New report presents solutions to manage economic downsides of oilsands developmentPembina Institute analysis identifies significant challenges for the Canadian economy if impacts of the oilsands boom are left unaddressed

May 30, 2012

OTTAWA — The federal government needs to consider the economic downsides of rapid oilsands expansion and take immediate action to minimize the short-term impacts and future risks to Canada’s economy, according to a new report released today by the Pembina Institute.

In the Shadow of the Boom: How oilsands development is reshaping Canada’s economy reviews the extent to which oilsands production and exports are affecting Canada’s economy, and explores the longer-term economic implications of increased reliance on oilsands expansion to support economic growth and generate public revenue. While the significant economic benefits of oilsands development are well documented, relatively little attention has been paid to the downsides to date.

“Looking at various sectors across Canada, it’s clear the oilsands boom is playing a significant role in re-shaping our economy — but many of the benefits are being overstated, and there has been too little consideration of the downsides,” said Nathan Lemphers, a senior policy analyst at the Pembina Institute and co-author of the report. “The good news is there are steps that can be taken to better understand and address these impacts and promote a healthy, inclusive conversation about Canada’s energy strategy.” 

The report outlines five key actions the federal government should take to proactively address the near- and long-term economic impacts of oilsands development, including:

  • Establishing a Federal Savings Fund for oil and gas revenues, as recommended by the OECD, with assets held in foreign currencies, to smooth out inevitable booms and busts;
  • Eliminating preferential tax treatment for the oil and gas industry, as agreed to by G20 countries;
  • Convening a Royal Society of Canada panel to examine and make recommendations regarding the economic impacts of oilsands development across the Canadian economy, both now and in the long-term;
  • Having a federal committee study the impacts of a high dollar on regional competitiveness and identify actions the federal government can take to ensure a robust, diverse economy that supports economic growth and competitiveness throughout Canada; and
  • Cooperating with provincial leaders to develop a Canadian energy strategy that will transition Canada to a competitive, clean energy economy.

The Pembina Institute report includes a survey of recent analysis on “Dutch disease” and the effects an appreciating Canadian dollar has had on various sectors in our economy. It also explores the challenges associated with the volatility of oil markets and the prospect of oilsands being replaced by lower-emission alternatives in a carbon-constrained future.

The report suggests Canada has developed a unique strain of Dutch disease, called “oilsands fever,” which is producing near-term economic benefits that are often overstated. The report also finds these benefits are unevenly spread across the country, and may be masking more significant long-term economic challenges.

“Canadians deserve a rational, informed conversation about how the pace and scale of oilsands development is affecting Canada’s economy, especially as the federal government reduces environmental oversight to fast-track development,” said Dan Woynillowicz, co-author of the report. “This discussion is critical and doesn’t need to be divisive — there is ample opportunity to proactively address the economic challenges of oilsands development and transition toward a strong, competitive clean energy economy that benefits all Canadians.”


Learn more:

In the Shadow of the Boom: How oilsands development is reshaping Canada’s economy (Executive summary | Full report)


Julia Kilpatrick (English / français)
Communications Manager, Pembina Institute
Cell: 613-265-5579


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