The Enbridge Northern Gateway Pipeline will deliver an inflationary oil price “shock” to Canadians of US$2 to $3 per barrel “every year for 30 years,” a B.C. economist predicts.
Robyn Allan, former president of the Insurance Corp. of B.C. and senior economist for B.C. Central Credit Union, cites studies by Alberta Energy and the University of Calgary that predict Enbridge will trigger even higher domestic oil prices — ranging between $8 to $10 per barrel respectively. She has taught money, public finance and economics at the university level.
Higher oil prices without any change in real economic activity — the Enbridge case — create inflation, she continues. Inflation from higher oil prices will be especially painful for Canadians since Canada must import almost half of its crude oil from offshore. It still has no pipeline to ship western crude to eastern markets.
As oil prices rise, income is transferred from consumers to producers, causing greater unemployment, higher interest rates and a decline in business investment.
Northern Gateway, Allan says, “will serve to permanently reduce GDP, increase unemployment, cause labour income to fall and decrease government revenues.”
As it is, real average income has grown just 0.5 per cent per year over the past 33 years, while median income, due to economic inequality, has risen only 0.2 per cent, the Conference Board of Canada says.
“The price increase Northern Gateway hopes to realize is tantamount to a private-sector levied tax on consumption,” Allan says. “The only difference is the revenue will be channelled into the corporate treasuries of Canadian corporations, foreign corporations and corporations acting on behalf of foreign governments, not into goods and services for Canadians.”