How the Tar Sands Threaten Canada's Economic Fate

[JohnyCanuck]

A short course in Dutch Disease, deindustrialization and the Bitumen Curse.

By Andrew Nikiforuk, 13 Aug 2010, TheTyee.ca

Every week Canada's least favorite Emir, Alberta Premier Ed Stelmach, earnestly lectures Canadians that the mighty tar sands are a boon to the national economy because "Alberta's engine drives Canada."

Just a week ago the eloquent Stelmach told the folks at the annual Canadian premiers conference that the project has the grandest of national visions: "It's all about jobs and it's all about the tax revenue that will flow to the federal government and the provinces." In other words dirty oil now cements prosperity and serves up stacks of cash for fat and lazy governments.

But simple-minded statements from members of Alberta's Wahabi-like sect, the province's well-tarred Tory party, are now a dime a dozen. They all read like incredulous Saudi Arabian press releases. For the real economic impacts of the tar sands, an almost untold business story, are really about a monetary hurricane and massive structural change. In fact the economic fallout from rising oil exports, in the absence of sensible national policy, totally dwarf the project's significant environmental messes.

Dollar dangerously pegged to oil prices

To date the $200-billion energy mega-project has not only changed Canada's economic life but also diminished the nation's economic diversity and resilience. Although the Emir pretends the tar sands is an economic "win-win," the project's chaotic development has planted several improvised explosive devices in the economy that should give any small-c conservative pause for thought.

In particular the oily behemoth has transformed the loonie into a volatile petro dollar, destabilized the country's manufacturing base with a bad case of the Dutch Disease, provided governments with access to easy revenue (always a problem), exported thousands of added value jobs to U.S. refineries and perilously yoked the nation's future to the yoyo world of global oil demand.

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