Are the oil sands holding Ontario up or hollowing it out? - Macleans.ca

Are the oil sands holding Ontario up or hollowing it out?

A fascinating public debate has broken out between the premiers of Alberta and Ontario

by

A fascinating public debate has broken out between the premiers of Alberta and Ontario. Alison Redford kicked off the festivities by calling on Dalton McGuinty to acknowledge that spinoffs from oil sands development are worth billions to the Ontario economy:

“We in Alberta have a resource that matters to the rest of the country,” Ms. Redford recently told members of the Small Explorers and Producers Association of Canada in Calgary, “It’s not enough for Alberta to be talking about the importance of Keystone in the United States. We need the Premier of Ontario talking about that. We need the Premier of Quebec talking about that, and of course, we have the Prime Minister of Canada talking about that.”

The ink on that Globe story was barely dry before McGuinty made nearly the opposite argument: that Alberta’s resource economy is driving up the dollar and sucker-punching Ontario manufacturers and exporters.

“So if I had my preferences as to whether we had a rapidly growing oil and gas sector in the West or a lower dollar, I’ll tell you where I stand: with the lower dollar.”

That sounds kind of defeatist, but it’s possible to see where McGuinty is coming from. The Globe stories I’m using for this post both quote the same study on oil-sands fallout for Ontario:

According to the Canadian Energy Research Institute, the province enjoys the lion’s share of oil-sands benefits outside Alberta. Between 2010 and 2035, Ontario is expected to see $63-billion in economic spinoffs and 65,520 oil-sands-related jobs.

$63 billion over 25 years, or $2.52 billion per year on average, is a lot of simoleons. But you need to remember how deep a hole Ontario is in:

Ontario lost nearly $154-billion worth of direct economic activity between July 2008 and December 2011 from lost factory sales alone. That’s $3.7-billion every month.

Those lost factory sales aren’t all Redford’s fault, and it’s a mug’s game to guess how the sector would have evolved if oil had been $40 cheaper, but they are McGuinty’s problem, and he seems to be sensitive about it all.