A recent report from TD Economics suggests that while a proposed new oil pipeline to the West Coast could have positive impacts on Canada and Alberta’s economies, the projected benefits may be overstated by the provincial and federal governments. The analysis anticipates a potential 0.6% GDP increase for the national economy by the 2040s and a 3.5% boost for Alberta.
Economists Marc Ercolao and Likeleli Seitlheko caution that these estimates should be taken with a grain of salt as they are based on figures provided by project proponents and government entities with vested interests in advancing the development. They propose more conservative assumptions, suggesting a national GDP rise of around 0.3% and a provincial increase of approximately two percent.
Even with more modest impacts than officially projected, the pipeline could still significantly contribute to economic growth, especially when considering enhanced market access and export diversification benefits, according to Ercolao and Seitlheko.
The proposed pipeline, which would be constructed and managed by Crown-owned Trans Mountain Corp, is expected to cost between $35 billion and $44 billion. Currently, the majority of this cost (90%) is planned to be covered by federal and provincial governments, with Pembina Pipeline Corp holding a 10% stake.
The pipeline, set to run to a port south of Vancouver along the existing Trans Mountain route, could potentially increase Canada’s oil exports by 20% and more than double the current volume shipped overseas to Asia. This expansion is aimed at capitalizing on Asian markets and diversifying oil supply sources away from the Middle East.
While the pipeline project is seen as crucial for Alberta’s export strategy, there are concerns about long-term demand trends in Asia, particularly as countries like China transition towards cleaner energy sources and electric vehicles. Additionally, Canadian oil faces competition from other global suppliers like Russia.
The Alberta government is optimistic about the pipeline’s prospects and anticipates it will be designated a project of national importance in the near future, with construction possibly commencing by late 2027.