Source: Matt Price, Huffington Post
What follows is a brief excerpt in terms even a non literate economist like myself would understand. I did expect that the tar sands were a sink hole for federal monies, not only directly in terms of capital investment based on tax write offs but also in giveaways through lack of environmental cleanup, CO2 emissions and resultant burden on the environment. I did think that as we were up until recently tied to costing on carbon tax, that there would be monies owed by high polluting companies. It is, in the main, a factor of petro dollars dictating our real finances.
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The term "Dutch Disease" was coined in the 1970s after the Netherlands discovered a large natural gas field. The country's exchange rate became tied to the rising price of natural gas, pricing its manufacturing goods out of international markets and leading to job losses.
In 2011, the Canadian dollar traded on average above the U.S. dollar for the first time since 1976. This puts an extra burden on Canadian companies who export, since it makes their products less competitive versus products from other countries.
While experts will tell you there are various factors behind our exchange rate, it's hard not to see the close correlation between the price of oil and the exchange rate, charted in a graph here. Thanks to increased oil production, we now have a petro-dollar that rises and falls with the price of oil.
And, with oil being a finite commodity, its price will only rise, taking our dollar and manufacturing jobs in Ontario and Quebec along with it.
How many? One economist at the University of Ottawa has estimated that 42 per cent of manufacturing job losses in recent years are due to Canada's case of Dutch Disease. Another study out of Montreal points out that while 95 per cent of Canada's oil reserves are in Alberta, 75 per cent of Canada's manufacturing output is located in Eastern Canada, making this a growing issue of regional fairness.
So when you hear boosters argue how great the tar sands are for the Canadian economy, it's a new kind of snake oil, this time of the viscous and toxic kind called "bitumen."
If we were at all serious about both regional economic fairness and about charting a new economic future that isn't based on trashing our planet, we'd reverse the growth of tar sands production and instead invest heavily in the ample renewable energy resources that exist all across the country.
