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energy sector



Does Canada’s economy need Kinder Morgan?

Port of Vancouver

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Much of the recent debate around Kinder Morgan’s pipeline and tanker project has centered around vigorous debate between the provinces of BC and Alberta and the question or whether the project is in the national interest. Ultimately, this depends on what kind of economy Canadians want to invest in, and what kind of economic future we want to create.?

There are also important questions about whether Canada’s economy is reliant on oil sands expansion, and whether the pipeline would create long-term jobs. Because of these key questions, we are updating and re-sharing some of our previous research around what’s fuelling Canada’s economy and where Kinder Morgan’s pipeline fits in.?

At the same time, over 700 businesses have joined together to raise concerns about investing taxpayer dollars in Kinder Morgan’s risky pipeline and tanker project at?http://LetsMoveForward.ca

Where Does Canada’s Wealth Come From?

A diverse mosaic of industries forms our national economy, from tech start ups to winter sports to microbreweries. Although key industries vary significantly across regions, some clear national trends are also evident.

Real estate is by far Canada’s largest sector overall, contributing a full 13% of national GDP. Manufacturing and retail and wholesale trade are also significant, each bringing in some 11% of GDP (according to 2017 data by StatsCan). Construction and finance each generate another 7% of GDP.

Comparatively, in 2017, the oil and gas extraction sector was responsible for 6.5% of national GDP (again according to StatsCan). Although still significant, this economic contribution is less than most Canadians realize, as reported in a poll conducted by Environics.

Canada 2017 GDP by industry
Of this, the Alberta oil sands (what Statistics Canada calls “unconventional oil and gas extraction”) contributed just 2% of GDP – a number that has remained relatively consistent over the past several years.

Relative size of oil sands


Which Sectors Contribute the Most to Social Spending?

Another part of the ‘national interest’ conversation has focused on whether Kinder Morgan’s pipeline is necessary to pay for other public investments, like schools and hospitals. To answer this question, first it’s important to put the energy sector in context.

In 2014, the total the oil and gas sector––including oil and gas extraction and support activities––contributed 3.6% of all federal corporate tax revenue. This number is relatively low compared to financial and insurance services, which together contributed 23% of all federal corporate taxes, and construction, which contributed 7.6%. It is also notably lower than the manufacturing sector, which covered 14% of federal tax revenues in 2014.

Canada tax revenues breakdown
Read our full 2016 report for more details:?WHAT’S FUELLING OUR ECONOMY: Is Kinder Morgan’s Proposed Pipeline Inconsistent with New Economic Trends and Realities?

 

BC Government Rejects Trans Mountain Pipeline Expansion

trans mountain pipeline_from tm site

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We walked to work on Monday morning with an extra spring in our step after we heard the announcement that the Government of British Columbia is formally opposing the Trans Mountain pipeline expansion. This was welcome news to CRED, our members, supporters and partner organizations!?

While the eleventh hour decision may be politically motivated rather than driven by concerns over inadequate bitumen spill response as indicated, the end result is what we all want: attention to the need for a review board that thoughtfully and transparently weighs the risks of economic activities against potential benefits.

Provincial opposition is just one step. We need the federal government to make a move and recognize that transformation of the National Energy Board isn’t enough. The transformation needs to happen before the Trans Mountain Expansion review is concluded under the current framework.

CRED is working to make this concern heard through an open letter to Prime Minister Trudeau. As many of you know, on top of generating fact-based research and stimulating dialogue around our economy, the CRED team advocates for responsible economic development at the municipal, provincial and federal levels.? We are partnering with like-minded business organizations in our efforts to engage policymakers in supporting industries that generate employment and benefits for society without degrading our land and water.

As part of this process, in the coming days, CRED will be active in the following:

  • We will publish an?open letter to Prime Minister Trudeau?from BC businesses to put a halt to the NEB process, and overhaul the NEB before pronouncing on the Trans Mountain expansion in May 2016. The timing will coincide with the upcoming NEB final hearings in Burnaby.
  • We are generating infographics to illustrate the worsening economics of the pipeline expansion project, as outlined in recently published research?by SFU and the Living Oceans Society.

Please go to /a71/neb-open-letter-trudeau/ to sign on to the Open Letter, and stay engaged with us as we continue to work towards a vibrant economy.

 

Kinder Morgan benefits overblown: independent study

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Earlier this week, an independent study?released by the SFU Centre for Public Policy?Research, in collaboration with California-based consultancy the Goodman Group, found that Kinder Morgan has substantively over-stated the benefits of its proposed Trans Mountain Pipeline Expansion in its submission to the National Energy Board.

The report echoes past research from CRED which has found that BC’s provincial and municipal coffers will only get a tiny benefit from the Trans Mountain expansion. Instead, oil sands producers, Alberta and, of course, Kinder Morgan will be the main beneficiaries.

Municipal benefits from the Trans Mountain pipeline expansionCRED_km tax revenue Municipalities rev1-01

According to our research, Kinder Morgan’s stated tax benefits (which, as this report highlights, maybe also be overblown) would only fund a small fraction of provincial and municipal services – 0.3% of the costs of running the province’s schools, for example, or just 1% of the Coquitlam police department. Even the biggest municipal beneficiary, the City of Burnaby, could fund less than 9% of its Parks, Recreation and Cultural budget with tax revenues from the Trans Mountain Expansion. And this is a best case scenario, assuming no increased costs for servicing the pipeline right-of-way or any incidents to respond to.

BC provincial benefits from the Trans Mountain expansionCRED_km tax revenue BC rev1-01

The SFU report also found that Kinder Morgan has significantly over-estimated the number of jobs the pipeline would create, and downplayed the cost of a major oil spill because the company failed to take into account the high population density of the Lower Mainland, underestimating the costs of a catastrophic oil spill by potentially billions of dollars.

Download the full report here, and read CRED’s reaction here.

 

How does BC’s construction sector break down?

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Construction generates a lot of buzz, especially when talking about the jobs created by new oil & gas projects. Here, we take a deeper dive into the sector as a follow-on from our recent report,?“What’s Fuelling BC’s Economy?”?

Are construction jobs the missing link?

In BC, the construction sector – building everything from houses to roadways – is responsible for 7% of our GDP and almost one in ten jobs. It’s also one of our province’s fastest-growing sectors. But how does it break down, and what are some of the factors that keep the construction sector booming?

What fuels?construction?

The construction sector is one of the primary drivers of our provincial economy. It’s a $15 billion dollar industry in BC – and over the past decade, has consistently been one of the fastest growing sectors.

So where is this growth coming from? Just over half of the GDP from BC’s construction sector comes from retail and commercial building construction and another 16% comes from repairs. Finally, the remaining 31% is from industrial projects, everything from roadways to hydroelectric dams [source: BC economic accounts – download].

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How big is BC’s energy sector?

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CREDBC_bceconomy_infographic(click on image to expand)

How important is the energy sector to BC?

And is it more or less important than other sectors? ?We’ve compiled this report to find out where the jobs, GDP and growth are coming from in order to determine BC’s main economic drivers.

DOWNLOAD “What’s fuelling BC’s economy?”

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The changing face of jobs in Northern BC

Prince George

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How important are resource jobs to BC’s north?

After posting a report highlighting that only 1 in 100 BC jobs are in the mining, oil and gas sectors & that more people in our province work in the tech sector than in oil, gas, mining, forestry and utilities combined, we started having conversations about the tensions between different parts of our province – is information like this more relevant to Vancouver and the surrounding south coast than to the interior and north?

Outside of the urban and populous south coast, it’s often assumed that vastly different market forces are at play. We decided to examine the data and see if these assumptions matched up with reality.

In particular, we were interested to learn what regional job markets in the north of the province look like, which industries are growing & which are shrinking, and where future demand is expected to come from. What would the same jobs breakdown look like in Kitimat or Prince George – both places where primary resource industries have traditionally played a significant economic role?? Is there a much higher reliance on extractive industries (oil, mining and gas) than in the south? The following summarizes our initial research:

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Fuelling BC’s economy: where does our wealth come from?

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Why does this conversation matter?

In order to decide whether energy development projects should go forward, it’s essential to have a good understanding of where the sector fits into the bigger economic picture. Of course we know that energy is important to Canada, but how important? In what ways? And is it more or less important than other sectors?

Where does our wealth come from?

It’s often said that British Columbia is a resource-based province. In actual fact, the reality is a lot more complex. While it’s true that much of BC was built on natural resources, and that even today sectors like technology and construction have a certain amount of inter-relationships with the resource sector, the basis of our economy has overwhelmingly shifted to service-based industries. More than 4/5 of us work in services and over 76% of our GDP comes from those sectors.

It’s also important to note that a significant part of our economy is based on small businesses.?Small businesses make up 98% of all businesses here in BC, more than any?other province.

Although economics can be complex and numbers can tell different stories depending on how they’re interpreted, some data speaks for itself. Here’s a chart breaking down the main sources of GDP in British Columbia:

BC GDP by industrySource:?The 2012 British Columbia Economic Accounts, BC Stats

Oil, gas and support services make up just 3% of our GDP, compared to 15% for manufacturing and construction and over 23%?for financial and real estate services. When secondary energy services are added into the equation, the total contribution to GDP is still only 11%. While this number is significant, it’s certainly not where most provincial economic activity is coming from.

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