McGuinty rebuffs Redford's oil-sands plea

Ontario Premier Dalton McGuinty has rebuffed Alberta Premier Alison Redford’s plea to publicly defend the oil sands, saying the country’s high “petro” dollar has “knocked the wind” out of exporters in his province.

Ms. Redford, in Chicago for a few days talking up Alberta’s oil and gas industry, has said Mr. McGuinty needs to do his part to help tell her story: that Ontario’s economy is the second-largest beneficiary from the production of the gooey bitumen.

Mr. McGuinty flat out rejected that assertion, saying the harm caused by the high Canadian dollar relative to the U.S. greenback far outweighs any spin off benefits Ontario might derive from Alberta’s oil and gas sector.

The value of the Canadian dollar has soared from just 67 cents in 2003 to over $1 last year, Mr. McGuinty told reporters on Monday. The “petro dollar,” he said, has been driven by global demand for oil and gas from Western Canada.

“That has knocked the wind out of Ontario exporters and manufacturing in particular,” Mr. McGuinty said. “So if I had my preferences as to whether we had a rapidly growing oil and gas sector in the West or a lower dollar, I’ll tell you where I stand: with the lower dollar.”

According to the Canadian Energy Research Institute, the province enjoys the lion’s share of oil-sands benefits outside Alberta. Between 2010 and 2035, Ontario is expected to see $63-billion in economic spinoffs and 65,520 oil-sands-related jobs.

However, another study comes to a very different conclusion. The Organization for Economic Cooperation and Development has warned that Canada has entered into a form of the dreaded “Dutch disease,” whereby the increase in exploitation of natural resources is leading to a decline in its manufacturing heartland.

The OECD said the oil boom in Alberta has created many jobs in the rest of Canada. But the high Canadian dollar has cost jobs in manufacturing-based provinces such as Ontario, which are also competing with emerging markets in Asia. Mr. McGuinty acknowledged this trend, saying the high Canadian dollar is making goods produced in Ontario more expensive for buyers outside the country. The dollar is high, he said, because of the price of oil and gas in Western Canada.

“The high dollar may be good for other parts of Canada, but it’s very harmful for Ontario,” he said in a speech to the Rural Ontario Municipalities Association in Toronto.

Original Article
Source: Globe
Author: Karen Howlet