TD Report Cautions Pipeline's Economic Impact May Fall Short of Government Estimates

A new oil pipeline to the West Coast could have a significant impact on Canada's and Alberta's economies, but its actual effect may be less than predicted by government estimates. According to a report from TD Economics, a pipeline with a capacity of one million barrels per day would boost the national economy by 0.6% by the 2040s, as well as 3.5% in Alberta.

However, using more conservative assumptions, economists Marc Ercolao and Likeleli Seitlheko wrote that the increase could be around 0.3% nationally and 2% provincially. They noted that even if the actual impacts fall short of official estimates, the pipeline would still contribute to growth.

The pipeline, which would largely follow the route of the existing Trans Mountain line, is expected to cost between $35 billion and $44 billion, with 90% of the costs to be shouldered by the federal and provincial governments. Alberta has filed its application for the project, which aims to boost Canada's oil exports by 20% and more than double what currently goes overseas on tankers to Asia.

The TD report also cautioned that Asia's willingness to absorb Canadian barrels reflects a longer-term diversification strategy aimed at securing stable supply from non-Middle Eastern sources. However, it noted that Asia's oil use is expected to flatten over time as Chinese demand approaches a peak in the next decade.