I hope you’re willing to say goodbye to all those social programs that are subsidized by oil industry revenues!

You might be surprised to learn just how little Canada’s booming oil and gas sector contributes to the social and economic welfare of our country, and the degree to which the industry offloads the true, total costs of its activities onto the consumers and taxpaying citizens of Canada.

The majority of Canadians strongly overestimate the contributions that the oil and gas sector contribute to our national economy.  Environmental Defence published a great little report on this, following an Environics survey they commissioned earlier this year, in which they found that only 9% of respondents correctly answered that the Canadian tar sands contributes only 2% to Canada’s GDP.  34% weren’t sure how much this sector contributes, but everyone else – 57% of Canadians polled – thought that the tar sands contributes as much as 48% of Canada’s GDP.

When asked what percent Canada's tar sands contribute to our GDP, this is how people responded.
When asked what percent Canada’s tar sands contribute to our GDP, this is how people responded.

The 2% figure comes from statistics recorded by the Canadian government (Statistics Canada, CANSIM table 379-0031), shared in a report by CREDBC.

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At the same time, the International Monetary Fund (IMF) has estimated the value of all fossil fuel subsidies, including petroleum and coal, in Canada in 2011 were equal to 1.5% of GDP and 4.0% of federal government revenues. (see p. 52 and 62 of this report)

In a blog post for DeSmog, Derek Wong gave a great breakdown of what that means in real dollar terms: out of total government revenues of $665 billion in 2011, the Canadian government spent 4%, or $26 billion, on subsidizing the costs we consumers pay for our oil and gas.  But 80% of government revenues come from income tax and consumption tax – in other words, from you and me.  So we are being taxed (on income and consumed goods) in part to provide a tax break to ourselves at the gas pumps.  Does that seem crazy to anyone else?!

The government collected $1.3 billion in oil and gas tax revenues in 2012, but in a report issued last year, the IMF pegged the comprehensive value of subsidies to that sector at a whopping $34 billion annually when accounting for externalities – or the total, lifetime costs of all activities involved in producing, distributing, and consuming oil and gas and the policies that exist in Canada to buffer industry from incurring these costs directly.  Naturally, the business community balked at the $34 billion subsidization figure as absurd, but even they admit that the industry currently receives direct, overt subsidies of $211 million.

Those who bemoan the loss of social benefits to the nation from potentially diminishing oil and gas sector activities would do well to consider the number of social programs that could be supported with that $211 million direct government subsidy.  And if we accept the Pembina Institute’s assertion that the $1.3 billion in annual tax revenue the federal government collects on oil and gas industrial activities could be more than double were in not for the past decade’s continually diminishing corporate tax rates, there are countless other civil society programs – including much of the capacity of Environment Canada, and locally, the Department of Fisheries and Ocean’s Experimental Lakes Area – whose demise has come at industry’s gain.

 

 

 

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