Author: Northern Gateway
Dated: 18 July 2012
“Expanding Canadian pipeline capacity to allow oil exports to Asia will pour billions of dollars into government coffers, create thousands of jobs, and bring substantial benefits to First Nations and pensioners.”
That’s the conclusion of Vancouver-based The Fraser Institute in a new report that provides a comprehensive overview of the economic feasibility and attractiveness – as well as the boost such a pipeline would bring to pension benefits of Canadians – of exporting Canadian crude oils to countries in the Asia-Pacific region.
To arrive at their conclusions, Senior Economist Gerry Angevine and former energy analyst Vanadis Oviedo examined two possible future scenarios against a status quo base case — the base case assumes no new pipelines are built to the B.C. coast and no significant amount of Canadian crude oil is exported to Asia-Pacific countries.
So what did the authors find in their examinations?
At the core of their research, the authors looked at who benefits from the construction of new oil pipeline infrastructure. Their findings might surprise you:
Looking at the construction benefits of new pipeline capacity and terminal facilities in B.C. alone, the report’s authors calculated Canada’s GDP would receive a $10.5 billion boost and gain up to 104,400 person years of employment. While these are no small sums, the authors note the benefit to the Canadian economy during a 30-year operation span for Northern Gateway is also substantial, with a nearly $9 billion annual boost to Canada’s GDP totaling $270 billion over 30 years. It’s expected 1,150 long term jobs will result from the project’s operation.
The report also notes potential returns on the substantial investments the Canada Pension Plan ($1.8 billion) and the Ontario Teachers’ Pension Plan ($1 billion) have made in the Canadian oil sands.
"Shipping Canadian oil to Asia-Pacific nations will boost the returns for the Canada Pension Plan and could improve investment income for virtually every Canadian collecting a pension," Angevine said.
The authors also discuss the economic consequences resulting from Canadian producers’ inability to access the global price for oil because of the lack of infrastructure. Canadian crude trades at a considerable discount to the global crude price, primarily because almost all exported oil from Canada goes into one market in the U.S. mid-west.
In February 2012, the discount was over $15 per barrel to the Brent (European) price and over $25 per barrel when compared to the Malaysian market price. Angevine and Oviedo’s calculations suggest that capturing an additional $2.50 per barrel of Canadian oil will lead to a $14.25 billion net gain over 30 years—that’s a lot of wealth to help create Canadian jobs, fund Canadians’ retirements and to be taxed by Canadian governments to pay for the services Canadians hold dear.