The Alberta Federation of Labour says the Enbridge pipeline project will actually eliminate Canadian jobs”: http://www.cbc.ca/asithappens/episode/2012/09/04/the‐tuesday‐edition‐45/
The Alberta Federation of Labour has two main criticisms of the Northern Gateway pipeline: (1) Canadian jobs would be created if the crude bitumen was refined in Canada and then exported rather than being exported directly; and (2) The pipeline will reduce the “Asian” premium, which means a higher price of oil in Canada and job loss due to the higher processing costs for Canadian refineries.
In about 200 words carefully explain why the creation of the Gateway pipeline from Alberta to Kitimat BC will raise the price of crude oil for Canadian refineries.
The Enbridge Northern Gateway Pipelines Project is a proposal to construct twin pipeline running from Bruderheim, Alberta, toKitimat, British Columbia. The eastbound pipeline would import natural gas condensate and the westbound pipeline would export bitumen from the Athabasca oil sands diluted with the condensate to the new marine terminal in Kitimat where it would be transported to Asian markets by oil tankers.
In Asia, especially in China, the price for oil is a little higher than in North America. There are some reasons for that. For example, Chinese refineries are willing to pay more for bitumen products because they have a secure supply from their multi-billion-dollar investments in the oil sands, and in part because they they pay very low royalties and taxes in Alberta. The construction of Northern Gateway pipeline would increase the chance of exporting crude oil from Alberta to Asia for pursuing ‘Asian Premium’. Consequently, the oil supply in Canada becomes more scarce due to large amounts of exports.Therefore the decrease of domestic supply of crude oil would lead to the increase of pice in Canadian market.
In addition, the higher price of crude oil for Canadian refineries may result from the high cost of transportation, according to Texas-based energy consultant Muse Stancil, which means that ”Northern Gateway allows the Canadian crude producers to both stop selling to their least attractive refiner clients (from a pricing prospective) and reduces their need to ship heavy crude via comparatively expensive rail transport.”
References:
1. http://www.cbc.ca/m/touch/canada/story/2012/09/06/pol-cp-gateway-hearings-dutch-disease.html
2. http://en.wikipedia.org/wiki/Enbridge_Northern_Gateway_Pipelines
3. PDF from http://www.google.ca/search?client=safari&rls=en&q=northern+gateway+pipeline&ie=UTF-8&oe=UTF-8&redir_esc=&ei=g89OUNC8CabYigKdxIDQAw#q=northern+gateway+pipeline+canadian+refineries&hl=en&client=safari&rls=en&prmd=imvnsu&ei=-NFOUMjtCoTYigK7t4E4&start=10&sa=N&bav=on.2,or.r_gc.r_pw.r_qf.&fp=483643ae6a913172&biw=1247&bih=628