Over the years, issues concerning oil have caused controversy, especially to countries that have access to oil. This is the same for Canada, which owns and exports a significant amount of oil. The main issue surrounding the oil industry is transportation. For example, Canadian companies transport their oil from Alberta to the United States and British Columbia through pipeline systems.
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Therefore, there is need to continuously improve, modernise and expand the oil transport systems. This has compelled Canada to consider constructing new pipeline systems. Therefore, Canada has come up with proposals to construct two pipeline systems.
If built, these pipeline systems will improve transportation of the oil. This is because the systems will have the ability to transport around 0.8 million barrels of tar sand from Alberta to the respective destinations on daily basis. This paper discusses the effect that constructing the two systems will have on Canada’s economy.
Canada will use the proposed Keystone pipeline system to transport crude oil and diluted bitumen from Alberta to oil refineries in Illinois, crushing oil distribution hub in Oklahoma, and to the proposed refineries in Gulf Coast of Texas. This pipeline transport system will have several segments. The construction of some of these segments has stirred a lot of controversy.
For instance, environmentalist interest groups and a section of members of the United States Congress are against the construction of pipeline transport systems. On the other hand, Enbridge Northern Gateway Pipeline proposal, which rivals the proposed Keystone Pipeline project, faces similar issues.
The proposed gateway Project will have two identical pipeline systems running from Alberta to British Columbia. One of the two pipeline systems will export diluted bitumen to a terminal in Kitimat, Columbia while the other pipeline system will concentrate on transportation of natural gas condensate to Kitimat, Columbia.
Despite the fact that the two proposed pipeline systems mentioned above will rival each other, their contributions to Canada’s economy will be parallel. Besides, the two systems will continue to face similar challenges. Therefore, the two pipeline systems known as the Keystone and Gateway Pipeline systems will influence the economy both positively and negatively.
The sensitive nature of the activities of the two proposed systems will have the potential to either improve or damage the economy of Canada. The stakeholders have held many conferences to deliberate on the impacts of constructing the proposed keystone and Gateway pipeline systems.
The conferences have constantly evaluated the ability of these projects to create new jobs, expand the economy, and improve Canada’s relationships with its partners. These conferences have been effective but have neglected some essential facts.
When assessing the direct impacts of the proposed projects it is evident that the proposed projects will be essential to the economy of Canada. Right from the beginning of the construction to the daily operations, the two proposed projects will create more than 20,000 jobs.
In addition, the construction will elevate the Gross Domestic Production of Canada. However, these projects will have a negative long-term impact on the economy of Canada.
In the course of their operations, the systems will be prone to oil spills and leakages. These will negatively affect the economy of Canada. For instance, when oil pipes will have leaks the companies will incur losses in terms of reduced profits and increased maintenance costs. This will translate to the reduction of Canada’s GDP and GNP. In addition, the oil spills will pollute the environment.
For instance, the pipes will traverse through the land and the water. In case a spill will occur, there will be massive land, air, and water pollution. This will suffocate plants, aquatic animals and will have a negative effect on human health. Evidently, this will affect the oil based and the non-oil based industries alike. Consequently, this will have an effect on Canada’s economy as a whole.
The proposed Keystone and Gateway pipelines will cut across locations in Canada where economic activities include farming, ranching, fishing, and tourism. These sectors largely depend on fertile land and water. The construction process will interfere with the residents and tourists by stopping their daily activities for a certain period. In addition, oil spills will affect agricultural and tourism activities directly and indirectly.
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In addition, the oil spills will negatively affect the health of the people living around the area. Consequently, this will have a direct impact on Canada’s economy. Overtime, the increased maintenance costs, economic costs, job losses, reduced workforce, and poor environment related to the oil industry will start affecting the entire economy.
The burden that the construction the pipeline systems will have on residents will affect the residents’ purchasing power. For instant individuals who are sick or have no source of income will have low purchasing power. Consequently, this will decline Canada’s economy.
Canada will reap direct economic benefits if the construction of Keystone and Gateway pipeline systems will be successful. However, the construction will have direct and indirect negative impacts on the economy of Canada in the end. Therefore, in future Canada will benefit more if they will use clean energy.