IHS: Canada’s oil sands an economic boon for jobs

Oil sands production is responsible for significantly boosting Canada’s jobs, economic growth, and government revenue, according to IHS CERA Oil Sands Dialogue study, “Oil Sands Economic Benefits: Today and in the Future.”

And the economic contributions of oil sands will only expand in coming years as production is expected to double to 3.8 million b/d by 2025 from the current level of 1.9 million b/d, IHS said.

As a result, the contribution of oil sands to Canadian gross domestic product is expected to nearly double to $171 billion (Can.) in 2025.

Oil sands production has served as a major supplier of jobs as well. Production in 2012 supported more than 478,000 direct, indirect, and induced Canadian jobs—3% of all jobs in the country—and contributed $91 billion (Can.) of Canadian GDP.

Jobs from oil sands are expected to increase 58% from current levels, representing a total of 753,000 jobs, or 5% of total Canadian employment in 2012.

Government revenues in 2012 by way of tax receipts and royalties totaled $28 billion (Can.). The federal share was more than half of the revenue and represented 6% of total federal income, equal to half of federal spending on healthcare transfers in 2012, the study said.

IHS noted that revenues would have been even higher had western Canadian crude oils not been subject to price discounts due to export bottlenecks.

Government revenues increased more than 100% because of oil sands investment in Canada, moving from $28 billion (Can.) in 2012 to $61 billion (Can.) in 2025. The federal share of revenue ($28 billion) would be roughly equivalent to what the federal government spent on healthcare transfers to provinces in 2012.

The economic contributions from oil sands are driven by the industry’s capital-intensive nature, which requires ongoing investment to sustain production.

Four fifths of every dollar made by oil sands operations did not leave the industry, but rather was reinvested into maintaining and moving oil sands production to market in 2012, said Kevin Birn, IHS associate director.

“The economic benefit of oil sands is considerably greater than the amount of money oil sands companies invest, or the number of people who work directly in the industry,” Birn said. “Each dollar invested in oil sands spurs additional spending across other sectors of the economy. Oil sands development depends on a multitude of other industries, such as construction, engineering, geology, finance, manufacturing, environmental analysis, and hospitality.”

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