With the backing of the Carney government, Alberta’s proposed pipeline would transport approximately one million barrels of crude oil per day through a corridor stretching roughly 1,250 kilometres. Construction is expected to be completed between 2032 and 2034.
The project, estimated to cost between $35 billion and $43 billion, is expected to create thousands of jobs while generating billions of dollars in oil export revenues. Once the crude reaches ports in British Columbia, it would be shipped by tanker to markets such as Japan, South Korea, China, and India.
That is the vision shared by both the federal and Alberta governments.
But what if global demand for crude oil declines significantly by the time the pipeline becomes operational?
That possibility is becoming increasingly plausible. In The Conversation, Eric Chi, Professor of Economics at the University of Guelph, writes: “China’s oil-demand growth has already slowed as renewable energy expands and electric vehicle sales rise. EVs are expected to displace five million barrels of global oil demand a day by 2030, although projections vary.”
China is not alone. Other major importing nations are also investing heavily in renewable energy, electric vehicles, and alternative fuels in an effort to reduce their dependence on imported oil.
If those trends continue, an important question arises: What happens to Alberta’s crude once it reaches British Columbia?
If export markets weaken, British Columbia could find itself with an oversupply of crude oil on the West Coast.
That raises another question that deserves serious consideration: Should British Columbia invest in building oil refineries? Rather than exporting only raw crude, refining more oil domestically could create additional jobs, add value to Canada’s resources, potentially reduce fuel prices for consumers, and produce refined petroleum products for export to international markets.
Whether or not such investments make economic sense is open to debate. But as governments consider spending tens of billions of dollars on new pipeline infrastructure, they should also examine how changing global energy markets could affect the project’s long-term viability—and whether greater domestic refining capacity should be part of Canada’s energy strategy.
-Promod Puri
promodpuri.com
Promod Puri.com 