The impact of oil and gas on Ontario’s economy

From pipelines and refining to manufacturing and exports, the oil and gas industry plays a significant role in Ontario's economy and job market
By Ven Venkatachalam

The first com­mer­cial oil pro­duc­tion in North Amer­i­ca start­ed in Ontario in 1858. And 165 years lat­er, the oil and gas sec­tor con­tin­ues to play a sig­nif­i­cant role in the provin­cial econ­o­my. There are some 3,000 oil and gas wells active in the province.

Pro­vid­ing a reli­able sup­ply of ener­gy is just one of the ways in which the oil and gas sec­tor ben­e­fits the Ontario econ­o­my. Thou­sands of kilo­me­tres of pipelines in Ontario move oil and gas to the U.S., cre­at­ing many jobs in that province. 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.

A Major Con­trib­u­tor Across Sectors

Look­ing at the most recent (2017) com­pre­hen­sive data avail­able from Sta­tis­tics Cana­da, the oil and nat­ur­al gas indus­try was respon­si­ble for adding $7.7 bil­lion in nom­i­nal GDP to Ontario’s econ­o­my, and over 71,000 direct and indi­rect jobs.

Think of oil and nat­ur­al gas employ­ment in Ontario as the 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. Or think of an oil sands com­pa­ny in Fort McMur­ray whose local spend­ing on plant con­struc­tion mate­ri­als or office fur­ni­ture results in jobs cre­at­ed in Ontario for the com­pa­nies sup­ply­ing these goods and services.

Bil­lions Spent in Ontario

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 for Ontar­i­ans were gen­er­at­ed as the result of oil and gas indus­try spend­ing in Ontario.

Economies may be local­ly based, but local busi­ness­es and jobs are impact­ed by invest­ment and trade flows from oth­er places. From Bay Street to Yonge Street to Main Street, peo­ple liv­ing across Ontario ben­e­fit from a strong Cana­di­an oil and gas sector.