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Economics of the oil sands: its more than jobs and GDP (Canadian Case study)
Submitted By
Nitin Bighane Roll no. 224
Introduction
Oil sands, tar sands or, more technically, bituminous sands, are a type of unconventional petroleum deposit Oil produced from bitumen sands is often referred to as unconventional oil or crude bitumen, to distinguish it from liquid hydrocarbons produced from traditional oil wells As of 2007, crude oil prices were significantly in excess of the average cost of production, which was about $28 per barrel of bitumen. However, bitumen production costs are rising rapidly, with production cost increases of 55% from 2005 to 2007, due to shortages of labor and materials In mid-2007, Royal Dutch Shell announced that in 2006 its Canadian oil sands unit made an after tax profit of $21.75 per barrel, nearly double its worldwide profit of $12.41 per barrel on conventional crude oil According to the WEC, natural bitumen is reported in 598 deposits in 23 countries, with the largest deposits in Canada, Kazakhstan, and Russia Canada Oil Sands Worth $1.4 Trillion
The oil sands resource is mind-bogglingly large approximately two trillion barrels of oil in place of which up to 315 billion barrels are technically recoverable. Statistics Canada puts the present value of bitumen reserves at almost $285-billion dollars.
While production currently sits at just over two million barrels a day, this is expected to more than double by 2030. But, is more production always good? Not necessarily The planned 1,700 mile Keystone XL pipeline can transport up to 830,000 barrels of oil a day, or half of what we currently import from the Persian Gulf to U.S. refiners Thousands of jobs will be created from construction of this pipeline. And the potential trade impact on jobs is even greater. That is because for every dollar spent on Canadian exports, such as crude oil, up to 89 cents is in fact spent on imports of U.S. goods and services to Canada. OPEC spends just 33 cents on U.S. imports. The potential trade impact of the pipeline equals 90,000 U.S. jobs every year Sector is enormously capital-intensive, with 16.5 per cent of Canadas capital stock