Raw oil exports offer big bang-for-the-buck for Canada’s economy, report says – by Yadullah Hussain (National Post – March 28, 2014)

The National Post is Canada’s second largest national paper.

Canada’s raw oil exports are no hindrance to “high-paying, value-added jobs,” according to a new report. In fact, labour compensation in oil and gas extraction is the highest in the country, at more than three times the average hourly earnings in the Canadian economy generally, and nearly 50% higher than manufacturing.

Adding value to natural resources — from lumber to crude oil — is often seen as critical to creating high-end jobs in some quarters and some groups often view exports of ‘raw’ materials as a job-killer that robs the economy of taxes and revenues.

“It is completely false… to claim raw energy exports do not represent ‘high-paying, value-added jobs’,” Trevor Tombe, an assistant professor of economics at the University of Calgary and author of the report published last week by the School of Public Policy. “The opposite is true.”

Labour productivity in mining and oil and gas averages more than $200 per hour compared to about $160 per hour for utilities, the second-largest contributor. Manufacturing, often touted as a “value-added” industry, generates about $50 per hour, Statistics Canada data shows.

Average earnings per hour worked in oil and gas extraction is more than $100, compared with only $32 for the overall economy, StatsCan says.

“Manufacturing, the concern of so many policy-makers and politicians, is only marginally above average,” Mr. Tombe said. Meanwhile, auto workers take in slightly more than half of the earnings of oil and gas workers.

“Refinery jobs, which get significant attention by politicians, do pay more than manufacturing jobs generally — at approximately $70 per hour — but are still lower than the [oil and gas] extraction jobs.”

More crucially, does the export of raw oil add value to the Canadian economy?

“It is possible to measure the fraction of each dollar of exports from a variety of industries that is value-added,” Mr. Tombe noted.

Oil and gas exports have more value-added than any other type of Canadian export, according to data from the Organization for Economic Co-operation and Development and the World Trade Organization.

“No other industry group has a higher value-added content of exports. The bang-for-the-buck of raw-material exports for Canada’s GDP, and therefore everyone’s income, is large.”

The report contrasts with another study also published last week that noted that TransCanada Corp.’s proposed Energy East pipeline project will see oil “shipped unrefined to places like India, Europe and possibly, the United States”.

The report published by The Council of Canadians, Environmental Defence and others, said that exporting unrefined oil will have “little benefit to Canadians,” and would not boost refineries in the East as claimed by proponents.

For the rest of this article, click here: http://business.financialpost.com/2014/03/27/raw-oil-exports-offer-big-bang-for-the-buck-for-canadas-economy-report-shows/?__lsa=90b5-3e4b

 

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