Supports Northern Gateway pipeline to west coast
Building the Northern Gateway pipeline 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, according to a report by Fraser Institute.
The report 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.
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.
By looking at the construction benefits of new pipeline capacity and terminal facilities in B.C., the authors calculated Canada’s gross domestic product would receive a $10.5 billion boost and gain up to 104,400 person years of employment.
The authors note that apart from the large sums, 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 gross domestic product totalling $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,” says Angevine.
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.
Meanwhile, a blog post from Enbridge executive Janet Holder provides additional background to Canada’s oil price squeeze.
In February, 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 to help create Canadian jobs, fund Canadians’ retirements and to be taxed by Canadian governments to pay for the services Canadians hold dear.