The future of oil in Canada's economy: Your questions answered

On May 13th 2020, Stand.earth's own Tzeporah Berman hosted a webinar with a panel of experts to discuss global trends around oil and gas, the politics of oil, and Canada's potential role in the emerging renewable economy. Over 438 people joined the webinar and hundreds more tuned in through Facebook Live. We ended up running over by 30 minutes, which was still not enough time to answer all your questions!

Here are answers to several of the big questions we didn't get to on the call.

Laurie asks: What does Saudi Arabia own in Alberta?

Saudi Arabia’s sovereign wealth fund recently bought significant stakes in Canadian Natural Resources Ltd. and Suncor Energy, two of the largest oil sands producers. The Saudi’s bought their shares at a deep discount due to the crash in energy stocks caused by the price war they started with the Russians.

Stand.earth just released a new report on foreign ownership in the oil sands. While we found that 70% of oil sands production is owned by investors and shareholders outside Canada's borders, the majority of those investors are Americans, followed by the Chinese.

Anne asks: What do you think of the Canadian government's bailout 'loan' to big business including the fossil fuel industry?

If the goal of stimulus funding is to get Canadians back to work, then the fossil fuel sector, which is highly capital intensive but not very labour intensive, is not a very good fit. Basically that means that the government needs to invest more money to create jobs in the fossil fuel sector than almost any other part of the economy. Secondly, investments in fossil fuels now only make it harder and more expensive for the Canadian government to reach its 2050 net zero climate emissions goal. Which is why we have called on the Canadian government to focus short term investments on supporting workers and long term spending on creating the sustainable economy of the future.

Heather asks: Why did Justin Trudeau buy the Trans Mountain pipeline?

The short answer is that the Prime Minister’s decision was about politics not economics. While the Trans Mountain pipeline might have made sense in 2013 when Kinder Morgan filled their application for the project and oil was selling for around $100 a barrel, by 2018 (when the Trudeau government paid $4.5 billion for the project), it had become clear that it was no longer financially viable. That was also why Kinder Morgan had failed to find either a bank to lend them the funds to build the pipeline, or a joint venture partner to split the costs with. Ironically, the political situation that helped convince Trudeau to buy the pipeline also no longer exists. The pipeline purchase was supposed to help Premier Rachel Notley win re-election and help Liberal MPs in Alberta hang on to their seats. But even that was not enough, and Notley and all of Trudeau’s Alberta MPs lost their elections.

Tom asks: Andrew Nikiforuk's Petrostate talked about how citizens have lost any influence over governments. What might citizens do to help restore any figment of democratic principles?

Andrew wrote his book at the height of Stephen Harper’s power which was a very dark time in Canada. Since then a lot has changed in our country – the most visible evidence of which was last fall when over a million Canadians joined student climate strikers in the streets to call on all of our elected leaders to do more to reduce our emissions. Clearly industry capture still exists, especially at the provincial level in oil producing provinces, but there is much more light at the end of the tunnel than there once was. There are ultimately only two kinds of power: money and people. Big Oil will always have more money than us, but fortunately here in Canada we have laws that limit the power of money in politics by for example banning corporate donations to political parties. However, Big Oil still uses their money to buy high powered lobbyists who have far more access to government than we do. We can counter that advantage by getting and staying involved in the political process, by taking the time to write decision makers, by donating to causes we believe in, and of course by getting out to vote. By coming together and pooling our people power we can take back our democracy.

Martin asks: Canadians are a big market for foreign-made goods, and many like to travel abroad. Oil and gas are our biggest export...if we don't export fossil fuels, will we export something else or accept a drop in our living standards?

While oil and gas makes up about 20% of Canada’s exports, oil and gas production makes up only about 6% of Canada’s GDP. On top of that, because of the high percentage of foreign ownership, much of the revenue from the oil and gas sector is exported from the country along with the oil. And even before the pandemic and collapse in oil prices, oil and gas employed just 5% of Alberta’s workforce. All that is to say that oil and gas is a much smaller part of the Canadian economy than many people think. To put that 6% number in context, the service sector is a different industry that represents about 70% of Canada’s GDP and 80% of the jobs in the economy. Canada, like most western industrial nations, successfully moved past being a resource based economy long ago. That is not to suggest that the transition away from oil and gas will be completely pain free, especially for those still working in the sector – but the sooner we start planning the shift, the more we can do to ease the transition.

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You can re-watch a recording of the webinar on Vimeo here.

Don't forget to register for Part 2 on Wednesday May 20th at 12pm, where we'll be joined by a new panel to discuss the mess that oil and gas is leaving behind.