A study endorsed by opponents of the Northern Gateway pipeline proposed by Calgary-based Enbridge says it would cause an oil “price shock” to Canada’s economy.
The economic assessment was done by Robyn Allan, the former CEO of the Insurance Corporation of British Columbia.
It concluded that the higher prices for Canadian oil that would be gained by access to world markets would have an “inflationary price shock which will have a negative and prolonged impact on the Canadian economy by reducing output, employment, labour income and government revenues.”
“Higher oil prices mean a decrease in family purchasing power, higher prices for industries who use oil as an input into their production process, higher rates of unemployment in non-oil industry related sectors, a decline in real GDP, a decline in government revenues, an increase in inflation, an increase in interest rates and further appreciation of the Canadian dollar,” Allan said.
The study said industry predictions of $270 billion in economic benefits from Gateway don’t consider the depressing effects of increased oil prices.
The National Energy Board refused to grant Allan status as an intervener in regulatory hearings, the Alberta Federation of Labour said, so it included her report in the AFL’s submission.
Argues for more refining in Canada
AFL president Gil McGowan said the study shows that more upgrading and refining of oilsands crude should be done in Canada.
By doing that, he said, “We can make sure that Canadians keep much more of the value created by development within the country. And, by developing markets in Eastern Canada instead of Asia, we can ensure that Alberta’s growth isn’t coming at the expense of growth in other provinces.”
Enbridge spokesman Paul Stanway said the company can’t comment on the study because it is evidence submitted before regulators, but that the firm will be able to be able to make a rebuttal in September.
Canada’s oil industry has maintained that its inability to access world markets has kept Canadian domestic production trapped within North America, creating an oversupply and keeping the price below what it would be otherwise.
However, while Allan’s study assumes an annual increase of between $2 and $3 per barrel over 30 years, Stanway said that range came from a study commissioned by Enbridge, which dealt only with the one-time, immediate effect on price, once the pipeline went into operation.
The joint review by the NEB and the Canadian Environmental Assessment Agency continued Thursday with hearings in Fort St. James, B.C., and is scheduled to last until April, 2013.
The $5.5-billion, 1,177-kilometre project would carry 525,000 barrels of oilsands crude a day from near Edmonton to a tanker terminal at Kitimat, B.C.
huffingtonpost.ca, Fri Feb 3 2012