Click here for the The Bitumen Cliff: http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/02/Bitumen%20Cliff.pdf

Summary

The enormous bitumen developments taking place in northern Alberta today are collectively considered to be the largest industrial project on the planet. These projects will have dramatic impacts on the economy and the environment; they are also affecting the nature of the Canadian federation, and the structure of society itself. While the booming bitumen extraction and export industry supports important jobs and incomes, it is having a range of complex effects on other economic and social variables—both direct and indirect, intended and unintended. The full range of these effects has not
been adequately analyzed or debated by Canadians.

To help understand the broader economic consequences of the bitumen boom, this report applies the staples theory of resource extraction and export (as developed by Harold Innis and other Canadian writers). Viewed through a historical lens, the bitumen industry both reflects and reinforces Canada’s traditional role as a supplier of raw materials (fish, fur, wheat, timber, minerals, etc.) to more developed and powerful industrial centres (e.g. France, Britain, the U.S., and today China) in the global economy.

A risk of any staples development strategy is what Innis called the “staples trap.” Staplesbased economies must make enormous fixed-cost investments in production and transportation infrastructure, generally undertaken by large, often foreign-owned companies. To pay off these overhead costs and reward investors, staples industries face an enormous motivation to produce and export their staple faster.

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 Click here for The Bitumen Cliff Report: http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/02/Bitumen%20Cliff.pdf

February 21, 2013

OTTAWA—A failure to carefully regulate the Canadian bitumen industry is putting Canada on a dangerous economic and environmental trajectory, says a new report released today by the Canadian Centre for Policy Alternatives (CCPA) and the Polaris Institute.

The study’s original, integrated analysis shows that the current bitumen path is creating the double threat: a “staples trap,” whereby the faster Canada exports its bitumen, the less diversified, productive and resilient the economy becomes;” and a “carbon trap,” which locks Canada into an carbon dependent development path, making the costs of future climate adaptation much more difficult.

“Canada’s current bitumen strategy is not only damaging to the environment, but is leaving our economy highly vulnerable to shrinking markets for bitumen, as the world moves to less polluting fuels,” says Tony Clarke, co-author of the report, pointing out that export prices for Canadian bitumen (like natural gas before it) are already falling due to evolving market conditions.

“Another consequence is an unbalanced and vulnerable boom-bust economy where production is increasingly concentrated in unprocessed products; where manufacturing and other tradeable industries contract; and where production and employment shift to non-tradeable industries, damaging Canada’s productivity and wellbeing,” says co-author Jim Stanford.

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