Business
Government Subsidies and the Oil and Gas Industry
A look at Strathcona Resources Ltd.
Does the Canadian government subsidize companies operating in our oil and gas sector? According to research by science and technology journalist Emily Chung, between $4.5 billion and $81 billion of public funds are spent each year for assistance to the industry. But Chung notes how ambiguous definitions (what exactly is a subsidy?) mean that those numbers come with serious caveats.
I thought I’d make this discussion a bit more manageable by focusing on just one industry player: Strathcona Resources Ltd.
Strathcona is big. They produce around 185,000 barrels of oil equivalent each day and the company is currently ranked 98th among publicly traded companies in Canada in terms of market cap ($5 billion) and 88th for operating margin (21.59%).
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What Is a Subsidy?
In the context of their report on the fossil fuel industry, the Department of Finance Canada asserts that “subsidies” can include:
- tax expenditures,
- grants and contributions,
- government loans or loan guarantees at favourable rates,
- resources sold by government at below-market rates
- research and development funding
- government intervention in markets to lower prices
The report defines tax expenditures as:
A type of tax measure, such as a preferential tax rate, exemption, deduction, deferral, or credit, with which the government aims to achieve public policy objectives through the tax system.
In the specific context of Strathcona, I could find no evidence that they’d received any direct public funding or “bailouts”. The government did recently announce a billion dollar partnership with the Canada Growth Fund (CGF) to build carbon capture and sequestration infrastructure, but that’s clearly an investment and not a subsidy. CGF is a Canadian arm’s-length crown corporation whose investments are managed by the Public Sector Pension Investment Board.
Strathcona’s 2023 Annual Report includes a reference to only one loan liability, but that had already been paid off and, in any case, wasn’t guaranteed by any level of government.
What Tax Benefits Does Strathcona Receive?
Many. The company’s annual report discusses its $6.1 billion “tax pool”. The pool is made up of deductions and credits that it can’t use this year, but that can be deferred for use in future years. Here’s how those break down:
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The “Other Tax Deductions” item includes the Scientific Research and Experimental Development (SRED) deduction. That represents amounts spent on SRED-eligible research that companies can deduct from their payable taxes.
What Grant Funding Does Strathcona Receive?
Open Government data reports that only two federal grants were awarded to Strathcona, both in 2023. The first, worth $3.2 million, came from Natural Resources Canada as part of their Energy Innovation Program. Its purpose was development of Lindbergh Semi-Closed Cycle Flue Gas Recirculation and Carbon Capture.
The second grant was worth $12.5 million. It involved Environment and Climate Change Canada looking for an Orion Organic Rankine Cycle Waste Heat Recovery and Power Generation Project.
What Benefits Do Governments Receive From Strathcona?
Government subsidies don’t exist in a vacuum. As a rule, it’s assumed that subsidies to the private sector work as an investment whose primary payback is in profitable economic activity. Governments can also enjoy direct benefits.
In 2023, for example, Strathcona paid more than $405 million in crown royalties to provincial governments. They also spent $2.4 billion as operating expenses that included labor, energy costs, transportation, processing, and facility maintenance. Most of that money was spent in Canada.
A very rough estimate would suggest that total annual personal income taxes generated by people employed by Strathcona would be somewhere around $14 million. Vendors might pay another $13 million in corporate taxes.
There are also indirect benefits. For instance, those with jobs around the oil patch are, obviously, not unemployed and receiving EI benefits.
We could also take into account the larger impact Strathcona has on the general economy. Think about the food, shelter, clothing, and entertainment spending done by the families of Strathcona (and their vendors’) employees. That money, too, performs important social and economic service.
So does Strathcona receive more from government subsidies than the money they feed back into government accounts? Well, the $405 million in crown royalties are likely annual payments, as are the $27 million paid as income taxes. That’s what governments get. On the other side of the balance sheet, there is the $6.1 billion in deferred taxes and $16 million in grants. Those will probably be amortized over multiple years.
But does the word “subsidy” really describe tax benefits in any useful way? After all, there’s no company in all Canada – my own company included – that doesn’t deduct legitimate business expenses. And each and every Canadian receives similar benefits whenever they file their T1. For illustration, a Canadian whose total income happened to match the national average ($55,600) pays around $5,600 less in taxes each year due to various deductions and credits – including the basic personal amount.
Does that mean we’re all receiving government subsidies? There’s nothing wrong with thinking about it that way, but it does kind of strip the word of any real meaning.
Now you could reasonably argue that $6 billion is an awful lot of deferred tax, especially for a company with a 22% operating margin. And you could look to the tax code’s complexity for answers as to how this could have happened. But that’s not a subsidy in any coherent sense.
Think the tax code should be reformed? The line forms right behind me. However, the problem with playing around with the tax code is that changes apply to everyone, not just Strathcona or some other preferred target. Successfully anticipating how that might play out in dark and unanticipated ways isn’t the kind of thing for which governments are famous.
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FBI Director Kash Patel issued a blunt warning over the weekend as federal investigators continue unraveling a sprawling fraud operation centered in Minnesota, saying the hundreds of millions already uncovered represent “just the tip of a very large iceberg.”
In a lengthy statement posted to social media, Patel said the Federal Bureau of Investigation had quietly surged agents and investigative resources into the state well before the scandal gained traction online. That effort, he said, led to the takedown of an estimated $250 million fraud scheme that stole federal food aid intended for vulnerable children during the COVID pandemic.
According to Patel, the investigation exposed a network of sham vendors, shell companies, and large-scale money laundering operations tied to the Feeding Our Future case. Defendants named by the FBI include Abdiwahab Ahmed Mohamud, Ahmed Ali, Hussein Farah, Abdullahe Nur Jesow, Asha Farhan Hassan, Ousman Camara, and Abdirashid Bixi Dool, each charged with offenses ranging from wire fraud to conspiracy and money laundering.
Patel also said Abdimajid Mohamed Nur and others were charged in a separate attempt to bribe a juror with $120,000 in cash. He noted that several related cases have already resulted in guilty pleas, prison sentences of up to 10 years, and nearly $48 million in restitution orders.
Despite those outcomes, Patel warned the case is far from finished.
“The FBI believes this is just the tip of a very large iceberg,” he said, adding that investigators will continue following the money and that the probe remains ongoing. Patel further confirmed that many of those convicted are being referred to immigration authorities for possible denaturalization and deportation proceedings where legally applicable.
The renewed focus follows a viral video circulated by independent journalist Nick Shirley, which appeared to show multiple childcare and learning centers operating as empty or nonfunctional storefronts. The footage sparked immediate backlash from Republicans, including Vice President JD Vance.
House Majority Whip Tom Emmer accused Minnesota Gov. Tim Walz of sitting idle while massive sums were stolen from taxpayers. Walz addressed the allegations during a November press conference, before the full scope of the fraud became public, saying the scandal “undermines trust in government” and threatens programs meant to help vulnerable residents.
“If you’re committing fraud, no matter where you come from or what you believe, you are going to go to jail,” Walz said at the time.
Authorities say the alleged schemes date back to at least 2015, beginning with overbilling Minnesota’s Child Care Assistance Program and later expanding into Medicaid-funded disability and housing programs. One such housing initiative, aimed at helping seniors and disabled residents secure stable housing, was shut down earlier this year after officials cited what they described as large-scale fraud.
The fallout has already reached the federal level. Last month, President Trump announced the suspension of Temporary Protected Status for Somali nationals, arguing that Minnesota had become a hub for organized welfare fraud and money laundering activity.
Vice President JD Vance is giving public credit to a YouTube journalist for doing what he says legacy media and elite institutions have failed to do: follow the money in Minnesota. In a post on X, Vance praised independent reporter Nick Shirley for digging into alleged fraud networks tied to the state, saying Shirley “has done far more useful journalism than any of the winners of the 2024 Pulitzer prizes.” The comment was a direct response to a video Shirley shared online documenting what he described as widespread fraud, with Shirley claiming his team identified more than $110 million in suspicious activity in a single day while confronting facilities allegedly receiving millions in public funds.
Shirley’s reporting has been circulating widely among conservatives, with commentators amplifying clips of him visiting supposed daycare and education centers that appeared inactive despite receiving massive federal aid. Conservative media personality Benny Johnson said Shirley had exposed more than $100 million in Minnesota Somali-linked fraud routed through fake daycare and healthcare fronts, adding to the pressure on state leadership. The issue gained further traction after Tom Emmer, Minnesota’s top House Republican, demanded answers from Gov. Tim Walz following a viral clip showing Shirley confronting workers at an alleged daycare in South Minneapolis. Shirley reported the center, called the “Quality Learning Center,” showed no visible activity despite claims it served up to 99 children, and even misspelled “learning” on its signage. As Shirley approached, a woman inside was heard shouting “Don’t open up,” while incorrectly accusing him of being an ICE agent.
🚨 Here is the full 42 minutes of my crew and I exposing Minnesota fraud, this might be my most important work yet. We uncovered over $110,000,000 in ONE day. Like it and share it around like wildfire! Its time to hold these corrupt politicians and fraudsters accountable
We ALL… pic.twitter.com/E3Penx2o7a
— Nick shirley (@nickshirleyy) December 26, 2025
The controversy builds on earlier reporting from City Journal, which published a November investigation citing federal counterterrorism sources who said millions of dollars siphoned through Minnesota fraud schemes had been sent overseas, with some of the money allegedly ending up in the hands of Al-Shabaab. One confidential source quoted in the report bluntly claimed, “The largest funder of Al-Shabaab is the Minnesota taxpayer.” Since that report, the scrutiny has widened inside the Trump administration. Treasury Secretary Scott Bessent has announced that the Treasury Department is examining whether Minnesota taxpayer funds were diverted to terrorist-linked groups, while Education Secretary Linda McMahon has publicly called on Walz to resign amid separate allegations of large-scale education fraud within the state’s college system.
Taken together, the attention from Vance, congressional Republicans, and multiple federal agencies has elevated Shirley’s reporting from viral internet content to a flashpoint in a broader debate over fraud, accountability, and the role of independent journalists. For the vice president, the message was clear: real accountability sometimes comes not from prize committees or press rooms, but from outsiders willing to ask uncomfortable questions and stand in front of locked doors with a camera rolling.
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