Canada’s Energy Exports: The Fine Print

The relative importance of oil in Canada’s exports bears on the debate about oil prices and the exchange rate. A challenge is that the most widely-cited figures often lump oil and natural gas together. I compiled the following table from the merchandise-trade figures that Statistics Canada updated through September today:

Canada’s Energy Trade, 2007 year-to-date ($ millions)

Â	Exports	%	Imports	Balance	%
Crude Oil	30,033	  8.5 %	 17,812	12,221	  29.3 %
Refined Oil	12,348	  3.5 %	   6,028	  6,320	  15.1 %
Natural Gas	22,079	  6.2 %	–	22,079	  52.9 %
Electricity	  2,449	  0.7 %	–	  2,449	   5.9 %
Coal, etc.	  2,037	  0.6 %	   3,446	(1,409)	  (3.4 %)
Total Energy	68,946	 19.4 %	  27,286	41,660	  99.9 %
Merchandise	354,600	100.0%	312,880	41,720	100.0 %

Oil, in both crude and refined forms, accounts for 12 % of Canada’s merchandise exports. Viewed this way, rising oil prices hardly seem to justify the loonie’s recent surge. However, oil equals 44 % of our merchandise trade surplus.

Nevertheless, this percentage is well short of the 53 % of the surplus arising from natural gas, whose price has not been increasing. (Of course, all natural resources would equal far more than 100 % of the merchandise surplus because Canada runs trade deficits in other categories of goods.)

An important caveat is that virtually all of Canada’s oil exports go to the US and virtually all of our oil imports come from other countries. Therefore, oil is far more important than natural gas – $42 billion versus $22 billion – in Canada’s trade surplus with the US. Indeed, the Canadian dollar has mainly been rising in relation to the American dollar.