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Fort McMurray, economic centre of Canada? Torontonians and the rest of the country had better get used to the idea. The Canadian economy will increasingly spin around the northern Alberta oil town if an industry forecast that shows Canada’s daily volumes will more than double to 6.2 million barrels a day by 2030, largely from the oil sands, proves right.
Under the forecast, made public Tuesday by the Canadian Association of Petroleum Producers, Canada will climb to the No. 3 or No. 4 spot in the world as a major oil producer (from No. 5 currently), trailing only oil heavyweights Russia and Saudi Arabia and likely running neck and neck with the United States, depending on what happens to its tight-oil chase.
Canada will be the world’s fastest growing petro-state, with production expected to jump from today’s three million barrels a day.
The implication is that the Canadian economy will continue to tilt toward Alberta, with the rest of the country providing goods, services and labour to support its big spending oil sector. Some may not like the power shift it represents, or what it does to the environment, or how it affects the rest of the economy.
Next to the turmoil faced by other countries, it’s a nice problem to have and represents a vote of confidence in Canada, since a lot of the growth will be bankrolled by foreign companies.
Another positive is that expansion plans are so ambitious they have outgrown Alberta’s capacity and need all of Canada to make them happen.
“What we have seen over the last five years has been a stretching out of the supplies that we get across the country for this industry,” said Greg Stringham, CAPP oil sands vice-president. “While this is our oil forecast, when you look at where we get our manufactured goods, the engineering services, the legal accounting services, it’s … not Western Canadian at all. It goes into Ontario, Quebec and a lot of the materials come as far as Atlantic Canada.”
“It’s something that is part of the total Canadian economy, and we have seen a lot of the manufacturing companies retooling toward the goods that we require.”
CAPP’s annual forecast shows more aggressive oil growth than predicted only a year ago, despite uncertainty in the global economy and weaker oil prices.
For the rest of this column, please go to the National Post website: http://business.financialpost.com/2012/06/05/fort-mcmurray-economic-centre-of-canada/?__lsa=4b505818