirect value of goods and services produced by the Canadian oil and gas sector and its supply chains was $241 billion. Also in 2017, there were a total of 611,362 jobs associated with the Canadian oil and gas sector – 216,285 direct and 395,077 indirect. These are all big numbers.

As noted earlier, the activities of the Canadian oil and gas sector are indirectly responsible for sizeable portions of GDP and employment in other value chain industries across Canada.

This includes nearly $3.2 billion support for GDP in the machinery, equipment, and supplies merchant wholesalers’ sector; nearly $2.3 billion support for GDP in the architectural engineering and related services sector; and nearly $1.6 billion support for GDP in computer system design and related services.

Also of note, but not fully appreciated by many, is the oil and gas sector’s support for GDP in the repair construction sector ($1 billion); the truck transportation sector ($933 million); and support activities for transportation ($596 million).

The Canadian oil and gas sector also indirectly supports many jobs in other value chain sectors. In 2017 this included 33,467 jobs in the architectural engineering and related services sector; 23,008 jobs in the machinery, equipment, and supplies merchant wholesalers’ sector; and 13,624 jobs in the computer system design and related services sector.

The oil and gas industry also supports jobs in such sectors as truck transportation (9,888 jobs), food services and drinking places (8,676 jobs), and travellers accommodation (4,630 jobs).

Just think of a family in Ontario where the mother work as a computer programmer, writing, modifying and testing software to support operational functions such as controlling wellhead equipment operations. Or a family in B.C. where the father drives a truck over the Rockies to deliver products to an oil and gas firm located in Saskatchewan.

Clearly, the activities of the Canadian oil and gas sector are directly responsible for large swaths of GDP, employment, and the purchase of goods and services, and indirectly responsible for significant portions of GDP, employment, and the purchase of goods and services in key value chain sectors across Canada, even during an energy price downturn in 2017.

These jobs, GDP and purchase of goods and services would be placed at significant risk, not only in Alberta but across the country by a shutdown of Canada’s oil and gas industry, as advocated by some supporting the “Just Transition.”

So, Canadians, don’t believe some supporters of the “Just Transition” that tell you oil and gas is a sunset sector whose sizeable impact on jobs, GDP and purchase of goods and services can be easily replaced. The oil and gas industry has a vital role to play in a measured and realistic transformation towards a lower carbon economy.

Lennie Kaplan and Ven Venkatachalam are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of “The Oil and Gas Sector’s Contribution to Canada’s Economy.”

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British Columbia has been producing oil and natural gas since 1952. In fact, as of 2018, B.C. produced 32 percent of Canada’s natural gas and two percent of Canada’s conventional oil. British Columbia collects royalties from oil and gas development, supporting economic prosperity in the province.

Want to how important the oil and natural gas industry is to the B.C. economy? Using customized Statistics Canada data from 2017 (the latest year available for this comparison), it turns out oil and gas in B.C. produced  about $18 billion in goods and services  and contributed $9.5 billion to BC’s GDP.

As for what most of us can relate to—jobs—the B.C. oil and gas industry was responsible for nearly 26,500 direct jobs and over 36,100 indirect jobs (62,602 jobs in total) in 2017. Also relevant: the oil and gas sector paid out over $3.1 billion in wages and salaries to B.C. workers that year.

Here’s another slice of statistical bread to consider: in 2017, the B.C. oil and gas industry purchased $5.6 billion of goods and services from other sectors. That included $600 million from the finance and insurance sector, $770 million from professional service providers such as accountants, architects, I.T. professionals and lawyers, and $2.8 billion from the manufacturing industry.

Spending by the oil and gas sector in B.C. is not the only way to consider the impact of the industry. Given that a large “chunk” of the oil and gas sector is next door in Alberta, let’s look at what Alberta’s trade relationship with its westerly neighbour does for B.C.

B.C.’s interprovincial trade in total with all provinces in 2017 amounted to $39.4 billion. Alberta was responsible for largest amount at $15.4 billion, or about 38 percent.

That share of B.C.’s trade exports is remarkable given that Alberta’s share of Canada’s population was just 11.5 percent in 2017. Alberta consumers, businesses and governments buy far more from British Columbia in goods and services than the province’s population as a share of Canada would suggest would be the case. Alberta’s capital-intensive, high-wage-paying oil and gas sector is a major reason why.

If Alberta were a country, the province’s $15.4 billion in trade with B.C. would come in behind only the U.S. (about $22.3 billion in purchases of goods and services from B.C.) in 2017. In fact, Alberta’s importance to B.C. exports ranked far ahead of China ($6.9 billion), Japan ($4.5 billion) and South Korea ($2.9 billion)—the next biggest destinations for B.C.’s trade exports.

B.C. has a natural advantage for global market access in some respects when compared to the U.S. For instance, B.C.’s coast is closer  to many Asian-Pacific markets than are U.S. Gulf Coast facilities. The distance between the U.S. Gulf Coast to the Japanese ports of Himeji and Sodegaura is more than 9,000 nautical miles, compared to less than 4,200 nautical miles between those two Japanese ports and the coast of B.C.

The recent increase in demand for natural gas in Asia, especially in Japan (the largest importer of LNG), presents an exciting opportunity for the B.C. oil and gas industry.The IEA predicts that by 2024 , natural gas demand forecast in Asia will be up seven percent from 2019’s pre-COVID-19  levels.

Be it in employment, salaries and wages paid, GDP, or the purchase of goods and services, the impact of oil and natural gas (and Alberta) on B.C.’s economy and trade flows is significant.

Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes.

The headline screamed: “The end of oil age” in the Economist in 2003. Fast forward 18 years and that still doesn’t make sense in many ways. The demand for oil is increasing across the globe. Even U.S. President Joe Biden is now asking OPEC to produce more oil.

You don’t have to go far to fill your gas tank to see the rise in fuel prices in recent months. Who says oil is dead? Just look at the growing global disconnect between supply and demand, where the need for natural gas threatens all sorts of shortages.

Many environmental groups have been calling for divestment from oil and gas. Yet, they ignore the realities on the ground. Divestment from oil and gas harms not only the many energy companies that are creating jobs in the economy but also investors, such as the middle-class and seniors, and other value chain sectors that depend on oil and gas.

Let’s look at Ontario, as a prime example.

Many Canadians may not be aware that the first commercial oil production in North America started in Ontario in 1858. Since then, the oil and gas sector has played a significant role in the provincial economy. Though Ontario is not a major producer of oil and gas, there are still some 3,000 oil and gas wells active in the province.

There are many ways that the oil and gas sector benefits the Ontario economy, in addition to reliable energy supply. Thousand of kilometres of pipelines in Ontario move oil and gas to the U.S., creating many jobs in Ontario. The refining industry also creates employment and contributes to the provincial economy. And many value chain sectors in Ontario supply goods and services to oil and gas companies.

Looking at the most recent (2017) comprehensive data available from Statistics Canada, it turns out that the oil and natural gas industry was responsible for adding $7.7 billion in nominal GDP to Ontario’s economy, and over 71,000 jobs. Many of these jobs are indirect, but just as critical to the oil and gas sector.

Think of oil and natural gas employment in Ontario as engineers and manufacturers hired to design and build oil and gas operating equipment and facilities, a building in Edmonton or in downtown Toronto, or an investment firm tasked with raising capital for a natural gas company operating in northern Alberta or B.C. Also think of an Alberta oil sands company whose local spending on office furniture results in jobs created in the Ontario firm that produces that furniture.

In 2017, the oil and gas industry purchased $7.3 billion worth of goods and services in Ontario, including $4.3 billion from Ontario’s manufacturing sector alone. Other “big ticket” purchases include $700 million from the Ontario finance and insurance sector, $600 million from the professional, scientific and technical services sector, and $300 million from transportation and warehousing. Overall, $2.1 billion in salaries and wages were generated as the result of oil and gas industry spending in Ontario.

Beyond the impact of the oil and gas sector, let’s widen the look at Alberta’s impact on Ontario’s economy. In 2017, Alberta’s population was 11.6 percent of the national total, while Alberta’s share of purchases from Ontario’s manufacturing sector was 21 percent of Ontario’s total interprovincial trade in manufacturing. That is nearly twice Alberta’s share of Canada’s population. In fact, Alberta’s consumers, businesses, and governments were responsible for neatly 24 percent, or $32.5 billion, of Ontario’s total interprovincial trade in 2017. This was second only to Ontario’s next-door neighbour, Quebec.

Now consider Alberta’s share of Ontario’s interprovincial and export trade and how it compares to selected countries. Alberta’s $32.5 billion in purchases from Ontario in 2017 was behind only the United States ($197 billion), but ahead of the United Kingdom ($14.7 billion), China ($3.4 billion), Mexico ($3.2 billion), and Germany ($1.9 billion), among others. Add up the goods and services purchased by Alberta consumers, businesses, and governments from Ontario firms between 2012 and 2017, and the total value was about $193 billion.

Economies may be locally based, but local businesses and jobs are impacted by investment and trade flows from other places. Whenever someone says that oil and gas doesn’t matter to Ontario, tell them to look at the “on the ground” realities. From Bay Street to Yonge Street to Main Street, people living across Ontario benefit from a thriving oil and gas sector.

Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded by carbon taxes. They are authors of $193 billion and 71,000 jobs: The Impact of Oil and Gas (and Alberta) on Ontario’s Economy.    

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Next year will mark 30 years of offshore oil and natural gas production in Atlantic Canada. In that time, the region has been the primary source of human capital for the oil and gas industry in other parts of Canada, while also being a significant recipient of the benefits from oil and gas activity.

The evolving energy crisis in Europe, fueled by the high cost of renewable energy and increasing demand for natural gas in economies in Europe and Asia, has magnified the role that natural gas will play in reducing global emissions.

When previous governments implemented bans on hydraulic fracturing on onshore natural gas in New Brunswick and Nova Scotia, those political decisions prevented the development of a sizeable provincial industry that could have provided more jobs for workers and revenues to governments. Now, the current run-up in natural gas prices shows how much Atlantic provinces could reap in business investment, royalties and taxes, if they chose to increase natural gas exploration activities within their borders.

That brings us to the impact of the oil and gas industry spending that is already occurring in Atlantic Canada. As of 2017 (the latest year for which detailed Statistics Canada data about the region is available), oil and gas spending in Atlantic Canada had a direct impact of over $8.4 billion and another nearly $2.9 billion in indirect impact, for an $11.4 billion in total output.

That money contributed to the creation of over 7,500 direct jobs and another 12,500 indirect jobs in the Maritimes and Newfoundland & Labrador—over 20,000 well-paying jobs and nearly $7 billion in GDP. Wages and salaries paid to workers in the region amounted to around $1.36 billion in just 2017—and that was when oil and gas spending was in a “slump” year.

Oil and gas spending in Atlantic Canada touches on a variety of local industries. In 2017, the oil and gas sector purchased $447 million worth of services from Atlantic Canada’s finance and insurance sectors. It also paid $618 million into what Statistics Canada labels the “professional, scientific and technical” sector—think of engineers working on Newfoundland’s offshore rigs or Halifax accountants providing numbers expertise to energy companies.

Manufacturing in Atlantic Canada was a major beneficiary in the region. That sector alone received over $2 billion in orders as a result of oil and gas spending. And, at over $3.7 billion in direct spending, alone, oil and gas in Atlantic Canada is very significant.

Canada’s oil and gas sector also has a significant direct and indirect impact on Atlantic Canada’s interprovincial export sectors, as does the purchase of goods and services in Atlantic Canada by citizens, businesses, and governments in such provinces as Alberta. For example, in 2017, Atlantic Canada’s interprovincial trade with Alberta was $1.8 billion, behind the region’s trade with the United States (nearly $21.6 billion), Ontario ($7.6 billion), and Quebec ($6.7 billion), but ahead of trade with international markets such as China ($1.6 billion), the United Kingdom ($800 million), and the Netherlands and Japan ($600 million each).

The Atlantic provinces should take steps to take greater advantage of the benefits of higher oil and gas prices. At over $11 billion in direct spending in 2017 alone, oil and gas investment in Atlantic Canada is impactful. But it could be even more economically meaningful if additional reserves especially onshore natural gas in New Brunswick and Nova Scotia were tapped.

Ven Venkatachalam and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of 20,000 jobs and $11 billion: The impact of oil and gas (and Alberta) on Atlantic Canada’s economy.

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With the recent rise in the price of natural gas in Europe to five times where it was in early 2021, expect to see many more Europeans and those in United Kingdom plunged into what’s known as “energy poverty.” From Greece to Great Britain and everywhere in between, the European electricity grid has increasingly been delinked from reliable affordable fossil fuels and hooked up to more expensive and intermittent wind and solar projects.

One result is that Europeans pay twice for generated electricity: once for the existing sunk costs of existing fossil fuel (and nuclear in some countries) projects and again for renewable-based electricity projects. Another result is that when wind and solar are not available, multiple nations in Europe and elsewhere are chasing the same available oil, natural gas and coal, pushing those fuel prices dramatically higher.

Canadians and indeed everyone else around the world should pay attention. That’s because what Europeans are enduring and will suffer through again this winter will intensify thanks to what governments worldwide are pushing at the 26th UN Climate Change Conference of the Parties (COP 26) at Glasgow, Scotland: An even faster assumed “phaseout” of fossil fuels.

But it is just that past policy preference which has caused substantial energy poverty in Europe even before the price spike this autumn. (For those unfamiliar with the term, energy poverty is all about citizens too poor to pay their utility bills on time and/or keep their homes adequately warm.)

Stephen Bouzarovski, a University of Manchester professor and chair of an energy poverty working group, estimated that pre-pandemic, 80 million Europeans were already struggling to adequately heat their homes. Meanwhile, at least 12 million European households were in arrears on their utility bills.

The European Union has attempted to provide an objective measurement of the problem but their best data is six years old. The EU Energy Poverty Observatory’s most recent estimate from 2015 showed that 16% of EU consumers faced a “high” share of energy costs. “High” was defined as the proportion of European households whose energy expenditures relative to income was more than twice the national median share (of energy expenditures relative to income).

To get a better sense of the challenge faced by European households and energy poverty, we used 2008 as a start year and then compared the rise in household median incomes (with the full set of data ending in 2019) with the rise in electricity prices (ending in 2020) in 30 European countries.

We found that for lower-income European countries that have seen strong growth in incomes since 2008 (mainly ex-communist states such as Estonia, Bulgaria and Poland as examples), most such states could handle the rise in power prices because median incomes rose faster.

This was not the case in mature countries where median incomes were already relatively high in 2008 but barely grew in the ensuing years, this while power prices zoomed up. For example, electricity prices jumped by 61% in France between 2008 and 2020 with median household income rising by just 19% (using 2019 as our end date given the limited data). The United Kingdom and Ireland saw a 51% and 48% rise in electricity prices in that period while incomes rose by just 14% and 11% respectively.

Worst off was Spain, where median household income was below more prosperous European states in 2008 (at €13,963 that year) and has barely grown since (to just €15,015 in 2019). Median household income thus rose by just 8% in the years available for comparison but electricity prices soared by 68%.

The response of some European governments to this has been to subsidize utility bills. But as with Ontario which does the same to mask the expense of past government policy which drove the province’s electricity prices dramatically higher, all that does is shift the burden of high power costs from the “consumer pocket” to the “taxpayer pocket.” Of course, it’s the same household that bears the cost, or their children and grandchildren if present-day utility bills are subsidized through government borrowing.

The source of high-cost electricity can be found in European Union and United Kingdom policy. Governments there have attempted to “transition” from fossil fuels despite their superior energy density (their “power punch” as Vaclav Smil, retired environment professor at the University of Manitoba characterizes it) vis-à-vis renewables.

The result can be seen in the declining share of fossil fuels in EU electricity production from about 50% in 2000 to 38% as of 2019, with nuclear-generated electricity also discouraged and declining from 32% in 2000 to just over 26% in 2019).

Meanwhile, renewables as a share of EU electricity production more than doubled, from just over 16% in 2000 to over 34% in 2019. That would be fine, except solar and wind are not inexpensive. They are also not as reliable as fossil fuels, something Brits just noticed again when wind power dropped and coal was again used to prop up that country’s electricity grid.

It’s been said that the definition of insanity is “doing the same thing over and over again and expecting different results.” It appears that policymakers are gathering in Glasgow to speed up killing fossil fuels, precisely what already led to massive energy poverty in Europe.

Mark Milke and Ven Venkatachalam are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are authors of Energy Poverty in European Households: An Advance Lesson for Canadians.

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In the recent equalization referendum in Alberta, nearly 62 percent of voters endorsed removing equalization from the constitution. One constitutional scholar, Ted Morton, also a former Alberta finance minister, has argued that the province has the ability to force the issue, this via previous constitutional references. Others have argued that equalization has a weak constitutional status, which make reforms easier than often presumed.

Part of what drives unhappiness with equalization for some Albertans is the notion that a significant portion of federal tax revenues originate (in net terms) in traditional “have” provinces such as Alberta.

Alberta’s resource extraction is significant, and its revenues (as well as other economic activity and taxes) thus end up on a net basis in provinces such as Quebec via federal transfers. In Quebec though, resource extraction—at least oil and gas, is discouraged and will soon be banned. The fact that some Quebec politicians have called Alberta oil “dirty” also factors into the dissatisfaction.

One of us has previously written a number of reports on equalization and transfer payments over the years, including suggested reforms, but here we will instead look at one overlooked “sliver” of contributions to federal finances: what the oil and natural gas extraction sector in Alberta has paid into federal coffers.

Using Statistics Canada data on revenues from Alberta and federal spending on the same, we found that between 2007 and 2019, Alberta’s total gross fiscal contributions to federal government finance totalled almost $561 billion. Subtract federal transfers to the Alberta government and to Albertans, as well as federal spending in Alberta, and the net transfer to the federal government from Alberta has been $272 billion.

The contribution of Alberta’s oil and gas sector to that $272 billion net figure was $53 billion over the same period, or about 19 percent of the net fiscal contribution “east” to the federal government.

We should note that this $53 billion figure does not include all oil and gas activity in Canada, only the oil and gas extraction sector in Alberta. It also includes only federal corporate tax revenues from Alberta’s oil and gas firms ($35.5 billion) and the federal personal income taxes of Albertans directly employed in the sector ($17.4 billion).

The figure thus excludes direct and indirect revenues from pipelines and other oil and gas economic activity. It also does not include federal taxes on production and taxes on products, such as GST, excise taxes, duties, import taxes, air transportation tax, gasoline and motive fuel taxes, and the like that the oil and gas extraction sector in Alberta paid over the period.

(We chose this narrower comparison in this new study because of the lack of available data from Statistics Canada on other federal taxes on oil and gas production.)

To reach the nearly $53 billion total, the contribution of the Alberta oil and gas extraction sector to federal finances has ranged from an annual high of $3.7 billion to a low $2.5 billion.

The figures also adds context for why many Albertans are often concerned about attacks on the oil and gas industry in Canada: because looking at just oil and gas extraction, 88 percent of all personal income tax paid to Ottawa between 2007 and 2019 came from Alberta; and 89 percent of all corporate income tax paid from oil and gas extraction came from Alberta.

Expressed another way, if Alberta’s oil and gas extraction sector is “phased out,” not only does a major contributing sector to federal government finances diminish significantly, so too does nearly 90 percent of resulting federal and corporate income tax revenues from all oil and gas extraction in Canada.

The $53 billion figure should be placed in the much larger context of our previous research paper where we detailed gross revenue contributions to all governments cross-country from the oil and gas sector, looking at data between 2000 and 2019.

In that study, we found that Canada’s wider oil and gas sector in all provinces paid almost $505 billion between 2000 and 2019 to federal, provincial and municipal governments. That was almost as much as what two other major industries, real estate and construction, paid into government coffers over the same period.

Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are authors of $53 billion to Ottawa: The Alberta oil and gas sector’s contribution to federal government finances, 2007 to 2019.

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

In 2009, the central European country of Ukraine endured a twin lesson in geopolitics and energy security: Russia cut off its natural gas supply in mid-winter.

Russia’s public reason was that it was engaged in a pricing dispute with Ukraine. In reality, it was an attempt by the Kremlin to influence Ukraine’s government and to send a message to its public: you need us to keep your homes warm and businesses, schools and hospitals running. After that, Ukraine made efforts to import natural gas through third-party suppliers rather than directly from Russia.

Fast forward 12 years and Europe is racing to make itself even more dependent on natural gas from Russia, a country which can best be described as an autocracy. Europe is doing so while it continually discourages its own natural gas exploration and extraction.

For example, between 2005 and 2019 (the most recent year for which we have this data), Russia has been one of the largest sources of imported natural gas for the European Union, exporting over €165 billion worth to the EU in that period.

The EU’s dependence on Russia’s natural gas increased when the first of two Nord Stream pipelines, partially owned by Russia’s majority state-owned natural gas company Gazprom, became fully operational in 2012. Nord Stream delivers 55 billion cubic metres (bcm) of gas annually from Russia directly to Germany via a pipeline that runs under the Baltic Sea.

These deliveries are expected to grow further, by up to another 55 bcm annually, when the second pipeline, Nord Stream 2, becomes operational in 2022. Nord Stream 2 will also run under the Baltic Sea. As Gazprom itself notes, Nord Stream 2 is seen as “particularly important now when Europe sees a decline in domestic gas production and an increasing demand for imported gas.”

That increasing dependence is why some German lawmakers, including the head of the parliamentary committee on foreign affairs, opposed Nord Stream 2 and wanted it cancelled. That hasn’t happened, and Europe looks set to become more dependent on Russian natural gas and that from other Not Free countries. (The term “Not Free” is from the Washington DC-based think tank, Freedom House, which has measured and ranked countries and territories by their degree of freedom since 1973. Their broad rankings are: Free, Partly Free, and Not Free.)

Here are the hard numbers: Between 2005 and 2019, the European Union imported over €838 billion in natural gas from foreign sources, an average of nearly €56 billion per year. (In Canadian dollars, that’s about $1.2 trillion and $83 billion, respectively.)

Of that, about €286 billion or 34 percent came from Not Free countries, and €519 billion or 62 percent from Free countries. The remainder came from Partly Free countries and/or was not categorized according to a freedom measurement.

Of the over €286 billion worth of natural gas imported by the EU from Not Free countries between 2005 and 2019, almost 58 percent came from Russia, just over 31 percent came from Algeria with just over six percent from Libya. In other words, about 95 percent of the EU’s natural gas imports came from countries considered to be autocratic or Not Free to use Freedom House’ description.

Now focus on just 2019. That year, the EU imported €40.1 billion in natural gas from outside sources with over 41 percent from Not Free countries, just under 53 percent from Free countries, and the rest from Partly Free countries or not measured.

Thus, that 41 percent from Not Free countries was seven percent higher than the 34 percent average in the preceding 15 years—and before Nord Stream 2 starts exporting even more natural gas from Russia.   

Which European countries are most dependent on imported Not Free natural gas?

Of the over €286 billion worth of natural gas imported by the EU from Not Free countries between 2005 and 2019, just over €237 billion, or nearly 83 percent, was imported by Italy, Spain, Hungary, Slovakia, and the Czech Republic.  These EU natural gas import numbers from Eurostat do not include Germany and France due to confidentiality reasons and thus EU imports from Not Free countries are in fact conservative estimates of such natural gas flows.

Could Canada help lessen some of this dependence? Potentially. According to Natural Resources Canada, at the end of 2018 Canada had 73 trillion cubic feet (tcf) of proven natural gas reserves. To extract that and move it offshore (be it to Europe or to Asia), a more predictable regulatory regime for investors on natural gas infrastructure, including pipelines and liquefied natural gas (LNG) terminals, could help secure new markets for Canada’s natural gas.

Such natural gas, mostly uncompetitive before given the distance between Quebec, the east coast provinces (gas deposits exist in such provinces) and Europe, may be more competitive now given the rise and likely permanent higher prices Europeans look set to endure. A side bonus for Europe would be diversified gas import markets and reduced dependence on Russia.

Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are authors of EU Natural Gas Imports: €286 billion Imported from Tyrannies and Autocracies Since 2005.