Alberta Tar Sands Boom Poses Economic Risks to Canada: Report

by: Obert Madondo  | Published Nov 18, 2013

A new report released the Pembina Institute and Équiterre doesn’t just present a counterpoint to the overstated economic benefits of the Alberta tar sands. It unequivocally shows that the rapid pace of the tar sands development poses economic risks to Canada, other provinces, and Canadian manufacturers competing on the global stage.

The report, Booms, Busts and Bitumen: The economic implications of Canadian oilsands development, “indicates that the overwhelming majority of those economic benefits — both direct and indirect — are limited to Alberta.”

“Other provinces will benefit less: even the United States would gain more employment opportunities from the oilsands than the rest of Canada if oilsands development goes ahead as projected,” the Pembina Institute said in a press release. “Meanwhile, the economic side effects of the boom, such as a high dollar that makes it harder for manufacturers to compete globally, are being felt across the country.”

Growth in the Alberta tar sands industry will depend on the construction of the disputed Keystone XL pipeline, which would increase the flow of the oil to the United States, and Line 9, which would transport the oil from Alberta to eastern Canada. This year alone, Prime Minister Stephen Harper, senior government official and premiers have made no less than a dozen visits to the US to promote the Keystone XL pipeline. According to the Guardian, the Harper government “has increased its advertising spending on the Alberta tar sands to $16.5m from $9m a year ago.”

“By favouring oil and gas over other economic sectors with longer-term growth potential, the federal government is putting the prosperity of all Canadians at risk,” the Pembina Institute said.

The report is also concerned about the so-called Dutch disease effect.

“It’s too early to know what Canada’s economy will look like when the oilsands boom is over. However, the conditions required for Dutch disease to develop are present in Canada,” the report says. “This report shows that the oilsands boom does not benefit all Canadians. Other economic sectors are being squeezed out. The “echoes” of the boom that can be heard in Ontario, Quebec and the Maritimes sometimes strike a false chord.”

A different report released by the Canadian Centre for Policy Alternatives (CCPA) and the Polaris Institute warned that dependence on the Alberta tar sands could hurt the Canadian economy. The report noted that the consequence of this dependence “is an unbalanced and vulnerable boom-bust economy where production is increasingly concentrated in unprocessed products; where manufacturing and other tradeable industries contract; and where production and employment shift to non-tradeable industries, damaging Canada’s productivity and wellbeing.”

The economic side effects of the boom will include a high Canadian dollar “that makes it harder for manufacturers to compete globally.

“The manufacturing sectors of Ontario and Quebec have been, and still are, suffering greatly from the rapid increase in the value of the Canadian dollar,” said Steven Guilbeault, co-founder and senior director of Équiterre. “Unfortunately, this doesn’t seem to register with the federal government. A truly national economic and energy plan would benefit communities and industries across the country, not just in one region.”

Sarah Dobson, the Oilsands Program Economist with the Pembina Institute, says a projected significant growth in tar sands production in the next few years carries risks for the environment as well.

“Oilsands production is projected to grow significantly in the years ahead. That carries risks for our environment and, as today’s report shows, for our economy as well. We need responsible policies for oilsands development to protect Canadians’ long-term prosperity.”

The Alberta tar sands developments are also blamed for a spike in incidence of blood cancer for First Nations communities in the area. As Think Progress reports:

A new study has found that levels of air pollution downwind of the largest tar sands, oil and gas producing region in Canada rival levels found in the world’s most polluted cities. And that pollution isn’t just dirtying the air — it also could be tied increased incidence of blood cancers in men that live in the area.

The study, published last week by researchers from University of California Irvine and the University of Michigan, found levels of carcinogenic air pollutants 1,3-butadiene and benzene spiked in the Fort Saskatchewan area, which is downwind of the oil and tar sands-rich “Industrial Heartland” of Alberta. Airborne levels of 1,3-butadiene were 322 times greater downwind of the Industrial Heartland — which houses more than 40 major chemical, petrochemical and oil and gas facilities — than upwind, while downwind levels of benzene were 51 times greater. Levels of some volatile organic compounds — which, depending on the compound, have been linked to liver, kidney and central nervous system damage as well as cancer — were 6,000 times higher than normal. The area saw concentrations of some chemicals that were higher than levels in Mexico City during the 1990s, when it was themost polluted city on the planet.

Finally, the question of ownership of the Canadian tar sands.

A recent analysis of Bloomberg data revealed shows that 71 per cent of all Canadian tar sands production is owned by non-Canadian shareholders.

According to a recent report by TruthOut, a recent study by the International Forum on Globalization (IFG), “provides evidence that the Koch Brothers could earn at least $1 billion from Alberta tar sand land holdings (with additional profit from their processing plants and related products and services).” The notorious Kochs own lucrative processing facilities that convert Alberta tar sands oil into petroleum coke in the US.

The report provides pragmatic recommendations to address these concerns, such as improving the management of one-time resource wealth and eliminating preferential tax treatment for the oil and gas sector.

Obert Madondo is an Ottawa-based progressive blogger, and the founder and editor of The Canadian Progressive.

The following two tabs change content below.

Obert Madondo

Publisher and editor
Obert Madondo is an Ottawa-based independent journalist and progressive political blogger. He's the publisher and editor of The Canadian Progressive.