Oil & Gas
U.S. Benefits from Maintaining Canada NatGas, Oil Trade, Research Says
August 10, 2017
Canadians will buy American if the United States border stays open for natural gas and oil flows, according to a defense of free trade crafted by the Canadian Energy Research Institute (CERI).
Over the next 10 years CERI predicted currently anticipated supply development and maintenance will generate US$45.6 billion in Canadian purchases of U.S. goods and services, including $16 billion in oilsands hardware and expertise.
The numbers in the new report, “Economic Impacts of Canadian Oil and Gas Supply in Canada and the U.S. (2017-2027),” are predictions, not promises. The outlook is derived from an array of Canadian- and U.S.-made statistical “input-output models” that CERI researchers admitted have limitations.
The last complete trade data set, for instance, is for 2013, which is before the decline in gas and oil prices to current lows. Mathematical relationships that drive the models are static and register effects of change on major economic fronts such as commodity prices, technology and productivity, CERI noted.
The U.S. Energy Information Administration (EIA) compiles less theoretical accounts on U.S. gas and oil trade with Canada that do not attempt to predict spin-off benefits.
“For 2016, the value of U.S. energy imports from Canada was US$53 billion, while the value of U.S. energy exports to Canada was US$14 billion,” EIA said.
Last year Americans paid about US$6 billion to import an average 8 Bcf/d of Canadian gas and US$36 billion for 3.3 million b/d of Canadian oil. In 2016 U.S. exports to Canada were 301,000 b/d of oil and 2.1 Bcf/d of gas.
However, the trade record, and not only input-output computer simulations, indicates the energy relationship between the United States and Canada is far from one-sided, CERI said. Investments and operations of Canadian oil and gas projects make important contributions to the United States economy, it said.
“In fact, prior to the 2014 oil price collapse, the Canadian oil and gas production sector imported C$6.5 billion ($5.2 billion) worth of products and services from the U.S. in 2013. Supply of those products and services spur economic activity and create or preserve jobs.”
CERI’s statistical modeling also is forecasting astronomical benefits for Canada from the next 10 years of energy free trade with the United States: C$380 billion ($304 billion) in investment, C$1.8 trillion ($1.4 trillion) in operating revenue, C$2.7 trillion ($2.2 trillion) in gross domestic product, and 6.6 million person-years of work.