CEO and labour leader agree: Canada should upgrade bitumen rather than send value-added jobs to China
EDMONTON, Feb. 2, 2012 /CNW/ - Building a pipeline to send millions of
barrels of raw bitumen from Alberta's oil sands to refineries in China
will make some oil companies richer - but those riches will come at the
expense of consumers and non-energy businesses across Canada.
That's the main conclusion of a detailed report prepared by Robyn Allan,
an economist and prominent businesswoman who was once named one of
Canada's top 200 CEOs.
The report was filed this week as evidence to the federal panel
currently considering Enbridge Inc.'s application to build the
controversial Northern Gateway pipeline.
In her report Allan projects that the Northern Gateway pipeline, if
approved, will reduce Canada's GDP, increase unemployment and put
downward pressure on personal incomes because it will impose a
two-to-three-dollar per-barrel increase in the price of oil - something
she describes as a "price shock" that the Canadian economy can ill
afford at this time.
"Somehow this project is being presented as 'nation building'" by people
like Prime Minister Stephen Harper, writes Allan.
But "all available research, as well as the experience of most
Canadians, points to just the opposite. Higher oil prices mean a
decrease in family purchasing power, higher prices for industries who
use oil as an input into their production process, higher rates of
unemployment in non-oil industry related sectors, a decline in real
GDP, a decline in government revenues, an increase in inflation, an
increase in interest rates and further appreciation of the Canadian
Allan's report concludes that industry predictions that the pipeline
will add $270 billion to the Canadian economy over the next 30 years
are fatally flawed because they don't factor in the depressing effect
of an across-the-board increase in oil prices.
Allan's report almost didn't see the light of day because the National
Energy Board (NEB) refused to grant her status as an intervenor in the
hearings. But the Alberta Federation of Labour (AFL) did have status
and chose to submit Allan's report as part of its evidence.
"Both Robyn and I agree that the oil sands should be developed," says
AFL president Gil McGowan. "But that development should not come at the
expense of the rest of the Canadian economy.
"The good news is that there is a way to avoid the price shock that
Robyn talks about. By doing more upgrading and refining in Canada, we
can make sure that Canadians keep much more of the value created by
development within the country. And, by developing markets in eastern
Canada instead of Asia, we can ensure that Alberta's growth isn't
coming at the expense of growth in other provinces."
In addition to Allan's report, the AFL submitted its own 42-page
analysis which argues that the Northern Gateway pipeline, if approved,
would close Canada's window of opportunity for "moving up the value
ladder" for at least another generation.
"By increasing bitumen prices, the pipeline will remove the major
competitive advantage that had traditionally been enjoyed by Canadian
upgraders: access to cheap feedstock," says McGowan.
"In essence, the pipeline will dramatically undermine the economics of
Canadian-based upgrading and refining. In the process, we'll be forced,
again, into the role of 'hewers of wood and drawers of water.' Other
nations will take the jobs and profits associated with adding value to
our resources, and we'll be left with pollution and inflation. It may
even drive existing Canadian refineries out of business. I fail to see
how Stephen Harper and other boosters of the Northern Gateway pipeline
can argue that this approach is in the public interest. The evidence
clearly suggests that we will seriously regret opening the door to
bitumen exports to China."
A copy of Allan's report, entitled "An Economic Assessment of Northern
Gateway" can be found here. A copy of the AFL's brief on the same subject can be found here. Allan's bio can be seen here.
SOURCE Alberta Federation of Labour
For further information:
Gil McGowan, President, Alberta Federation of Labour @ 780-218-9888 (cell)
To arrange interviews with Robyn Allan, please call Terry Inigo-Jones, AFL Communications @ 780-910-1137 (cell)