Lower oil and gas production brought Canada's GDP down in November

Canada’s economic output shrank 0.1 per cent in November, according to Statistics Canada, the second month in a row with no growth. Lower output in the energy sector was the main reason for the decline in GDP, with decreases recorded in wholesale trade, the financial sector and construction. Manufacturing, retail, and real estate all showed gains, but the gains were not enough to offset the 2.5 per cent decline in oil and gas extraction and the 3.8 per cent drop in support activities.

The rise in manufacturing was the third consecutive monthly rise, mainly in the manufacture of durable goods, up 0.9 per cent. Foreign demand for machinery and motor vehicles helped drive that increase, but gains were also seen in the manufacture of metal products, furniture and related products.

The falling output in the oil and gas sector reflects a declining North American demand for petroleum, the result of increasing fuel efficiency, the development of alternative fuels, and changing demographics.

At a parliamentary hearing in Ottawa today into the state of oil and gas pipelines and refineries in Canada, committee members were told that there is more than sufficient supply in North America and that spending billions on increasing Canada’s refining capacity would not make sense at this time. At present, about one-third of Canada’s crude oil is refined at the nineteen refineries in this country, mostly in the west. Their production of two million barrels a day is just 80 per cent of their real capacity.

Canada imports half of the oil it needs, but exports two-thirds of the oil it produces.