EDMONTON — 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 former Insurance Corporation of British Columbia CEO Robyn Allan 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 researched 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 down-sized 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 NEB-CEAA at its ongoing pipeline hearings, but it will get a chance to rebut the report in September.
Stanway confirmed, 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 overall 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 happen 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.
AFL president Gil McGowan called the report “a game-changer” and a wake-up call to those who have been seduced by the public relations campaigns of the oil companies.
The economic assessment of the $5.5-billion project by former Insurance Corporation of British Columbia CEO Robyn Allan 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 researched 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 down-sized 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 NEB-CEAA at its ongoing pipeline hearings, but it will get a chance to rebut the report in September.
Stanway confirmed, 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 overall 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 happen 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.
AFL president Gil McGowan called the report “a game-changer” and a wake-up call to those who have been seduced by the public relations campaigns of the oil companies.
He said Allan’s report suggests the promises of economic growth and job creation “are nothing more than a mirage.”
“Once Albertans and Canadian read Robyn’s report and realize they are being sold a bill of goods by proponents of the pipeline, I think they will first get angry and then second, start asking some serious questions,” he said. “What Robyn’s report shows is that if this pipeline is built, the public interest will be undermined — not enhanced— in terms of broad economic growth and job creation.”
If it is approved, the 1,177-kilometre line will carry 525,000 barrels of oilsand crude from near Bruderheim, outside Edmonton, to Kitimat, B.C.
“Once Albertans and Canadian read Robyn’s report and realize they are being sold a bill of goods by proponents of the pipeline, I think they will first get angry and then second, start asking some serious questions,” he said. “What Robyn’s report shows is that if this pipeline is built, the public interest will be undermined — not enhanced— in terms of broad economic growth and job creation.”
If it is approved, the 1,177-kilometre line will carry 525,000 barrels of oilsand crude from near Bruderheim, outside Edmonton, to Kitimat, B.C.
Original Article
Source: edmonton journal
Author: Darcy Henton
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