Speeding up the growth of Canada’s mining and energy industries, especially the oilsands, has emerged as a clear goal of the federal government. This can be seen, for example, in recent attempts to weaken environmental laws and expedite the regulatory review and approval of major industrial projects (see Box 1). But to suggest that such projects have been or are being unduly constrained is to ignore the unprecedented, and unexpected, rate and scale of oilsands development over the past two decades, which exceeded even the loftiest of ambitions.
In 1995, the National Oil Sands Task Force, a collective of oil...
World oil prices have increased over the last decade, with early steady growth interrupted by a dramatic run up in 2007 and subsequent collapse in 2008, followed by strong recovery through to early 2012 (Figure 1). These increases are projected to continue, with a reference case projection by the United States Energy Information Administration for world oil prices to reach US$145 (in 2010 dollars) by 2035.54
Oilsands expansion in the last decade has been fuelled by high oil prices, supported by a stable, secure, and predictable operating environment, and grounded in the belief that prices will remain high, if not...
Behind the economic growth of the oilsands sector lie a number of disconcerting trends in the Canadian economy that must be an important part of any discussion on the role of oilsands development. This chapter examines the Canadian dollar’s tight relationship with the price of oil, the extent to which the Canadian economy may be afflicted with “Dutch disease,” and the economic winners and losers during an oilsands boom.
“Most traders would have on their screen a graph of the Canadian dollar and a graph of WTI [West Texas Intermediate — the benchmark crude oil price for North America], and...
In 2008, the OECD noted that oilsands development is “generating large regional disparities, especially because some provinces are affected by negative externalities through the currency appreciation and have questioned the appropriateness of current inter-provincial redistribution mechanisms.”188 It is apparent that the economic impacts of oilsands development, both positive and negative, continue to strain relationships between provinces; for example, note the war of words earlier this year between Ontario Premier McGuinty and Alberta Premier Redford regarding the “petro-dollar” and the relative benefits of oilsands development,189 and more recently between federal NDP leader Thomas Mulcair,190 western provincial leaders and western thought leaders...
Relative to the size of the resource, Canada’s oilsands have only begun to be exploited; yet even at this stage the industry is making significant contributions to Alberta’s GDP, public revenues and employment. In the shadow of this boom, however, other sectors and regions of the Canadian economy are undergoing considerable restructuring. Booming oilsands development has led the Canadian dollar to closely track the price of oil, contributing to the already significant challenges of the manufacturing sector, and creating a unique strain of Dutch disease in Canada. The Canadian manifestation of Dutch disease, oilsands fever, is contributing to an accelerated...
