Canada’s Oil Economy Through the “Staples” Lens

In 1963, economist Mel Watkins achieved international recognition with the publication of “A Staple Theory of Economic Growth” in the Canadian Journal of Economics and Political Science. To mark the 50th anniversary, the Canadian Centre for Policy Analysis published a collection of essays written by members of Canada’s Progressive Economics Forum, placing Watkins’ ideas in historical and global context. The section “Staple Theory and the Bitumen Boom” is essential reading, as authors Thomas Gunton, Gordon Laxer, Daniel Drache and Jim Stanford use staples theory to discuss the fossil fuel addiction of our economy, its dangerous impact on the broader economy, on cultures, especially Aboriginal culture, and on the environment.

Part 4: “Modern Applications”, includes “The Staple Theory and the Carbon Trap”, by Brendan Haley; “LNG: BC’s Quest for a New Staple Industry” by Marc Lee, and “Staples Theory: Its Gendered Nature” by Marjorie Griffin Cohen, among others. In the final essay in the collection, Mel Watkins writes: “My 1963 article has perhaps encouraged some readers to think too much about linkages and how to enhance them, to focus on incremental change when it is transformative change that is necessary…Fifty years on I have grandchildren, and know that the world must move ASAP from dependence on fossil fuels to reliance on green technologies. This will involve a wrenching change for Canada because bitumen is now the superstaple driving our economy and our polity…These may not be the best of times, and they may well get worse, but there is room for hope if we will but face up to our situation. In Canada, that means escaping both the staple trap and the carbon trap by weaning our­selves from the export of bitumen”.

LINK

The Staple Theory @ 50: Reflections on the Lasting Significance of Mel Watkins’ “A Staple Theory of Economic Growth” is available at: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/03/Staple_Theory_at_50.pdf

Energy East Pipeline: Transporting Crude Oil for Export, not Processing

Contrary to the economic projections put forth by TransCanada Pipeline, a new report released on March 18 contends that the proposed Energy East pipeline will be used primarily as a means to export crude oil, rather than to refine it in Canada.

The Energy East project would convert 3,000 kilometres of existing natural gas pipeline in Saskatchewan, Manitoba, and Ontario to carry crude oil, and also would build over 1,500 km of new pipelines through Quebec and New Brunswick, with the objectiveenergyeastreport of carrying 1.1 million barrels of crude oil per day. In September 2013, an industry-sponsored report by Deloitte & Touche consultants projected job creation in the order of 10,000 jobs in development and construction, and 1,000 ongoing jobs in the operational phase.

TransCanada’s Energy East Pipeline: For Export, Not Domestic Gain argues that the crude delivered by Energy East would exceed the processing capacity of existing Canadian refineries, given that they also source crude from the U.S., the Newfoundland offshore, and in the future, the newly-approved Line 9 pipeline project. The authors argue that new refineries are unlikely to be built in Canada, and point to TransCanada’s proposed plans for export terminals at Gros Cacouna, Québec (east of Québec City) and Saint John, New Brunswick to prove that the intended purpose of the oil is export.

LINKS

TransCanada’s Energy East Pipeline: For Export, Not Domestic Gain, prepared jointly by the Council of Canadians, Ecology Action Centre, Environmental Defence and Equiterre, is available at: http://www.canadians.org/publications/transcanada%E2%80%99s-energy-east-export-pipeline-not-domestic-gain

CBC summary is at: http://www.cbc.ca/news/business/energy-east-pipeline-benefits-overblown-report-says-1.2576782

Energy East: The Economic Benefits of TransCanada’s Canadian Mainline Conversion Project (Sept. 2013) is on the Deloitte website at: http://www.energyeastpipeline.com/wp-content/uploads/2013/09/Energy-East-Deloitte-Economic-Benefits-Report.pdf

Canada Caught in a “Staples Trap” and a “Carbon Trap” by Current Pace of Oil Development

The authors of a new report released jointly by the Canadian Centre for Policy Alternatives and the Polaris Institute reject the polarizing framework of “economic interests vs. environmental interests”, or “East vs. West”, and call for a public debate of the social, economic and environmental complexities of Canada’s current “bitumen path”. They argue that Canada’s current “gold rush” approach is creating a double threat to the country: a “staples trap,” which is making our economy less diversified, productive and resilient, and a “carbon trap,” which will make the inevitable day of reckoning for climate adaptation much more expensive and difficult. The report discusses employment impacts, income distribution, international trade, currency effects, and “Dutch Disease” and the Canadian manufacturing sector. An alternate policy approach is recommended, which uses tighter regulation to slow the pace of bitumen extraction and to boost Canadian content in the upstream and downstream supply chains. At the same time, Canada’s economy needs to encourage more balanced, innovative and low-carbon industries.

 

LINK

The Bitumen Cliff: Lessons and Challenges of Bitumen Mega-Developments for Canada’s Economy in an Age of Climate Change by Tony Clarke, Jim Stanford, Diana Gibson, and Brendan Haleyis available at: http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/02/Bitumen%20Cliff.pdf