EnergyBC

Economic Impacts (more...)

The potential effects of the offshore oil and gas industry on the BC and Canadian economies would be substantial. However, there are several pro and con influences that must be considered with this endeavor.

East Coast Studies and West Coast Responsibilities	- recent economic impact studies of offshore oil and gas development on the east coast of Canada can help to determine the best strategies and policies to maximize economic and social benefits for the province of BC and its local coastal communities
	- a study of the impact on Newfoundland shows that over the period of 1999-2002, offshore activities have resulted in an increase of 14.7% in gross domestic product, 6% in personal incomes and 3.7% in total employment (provincial unemployment dropped by 2.4%) (Community Resource Services Ltd., 2003)
	- a similar assessment done in Nova Scotia for the period of 1990-2000 shows the cyclical nature of employment in the oil and gas industry as during the different stages of operation (Garnier-Pinfold Consulting Economists Ltd., 2002)
	- a study by Royal Roads University (2004) estimated that investments offshore BC would be $1.3 billion for exploration and development and operating costs would run around $42 million/year, while total revenue generated from all related sources would come to around $488 million/year
Multiplier Effects	- oil and gas development can generate income and economic growth both directly and also through indirect methods (called multiplier effects) such as: revenue generated by processing the natural resources; production of the equipment and infrastructure; production and supply of consumer goods and services to meet the needs of those employed in the industry; and building and renting of housing for those employed in the industry
Offshore Revenue Concerns	- oil and gas revenue tends to be highly variable and cyclical in nature
	- revenue is influenced by international commodity prices which in turn are influenced by global political events
	- revenues collected by the provincial government will be at least somewhat offset by a reduction in equalization payments from the federal government
	- revenue generated by offshore resources tends to be less than revenue generated by those engaged in conventional land production methods (2-4% royalty rates for Newfoundland and Nova Scotia offshore production vs. 16-28% royalty rates for Alberta and BC conventional production) (SFU, 2004)

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