Canadian Oil Sands and the US Economy

The development of the Canadian oil sands could represent an economic boom for the United States creating more than 342,000 new (not saved) US jobs, according to a study by the Canadian Research Institute and commissioned by the American Petroleum Institute. The study entitled “Canada’s Oil Sands and Economic Impact on the USA”, said that more oil sands production could stimulate economic activity in both countries. With increased production and investment in oil sands, demand for US goods and services would add an estimated $34 billion to US gross domestic production in 2015 and $42 billion in 2025. The heaviest job growth in the US would take place during 2011-2015 when 342,000 new jobs would be created. These new jobs would cover a broad range of industries and sectors.

Oil sands reserves play an increasingly important role in the economic development of Alberta Canada and the United States. The study is based on the assumption that oil sands production would rise from the current 1.4 million b/d to around 4.0 million b/d in 2025. The study further estimated that about $25 billion in new investment would be required and $7 billion in annual operating costs in the peak year of 2015 would be needed to meet the oil sands output.

Commentary - The US relies heavily on about 2.1 million barrels of oil per day from Canada or about 23% of our total imported oil per day. The Canadian oil sands development is very important to the US economy in many ways. If this study is correct and the investments are made, the US economy could benefit greatly with the addition of new jobs. According to the study the benefits do not fall to just one industry but are broadly shared across many industrial sectors, especially the steel industry. I do have some concerns about the environmental impact of the oil sands, hopefully the environmental concerns will be addressed. The study did not address these concerns.