Energy becomes Canada's top export

By Eric Beauchesne
Times Colonist (Victoria)
11-Nov-2005

OTTAWA -- Energy has become Canada's No. 1 export, easily surpassing both machinery and equipment and automotive products, while also boosting total exports to a record high and pumping up the country's trade surplus.

"Energy has now moved firmly into first place among all our exports," senior Statistics Canada economist Philip Cross said.

The only other times that energy was Canada's top export was during the mid-1970s and early-1980s energy crises, he added.

Machinery and equipment had previously been Canada's No. 1 export, followed by auto products.

Energy exports crossed that milestone in August, according to revised figures for the month released Thursday with the September trade figures. Energy maintained that top spot in September with export sales rising above the $9-billion mark for the first time ever.

However, Canadians are also energy importers.

"The value of Canada's exports and imports both hit record highs in September, thanks to soaring outbound shipments of natural gas and inbound shipments of crude petroleum in the wake of back-to-back hurricanes," Statistics Canada said.

However, there is more to the strong trade report than just energy, other analysts noted.

"Canada's trade balance is still holding up, even in the manufacturing sector as the economy adjusts to the higher Canadian dollar," Nesbitt Burns economist Sherry Cooper said.

The strong trade performance, combined with evidence of a strong domestic economy, will reinforce the Bank of Canada's determination to continue raising interest rates to head off inflation, she and other analysts said.

"The Bank of Canada will take this surprisingly strong report, on the back of the surprising strong jobs report, as a sign that they are on the right path and will continue to raise rates," Cooper said.

In September, exports jumped 2.8 per cent to a record $39.8 billion, while imports posted a more moderate 1.4 per cent gain to a record $32.7 billion, Statistics Canada said.

As a result, the trade surplus rose to $7 billion, $1 billion more than expected, and up from an upwardly revised $6.4 billion in August, it said.

"Hurricanes Katrina and Rita sent natural gas prices soaring, resulting in a big gain in the value of natural gas exports going south of the border," it said, noting that about three-quarters of the increase in exports was due to higher natural gas prices.

Canada's surplus with the U.S. exceeded $10.7 billion, the second highest level ever, and up from $9.4 billion in August, as exports to the U.S. surged while imports from there edged down.

Canada's trade deficit with other countries, however, rose to $3.7 billion from $3 billion, as exports overseas shrank slightly, while imports surged nearly six per cent, reflecting increases in consumer goods from China and higher prices for oil from Saudi Arabia and Russia.

Exports of natural gas surged 26.7 per cent in September to a near record $4.4 billion, reflecting a 25 per cent jump in prices, which followed a 14.6 per cent surge in August. While petroleum-product exports also rose, crude-oil exports continued to edge down from what was a record high two months earlier.

Times Colonist (Victoria), Page C06, 11-Nov-2005
Alberta oilsand juggernaut 'could crush B.C. growth'
By Scott Simpson

VANCOUVER -- Alberta's oilsands are an economic juggernaut that could crush British Columbia's efforts to expand its northeast natural gas industry, a new B.C. Progress Board report warns.

The report says British Columbia should seek a collaboration with Alberta on job, transportation, and export strategies, lest Alberta simply "outbid' B.C. for gas industry workers and crimp economic growth in this province.

The report says B.C. has a lot of leverage to apply, if necessary, to encourage Alberta's cooperation.

B.C. assets include highways, transmission lines, oil pipelines, rail lines and ports without which Alberta cannot get many of its energy products -- including crude oil, natural gas, coal and electricity -- to market, says the report.

For example, Alberta-based Enbridge Pipelines just announced a $4 billion pipeline project running from Edmonton to the B.C. port town of Kitimat, planning to export Alberta oil sands crude to markets in China and the United States.

"In many ways, British Columbia holds the key to getting those products and services to market," says the report.

"Just as British Columbia is well advised to strike a joint labour strategy with Alberta to protect British Columbia interests, Alberta is well advised to develop a joint export strategy with British Columbia to protect Alberta interests."

The progress board was created in 2001 by Premier Gordon Campbell to serve as a senior policy advisory body to the provincial government.

This week it issued a report, Strategic Imperatives for British Columbia's Energy Future, that says B.C. must "protect and promote" its considerable energy assets -- and recognize that those assets are central to maintaining and improving B.C.'s high standard of living.

It says that "the development of the Alberta oil sands and the need to get both oil and electricity from the development to market provide an unparalleled opportunity for cooperation and resulting benefit between the two provinces."

Conversely, B.C. has relied on Alberta-based labour and investment to develop the gas industry in this province -- it uses pipelines built by Alberta-based companies to carry some of its gas to markets in eastern Canada and the United States.

"The development of the Alberta oil sands will put the Alberta government in a strong surplus position fiscally for years to come.

"Alberta's coming wealth will create a potential threat to British Coloumbia as better wages, take-home pay, health services and access to education in Alberta are likely to put enormous pressure on the British Columbia labour market, particularly in the area of skilled trades and engineers."

The report notes that those skill sets are "in short supply worldwide."

"Moreover they are the very skill sets British Columbia needs to grow its energy sector and to complete a wide array of transportation projects now underway in the province."