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Economic Factors

The rapid expansion of tar sands development has created tremendous economic risks for Canada. Frenzied expansion – 71 per cent of which is owned by non-Canadian companies – has undermined important sectors of Canada’s economy. Expansion has also lured governments into relying on easy oil revenues and tied Canada’s economic future to the unstable world of global oil demand.

Who benefits from tar sands development? Unlike Norway, which has used oil revenues to pay of its debt and save a public petroleum pension fund worth $600 billion, Canada has no federal savings fund to share this wealth with future generations, while Alberta is currently making cuts to education and health care.

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Over-investment in a fossil fuel economy carries numerous risks
Key Issues:
- 71% of the tar sands are foreign owned
- Canada has no national fund from this resource wealth 
Current Status:
When a global price on carbon eventually comes, Canada will be left with an unaffordable product

The $1.3 billion spent to subsidize the oil and gas industry has prevented Canada from pursuing a clean energy economy that can create 10 times more jobs (per dollar invested) than oil and gas development, and spur an innovation rather than raw resource extraction driven economy.

Tar sands development has transformed the Canadian dollar into a volatile petro currency that has contributed to the destablization of its manufacturing base. Rapid tar sands development has arguably resulted in a Canadian outbreak of Dutch Disease, which means the increase in the value of the Canadian dollar has made manufacturing goods in Canada more expensive. As a result, at least a third of Canada's 500,000 lost manufacturing jobs in the last decade are a result of its soaring petrodollar. This has created regional wealth disparities, with Alberta enjoying the economic benefits of tar sands expansion while Ontario, Quebec and the Maritimes suffer the consequences of a less diverse economy.

Canada’s economy is an example of a “carbon bubble” that will likely have significant consequences for its economic future. The International Energy Agency has determined that two-thirds to four-fifths of known fossil fuel reserves must be left in the ground because they cannot safely be combusted without leading to catastrophic climate change. Because Canadian financial markets, and pension funds in particular, have over-invested in fossil fuel industries as part of their portfolios, they are at great risk of economic collapse when the global community finally gets serious about limiting greenhouse gas emissions from hydrocarbon energy sources. 

When a global carbon pricing scheme is eventually created – as it must for the planet to be livable in the future – countries who overinvested in fossil fuels will be left with a product no one can afford to buy, and few other options for wealth creation. 

Many of the ancillary developments necessary to facilitate tar sands expansion, such as refineries, pipelines and oil tankers, provide little economic benefit to local communities while exposing them to the economic risks associated with the inevitable oil spills, such as those in Kalamazoo, Michigan and Mayflower, Arkansas.

Preventing the expansion of the tar sands, and eventually phasing this dirty source of energy out of existence, is the only way to create the sustainable clean energy economy that Canada, the United States and the rest of the world needs to embrace.

Economic Factors Updates & Resources

Oil sands megaproject era wanes as Suncor scales back

Rebecca Penty and Jeremy Van Loon | Bloomberg Business - June 18th 2015

Press Clipping: The era of the megaproject in Canada’s oil sands is fading. Crude’s price slump, pressure to get off fossil fuels and tax increases in Alberta are adding to high costs and a lack of pipelines, prompting producers from Suncor Energy Inc. to Imperial Oil Ltd. to accelerate a shift to smaller projects. “I don’t see the next mine being built quickly,” said Steve Williams, Suncor’s chief executive officer.

Climate change fight will hamper oil sands returns: Statoil exec


Jeff Lewis | Globe and Mail - June 11th 2015

Press Clipping: Financial returns in the oil sands stand to weaken under the most sweeping efforts to fight global climate change, a top oil producer said Thursday, as some of the industry’s leading companies call for increased carbon fees. “It will be increasingly challenging for high-cost production, wherever that might be,” said Eirik Waernessn, Statoil’s ASA’s chief economist. “There’s a lot of variation in cost, but of course high carbon prices and lack of technological improvement there will impose increasing challenges for that type of production.”

Carbon tax could level Alberta’s oil revenue roller-coaster ride

Stephen Ewart | Calgary Herald - June 11th 2015

Press Clipping: You know the carbon tax idea is becoming mainstream when even a columnist from the conservative Calgary Herald is allowed to support it. Stephen Ewart writes that Alberta Premier Rachel Notley has an opportunity to deliver on a major environmental promise and add stability to province’s volatile energy revenues by implementing a carbon tax.

Not so fast: New analysis finds 1.6 million bpd of tar sands expansion on life support


Hannah McKinnon | Oil Change International - May 31st 2015

Blog Post: The Alberta tar sands has been on a collision course with the climate since industry and government made it clear they would bend over backwards to make this high cost, high carbon, high risk oil the centerpiece of a misguided strategy to become an ‘energy superpower’. But it was never going to be that easy to get away with such reckless expansion. Today Oil Change International released a brand new analysis that shows just how bad things are looking for tar sands expansion.

Pop goes the oil sands

Adria Vasil | Now Toronto - May 28th 2015

Press Clipping: For almost a decade, Canada has been chasing one man's dream. Stephen Harper wanted the nation to become an energy superpower. Now we're living the fallout. "Our oil-sands-leveraged economy is at the epicentre of the bursting global carbon bubble," says Jeff Rubin in his new book, The Carbon Bubble: What Happens To Us When It Bursts. Rubin says it's time for oil sands producers to face the music and stop pouring billions into new deposits they'll never be able to burn.

Fishing at the end of Energy East


May 25th 2015

Visual: In part two of this three-part series documenting the stories of Energy East, photojournalist Robert van Waarden casts off with fisherman David Thompson and sails the Bay of Fundy to capture the sights and sounds of his way of life. Thompson worries the new Energy East pipeline will leak, and he questions the logic of major investments in oil infrastructure when we know the future of our society lies elsewhere.