Tags: trade diversification
Author: Janet Holder - Executive vice President Western Access
Dated: 9 February 2012
I’ve said it before and I’ll say it again … I think Northern Gateway is one of, if not THE most important proposed infrastructure projects in Canada today.
That belief was bolstered again when I read in the Globe and Mail about something that serves to underscore what I’ve been saying for some time – Canadian oil producers need another outlet for their oil.
Oil prices for Canadian producers are getting “squeezed” and that’s not a good thing.
It’s not good for energy producers, for the thousands who work in the industry, for communities, for provinces and for the federal government. All of us rely to varying degrees on the viability of our energy sector.
Whether or not the current squeeze is temporary is a matter of debate, but it does underline something very worrisome.
What’s happening? Canada produces a lot of oil. We are also a net-exporter of oil valued at about $50 billion a year.
It has become our most valuable resource and a pillar of our national economy – but there is one catch, virtually all of the oil we export goes to just one market, the U.S.
America is a mature market and demand there isn’t what it once was. Combine that with soaring U.S. oil production, and you get the picture. It’s a potentially dangerous imbalance for Canada.
“On a logistical basis, it points to the vulnerability of having all our eggs in one basket as a nation. It makes more sense to diversify your customer base for crude oil,” Frank King, an analyst with First Energy Capital, says in the Globe.
This imbalance could also see us leave a lot of money on the table. By one estimate, it will cost the energy industry $8 billion a year if Northern Gateway isn’t built. It is already depriving governments of millions in lost royalties and tax revenues every single day.
Northern Gateway would give our energy industry other crucial trade outlets. Booming economies in Asia promise to give Canadians more competitive returns for our resource and shelter us from the vagaries of having a single oil export market.
An Enbridge-commissioned report (which was required of us as part of our regulatory application for Northern Gateway) estimates that this one project would boost Canadian GDP by $270 billion in the first 30 years of operation.
That’s tremendous wealth that would flow through our economy, create jobs and result in higher tax revenues that pay for hospitals, roads, schools – all the things that help make Canada the country it is.
I’m a proud British Columbian and a patriotic Canadian.
And the situation described in the Globe concerns me greatly.