Illogical leaps of logic on the oil sands and economic growth – by Gwyn Morgan (Globe and Mail – June 4, 2012)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Federal NDP Leader Thomas Mulcair is clearly a man who chooses to enrage rather than engage. In advance of his visit to Alberta’s oil sands last week, he declared that “their model for development is Nigeria.” That he had never been to either Nigeria or to the oils ands was clearly no impediment to that astonishing pronouncement.

Nevertheless, his Alberta hosts did their best to show him the great strides industry has made in reducing the environmental impact of oil-extraction operations, as well as the restored mine sites where wood bison and other wildlife now roam.

Mr. Mulcair would have learned that the entire disturbed area of the oil sands is 100 square kilometres smaller than the footprint of the City of Toronto and comprises just one-10th of 1 per cent of the Alberta northern boreal forest. He would also have learned that the oil sands produce only 5 per cent of Canada’s greenhouse gas emissions.

There is no sign that such information altered his characterization of the oil sands as a threat to local and global eco-systems, but surely his earlier declaration obliges him to next visit the Niger Delta. There, he would see firsthand that thousands of oil spills have made the drinking of water almost as hazardous as being subjected to the human rights abuses and deadly conflicts that pervade the region.

Along with Mr. Mulcair’s environmental Armageddon routine came his economic argument about the oil sands, based on the “Dutch disease” theory (which refers to manufacturing decline that occurred in the Netherlands after a boom in natural gas exports in the 1970s). His argument starts with the premise that because oil-export revenue lifts Canada’s balance of payments and generates national wealth, global money markets will value our dollar higher than if we didn’t produce oil. All true, so far.

But then comes his leap of logic that if we just stopped producing oil, the dollar would fall, manufacturers would thrive and Canadians would be better off. But would they really?

No one disputes that Alberta is the biggest beneficiary of oil sands development, but Albertans return much of that financial gain to the country. In 2009, Alberta corporations and individuals paid some $40-billion in federal taxes, while receiving $19-billion in goods and services. That $21-billion difference helps finance federal programs that benefit the entire country.

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