oil industry

A low dollar and cheap oil didn’t rescue Ontario and Quebec before

One of the more persistent myths about prosperity is that it results purely from luck. Often, commentators credit the mere presence of oil, gas, potash and other natural resources for Western Canada’s recent (and presently fading) boom in investment, jobs and government revenues.

Alberta already tried to diversify her economy—and failed

With the price of oil plunging to below $50 per barrel and the outlook for Alberta’s economy and provincial budget revenues falling in tandem, an oft-heard piece of advice is being recycled: Alberta should diversify its economy.

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This report provides a comprehensive overview of the outlook for Alberta crude oil and bitumen production and an assessment of the economic attractiveness and feasibility of exporting oil to countries in the Asia-Pacific region instead of solely to markets in the United States. It also describes the extent of the new oil pipeline infrastructure that would be needed to allow oil exports to Asia-Pacific region under two scenarios: 1. no increase in oil sands bitumen production capacity from a base-case forecast; and 2. bitumen production capacity increased from that in the base case to supply Asian markets after 2026. The likely gross employment and overall economic (GDP) benefits from construction and operation of the required facilities are also discussed.

The report also examines unnecessary regulatory and other barriers that are inhibiting the development of the pipelines and port facilities required to ship crude oil, raw bitumen and synthetic crude oil (i.e., upgraded bitumen) to the west coast and on to oil refineries in Japan, Korea, China, India and other countries in Asia that are increasingly becoming dependent on oil imports.

Finally, we suggest a number of policy reforms that, if implemented, would resolve, or at least help to overcome, the obstacles that stand in the way of infrastructure development and therefore threaten to prevent Canada from taking full advantage of opportunities to develop markets for crude oil in southeast Asia. The overriding objective is to ensure that Alberta?s conventional crude oil and oil sands resources are developed expeditiously and efficiently in view of current market conditions, legitimate environmental concerns, and global investment opportunities in order that Canadians may benefit, both directly and indirectly, from the employment and income opportunities that such development will bring.

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This report is the first in a series of papers undertaken by the Fraser Institute in the course of developing a Continental Energy Strategy. The fundamental objective of this strategy is to ensure that applicable policy and institutional frameworks are conducive to as rapid a development of North America?s energy resources as possible, in light of market conditions, legitimate environmental concerns, and global investment opportunities. While North America?s proven crude oil reserves represent only about 15% of the world?s reserves, if probable and possible crude oil resources in US oil shale formations and in the offshore areas of Canada, the United States, and Mexico are considered, the continent?s crude oil supply potential is substantial. The goal of accelerated development of the continent?s energy resources is predicated on the economic benefits that it can bring in terms of expanded employment, improvements in living standards, and security of energy supply. In order to achieve this objective, the report argues that nonmarket barriers to private investment must be identified and removed.