KEI Network - Issue #215 - Who Is Subsidizing Canada's Economy?

Who is Subsidizing Canada's Economy?

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Editor - Perry Kinkaide

Last week’s KEI webinar sparked a revealing moment. A viewer criticized Alberta—and Premier Danielle Smith—for acting selfishly in pushing for oil and gas industry concessions. As an Albertan, I initially bristled. After all, Alberta is a net contributor to Canada, with transfer payments that support every other province. I turned to Bill Jones to confirm my understanding. Then the epiphany: Donald Trump has complained that the U.S. subsidizes Canada by $200 billion. Yet every single day, the U.S. purchases 3.7 million barrels of Alberta oil—amounting to over $100 billion USD annually. Far from being subsidized, Canada is being bankrolled by Alberta—and in turn, by the U.S. That’s the perspective inspiring this week’s newsletter and Justa Chat webinar. - Editor

Alberta, America, and the Subsidy Behind Canada

Co-Authors: Perry Kinkaide and Bill Jones

When Canadians grumble about p energy ambitions—labeling the province as greedy for wanting to pump more oil—few stop to ask: how much money from each barrel ends up flowing to them?

The irony is staggering. The very provinces rallying for green purity are cashing cheques underwritten not just by Alberta—but indirectly by the United States, which purchases over 95% of Alberta’s oil and gas—paid in U.S. dollars. That revenue doesn't stop at the Rockies. It flows straight to Ottawa—funding equalization programs, national infrastructure, and federal services that benefit the rest of the country.

Let’s call it what it is: the United States is subsidizing the Canadian economy—through Alberta! I repeat - THE UNITED STATES IS SUBSIDIZING THE CANADIAN ECONOMY - THROUGH ALBERTA!

This isn’t just political rhetoric. It’s economic fact. Prior to Leduc’s oil discovery in 1947, Alberta received about $3–5 billion (in today’s dollars) in federal support. Since then, it has paid back over $500 billion to the federal government. That’s not a return—it’s a windfall. A $5 billion investment that returned 100 times more is the kind of deal that would put Bay Street in a frenzy.

The real per-barrel benefit is eye-opening, as illustrated in the chart below:

Each barrel of Alberta oil provides:

$7.00 in federal corporate taxes
$3.00 in personal income tax from oil workers
$1.50 through indirect taxes like GST
And an estimated $2.50 in fiscal capacity that enables equalization transfers

That’s a total of $14.00 per barrel in federal fiscal benefit—just from Alberta's oil. Multiply that by over 3.7 million barrels of oil (plus 3.3 bpd of gas) exported daily, and you begin to grasp how Alberta underwrites the country. Yet many Canadians don’t understand—or don’t care to understand—where this prosperity comes from. There’s a growing disconnect:

Milk comes from the grocery store, not the farm.
Gasoline from the pump, not an oil well.
Electricity from a light switch, not a power plant.
Phones and clothing are somehow divorced from oil and mining.

Urban slogans like “Ban Fossil Fuels” and “Green New Deal” rarely engage with the infrastructure and fiscal reality that keeps the country running. Take Prince Edward Island, for example. From 1957 to 2023:

It received $19.8 billion in federal support.
It contributed $2.0 billion in taxes.
Net gain: $17.8 billion—the glue for the federation.

By contrast, Alberta’s return on investment to Canada is extraordinary—11.6% annualized—while each and every Canadian receives an average of about $485 per year from revenues generated by Alberta’s oil industry. Alberta is providing the glue that holds the nation together. - Continued below

No need to register. Just Zoom in

https://us02web.zoom.us/j/84258596166?pw..

Continued from above - Still, when Alberta questions equalization or federal energy policy, critics cry foul. Premier Danielle Smith is not wrong to challenge a system in which the province footing the bill is the one most frequently criticized.

Yes, the oilpatch has its flaws. Climate change is real. And yes, much of Big Oil’s profits flow to shareholders abroad. But ending Alberta’s oil industry tomorrow won’t stop climate change—it will only dismantle the fiscal framework sustaining the country.

The future must balance ambition with reality. Cleaner energy is essential—but not at the expense of biting the hand that feeds us. And here’s the afterthought: Donald Trump has long claimed that the United States subsidizes Canada. Canadians scoffed. But look at the flow of U.S. dollars into Alberta’s oilpatch—dollars that then bankroll Canada’s budget—and you realize Trump might, for once, have a point.

It’s time to stop denying where Canada's wealth comes from—Alberta isn’t the problem. It’s core to Canada's unity and to negotiating with respect and humility - Fortress North America.

Editor@KEInetwork.net