Open Collections

Ratcliffe, Christine

In this report I investigate how the proposed Enbridge Northern Gateway pipeline may affect the distribution of jobs nation-wide in Canada. The pipeline proposed, if built, will transport oil from the Albertan oil sands to the coast of BC at Kitimat. The nature of this study, which looks at Dutch Disease, means a focus on how job opportunities will shift industries and shift provinces from manufacturing in Eastern Canada to oil extraction in Alberta, Western Canada. In this report I will only briefly look at how jobs in Western Canada may be affected. The jobs in Western Canada are more positively affected by the proposed pipeline, however a large (pro)portion of these jobs are (jobs) expected to come about as an indirect result of the pipeline, rather than jobs directly created and therefore are difficult to calculate/take into consideration. Adding to the difficulty calculating the jobs creation, economies on the West coast are also threatened by oil spills. In Eastern Canada the effect on the job situation is a more abstract phenomena created through processes and characteristics in the economy. If the pipeline is built it will ship one kind of oil (bitumen) to markets in the Asia-pacific region. Being able to charge more for oil in Asia (Asia premium) may cause a real exchange appreciation in the Canadian dollar. One of the effects is positive as is it enables Canadians to buy more exports with their dollar. However this may be offset by the rise in the price of Canadian oil too and rise in cost of living. A second effect, and the concern that is related to Dutch Disease, is that the Canadian dollar changes in value. This change happens in such a way as to make goods that the Canadian manufacturing industry produces less competitive on a world market. This means that the demand for Canadian goods goes down; therefore, to keep the manufacturing industry going, jobs are cut. Some may point out that while this is the case jobs are being created in the booming sector – tar sands extraction in Alberta. This is the case but the geography of Canada, i.e. the size, makes it not possible for people to just swap industries without moving geographically. If the contraction of the Canadian manufacturing industry happens quickly not only will people not be able to move to the booming sector but additional economies, e.g. service sector economies, may not be able to grow quickly enough to fill the void the manufacturing industry left. In addition the politics of Canada, i.e. the structure of federal and provincial governments, complicates things still. In this report I look at how other countries have been able to mitigate Dutch Disease, the effect on the manufacturing industry, after discovering oil. However I find that Canada cannot simply do what these countries did because of the political structure. As a result I come to the conclusion that the Enbridge pipeline and any expansion of existing pipelines with a view to ship oil to the Asia- pacific market would be too great of a risk to the Canadian economy. If the tar sands are to expand and increase in output without ‘diversifying’ into the Asia-pacific markets there are a number of steps that can be taken to mitigate any negative economic impacts as outlined in the section headed ‘Curing Dutch Disease’. This report has only been able to explore a small part of the economic issues around tar sands expansion and associated pipelines. The issues go much further into other parts of the economy and environmental and social issues. The economic risks, some of which are explored in this paper need to be considered in conjunction with social and environmental risks for a true assessment of the cost-benefits that the tar sands and its pipelines will cause.

Text

University of British Columbia. GEOG 419

Vancouver : University of British Columbia Library

10.14288/1.0103549

Arts, Faculty of; Geography, Department of

Unreviewed

http://creativecommons.org/licenses/by-nc-nd/4.0/