Oilsands economics 101

Oilsands economics 101

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Alberta Premier Alison Redford and Ontario Premier Dalton McGuinty have kicked off a long-overdue debate about the role of Canada's petro-currency and its impact on manufacturing jobs across the country. It's about time.

With growing attention on the very real environmental impacts of the tarsands, there's been a concerted push by the oil industry and its allies in the Alberta and federal governments to talk up the economic benefits, not just for those in Alberta but across Canada. It doesn't ring true, however, anywhere in the country where the soaring Canadian dollar is squeezing jobs in manufacturing, tourism and other industries.

Back when oil and other commodity prices were lower and the loonie traded at 67 U.S. cents, Canadian manufacturing products could better compete against international rivals, leading to more jobs at home. Now that it's consistently at parity, or above, companies such as Caterpillar Inc. and Controlladora Mabe SA have more incentive to close up shop and move elsewhere.

The latest figures from Statistics Canada show a loss of 627,000 manufacturing jobs over the past nine years - many times higher than the number of jobs created by the oil boom.

The reason the two are connected is due to something called "Dutch Disease." The term was coined in the 1970s after the Netherlands discovered a large natural gas field, putting upward pressure on its currency and thereby hurting its manufacturing sector.

Read more: http://www.ottawacitizen.com/business/Oilsands+economics/6250226/story.html#ixzz1oM51G95I