Economist Robyn Allan says Enbridge and Kinder Morgan pipelines will harm Canadian economy

Prime Minister Stephen Harper and Natural Resources Minister Joe Oliver have tried to characterize critics of the proposed Enbridge pipeline as financial illiterates.

But that doesn't square with an economic analysis by Robyn Allan, a former ICBC CEO and former senior economist of the B.C. Central Credit Union.

Allan noted in her paper that oil-industry studies fail to identify the impact of building pipelines on the Canadian dollar and overstate the growth of royalties to government treasuries.

Building new pipelines will result in higher Canadian oil prices of anywhere from $2 to $13 per barrel, according to various studies, because tar-sands producers are currently limited to selling to U.S. refineries. (For more on this, see economist Jeff Rubin's new book, The End of Growth, which goes on sale tomorrow [May 8].)

In a recent speech at a breakfast event hosted by Liberal MP Joyce Murray, Allan said that when oil prices go up, this has a negative impact on the Canadian economy, leading to job losses.

She noted that Canada is a major importer of oil, particularly in Quebec and the Atlantic provinces. And these are some of the reasons why Allan believes that the development of the Northern Gateway pipeline to Kitimat and increasing capacity of a Kinder Morgan pipeline from the Alberta tar sands to the Lower Mainland are not good news for Canadian consumers.

"The benefit to western Canadian oil producers from higher prices is not enough to outweigh the cost to the rest of us," Allan said.

She added that "more balanced analysis" by the Bank of Canada, the World Bank, the Organisation for Economic Co-operation and Development, and the Canadian Imperial Bank of Commerce demonstrates that rising oil prices are a threat to Canadian economic growth.

"The net impact of a rise in oil prices once all the feedback mechanisms take place—when they're taken into account—results in a loss of jobs, a permanent decline in gross domestic product—or growth—and upward pressure on inflation, exchange rates, and interest rates," she said.

In effect, Allan argued that it's a "false dichotomy" to suggest that the pipeline proposals are a question of either supporting economic growth or promoting the environment and First Nations' rights. That's because in her view, the economics do not stand up to serious scrutiny.

Original Article
Source: straight
Author: Charlie Smith