Enbridge challenged on pipeline benefits

Forecasts are too rosy; critics claim

Enbridge faced tough questions Wednesday on its predictions that more than $300 billion in economic benefits will flow from its proposed $6-billion pipeline to the West Coast to carry oilsands bitumen to Asia.

In its second day of questioning at the federal Joint Review Panel, the Alberta Federation of Labour challenged the company's forecasts of the economic benefits to Canada.

Federation lawyer Leanne Chahely asked economists why their forecasts say little about the impact of the pipeline on gasoline prices but tout major economic gains for oil producers and a net benefit for Canada.

Enbridge contends the proposed pipeline would allow oilsands producers to get higher prices - up to $20 more a barrel - for bitumen by opening up new markets in Asia.

The company also says other conventional oil producers in Western Canada would also get $2 to $3 more per barrel.

Enbridge panel economist Bob Mansell said the local price of gasoline will likely only increase by about 1.5 cents per litre as a result of the "price uplift" that comes from Gateway sending 585,000 barrels of bitumen a day to Asia. Mansell said it's "likely" Canadian refiners would absorb that small additional cost, because there's pressure to keep the price low to compete with gasoline imports.

Over a 35-year period, the higher prices for crude oil feedstock would cost refiners in Canada about $12 billion, Mansell said.

But that additional cost to the refining industry has been taken into account in the company's forecast, which says Canada will gain $312 billion net benefit over the 35-year forecast, said Mansell, a University of Calgary economics professor.

Even with the pipeline shipping out 585,000 barrels of bitumen a day, there will still be plenty of crude oil feedstock to supply Canadian refineries, the economists said.

AFL president Gil McGowan disputed the net benefit figures.

"They want Canadians to believe statements refiners will not pass the higher cost on to consumers .

"Does anyone really believe that? The net benefit to Canada is a house of cards. It is based on the assumption that all oil producers in Western Canada, not just those with bitumen in the pipeline, will get higher prices for their product."

There is also no guarantee that Chinese refiners will continue pay the "Asia premium" when bitumen starts flowing, he said. Saudi Arabia currently charges a higher price for crude it sells to China, called the Asian premium.

Edmonton Journal, Thursday, September 6, 2012

Byline: Sheila Pratt

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