Thank you for inviting me.
For anyone who is unaware, the Conference Board is a non-profit, non-partisan think tank based here in Ottawa. We do research in a variety of areas including public policy, economic forecasting and analysis, and organizational performance. My understanding is that we're talking about the oil and gas sector in Canada and investment associated with that. I thought we'd start with some numbers.
First of all, in terms of oil and gas in Canada, today, it accounts for 6% of the economy directly and employs 100,000 people. Obviously that's most prominent in Alberta where about a quarter of the economy is directly accounted for by oil and gas. But it's also an important industry in a variety of other provinces, for example, in B.C., Saskatchewan, and Newfoundland and Labrador the sector is a major component of their economy.
Those are the direct impacts. When we talk about the oil and gas industry it's also important to look at the other impacts, the secondary impacts in the economy. These take a variety of forms. For example, the investments that these businesses undertake, their supply chains and, also, what we call in economics the induced effects or the income effects, the money people earn in their jobs creates additional economic impacts when they spend it.
We've undertaken several studies looking at the economic impacts of the oil sands over the last few years. I'd like to talk a little bit more about one of those studies. The biggest one is called Fuel for Thoughtand it was shared with the committee. Hopefully if you've not had a chance to look at it, at least you can after my comments. But I'd like to focus a little bit on the findings from that study.
Basically what we expect to see over the next 25 years is literally hundreds of billions of dollars of investment going into the oil sands. This is going to cause considerable economic impacts outside of Alberta. Obviously Alberta is the locus for the economic activity but it's not the only province that will see economic benefits. Just as an example, 30% of the supply chain impacts associated with oil sands development will occur in provinces outside Alberta. Ontario is the biggest recipient. They get about half of that total. Industries in Ontario like financial services, professional services, and manufacturing all benefit as a result of oil sands development. But we also see benefits across other provinces as well, everything from transportation and, again, professional services, manufacturing; different types of industries in different regions are all benefiting from this investment activity.
Another type of benefit that is often forgotten when we talk about economic impacts is the effects of income remittances. Right now there's an estimated shadow population of about 40,000 people in Fort McMurray. These are people who don't live there but are working there. If you think about it, there are fewer than 80,000 people actually living there. So that's a huge share of the population. We estimate that at least 5,000 of those 40,000 people are out-of-province workers, and if you look at the income that they're bringing back to their home provinces, in many cases it's actually larger than the supply chain impacts that I just mentioned. Particularly for the Atlantic provinces that's true.
The other impact that we looked at in the study is the fiscal impact associated with the development of the oil sands. We estimate that it's about $80 billion in fiscal revenue for federal and provincial governments over the 25-year period. I want to emphasize that this is just investment. We're not looking at royalties. This is just the investment activity. Most importantly, about 60% of that occurs outside the province of Alberta. That's because a large portion of the revenues are paid to the federal government, which gets redistributed back to the provinces, largely on a per capita basis.
Of course, all of this investment will lead to increased production. If we add together the economic impacts of production and investment in the oil sands we find that today, directly and indirectly, oil sands activity supports about 400,000 jobs across Canada. Given our investment profile and our production profile, we think that number could rise to as high as 700,000 by 2030. It's a significant source of jobs today and it can continue to be going forward.
In terms of how we realize this future, one of the key threats, if you will, one of the key restraints, is the fact that we need to have a sufficient infrastructure to move the product to market. At present we only have one market for our oil, North America. North American demand is flat, and production is rising. Where is production rising? It's rising in Alberta, also, primarily, in North Dakota and to a lesser extent in Texas. What's happening with an environment of flat demand and rising production is we're having to displace imports coming from outside North America. Those imports primarily come in on the periphery of the continent. The increase in oil production is coming from the interior of the continent.
We have a transportation problem. We need to move the oil to market. This has caused a glut of oil in the interior of the continent right now. They're seeing significant discounts on Canadian oil relative to international benchmarks, and it's costing literally billions of dollars.
We did a calculation in 2012 of estimated costs of about $25 billion to oil companies in Canada. That translates through to about $8 billion in lost revenues for federal and provincial governments in terms of income taxes and royalties in Canada. This is a huge number, and it's something that we need to address if we're going to maximize the benefit of our non-renewable resources.
Finally and obviously, if we don't address this, it could significantly hamper the investment plans in the oil sands going forward.
Thank you.