A new report says the Northern Gateway pipeline will boost crude oil prices $2 to $3 per barrel annually over the next 30 years, causing significant damage to consumers, businesses and the Canadian economy.
The economic assessment of the $5.5-billion project by Robyn Allan, former CEO of Insurance Corp. of British Columbia, says the price shock will have "a negative and prolonged impact on the Canadian economy by reducing output, employment labour income and government revenues."
Allan, an economist who re-searched the impact of the pipeline proposal out of curiosity, says it has been touted by proponents as a nation-building enterprise, but it really represents a "serious economic risk" to the Canadian economy.
"The emperor has no clothes," Allan said in an interview. "We're told it is a gross producing economic opportunity, but in fact it's an oil price shock to the economy."
Allan said when the price of oil goes up, that means Canadian consumers and businesses will pay more for anything produced by that oil. That will result in inflation, business being shrunk and employees being laid off, she said.
Enbridge forecast a $2 to $3 annual increase in the price per barrel of crude in its pipeline application to the joint National Energy Board-Canadian Environmental Assessment Agency panel.
Enbridge spokesman Paul Stanway said the company can't comment in detail about the report because it is evidence tabled before the panel at its ongoing pipeline hearings, but it will get a chance to challenge the report in September. Stanway con-firmed, though, the projected price increase in the application.
"The price of oil in Canada is estimated to increase $2 to $3 per barrel as a result of market diversity and exposure to global pricing," he said.
"That's correct, but that is taken into account in our estimation of an over-all benefit of about $270 billion to the Canadian economy."
He said there is a significant benefit to the federal treasury and to Alberta as a result of having an outlet to world markets. "If we don't get that outlet to the global marketplace, we're trapped with essentially being able to sell into just one market and we're going to get a heavily discounted price for that resource," Stanway said. "We're talking about Canada's most valuable export commodity. Why would we want to sell it continuously at a discount?"
Allan said Enbridge has exaggerated the benefits of the pipeline and downplayed the economic impact of price shock on Canadian refineries and businesses and consumers.
"They used the wrong model to answer the question of what will hap-pen to the economy when Northern Gateway is successful in raising oil prices," she said.
Allan, named as by the Financial Post as one of Canada's top 200 CEOs, said she wanted to present her information to the hearing panel and question Enbridge on its model, but was denied intervener status.
The 145,000-member Alberta Federation of Labour included her report in its submission to the panel this week.
Edmonton Journal, Sat Feb 4 2012
Byline: Darcy Henton