Did you know that Canada is currently the sixth-largest crude oil producer globally? Canada is also the fifth-largest natural gas producer.1 Energy not only plays a fundamental role in our everyday lives, from what we eat and drink to how we move around, but it also plays a role in how we interact with the rest of the world.
As our energy needs continue to evolve, it's interesting to look at Canada's current energy markets and how they are changing to fit the needs of not only our country but also the world. Let's dive deeper into Canada's energy markets.
Energy Production in Canada
According to the Canadian Association of Petroleum Producers (CAPP), Canada's primary energy sources include oil and natural gas, hydroelectricity, coal, nuclear power, and renewable energy, such as wind, solar, and geothermal energy.2 The majority (38.7%) of our energy sources in 2019 were petroleum, with natural gas (35.7%) a close second.
One reason why oil continues to be one of our primary energy sources is because Canada has the third-largest oil reserve in the world.3 In 2019, we produced 4.7 million barrels of oil per day, and total production is expected to increase to 5.8 million barrels per day by 2030.4
In addition to oil production, we have enough natural gas to meet our country's energy needs for the next 300 years and still have enough left over to export to other countries.5 Liquified natural gas (LNG) is a growing energy need because it makes it possible to transport natural gas to places where natural gas pipelines do not reach. This means that Canada could potentially ship this LNG to markets in Asia.
Energy Markets in Canada
With all this oil production, it's clear that Canada produces more oil and natural gas than needed to meet our energy demands, so we export our excess supply to other countries. Currently, the US is Canada's number-one customer. Still, many economists suggest diversifying our energy market because the US has increased its own oil and natural gas production over the last few years. In addition, Canada and the US have a unique trading partnership whereby Canada sells 99% of its oil to the US at low prices.
World demand for natural gas is expected to increase by 22% by 2040, with a lot of this growth driven by expanding Asian economies.6 Specifically, countries in Southeast Asia have an increased demand for liquified natural gas, which Canada could be uniquely positioned to provide.
The hope is that Canada can position itself as a world leader in oil and natural gas exports and have better access to these international markets. Revenue generated from these energy markets contributes to our infrastructure, social services, and other programs that require government spending.
Canada has a rich economy, and oil and other energy sources are important factors when considering where our energy market is today and where it might be in the future. As the race for more sustainable energy sources soldiers on, it will be interesting to see how Canada positions itself as a powerful force in the global energy economy.
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