Canada Largest Producers And Exporters Of Energy Economics Essay

Canada is one of the universe ‘s largest manufacturers and exporters of energy. In 2008, Canada produced 19.3 quadrillion British Thermal Units of entire energy, the fifth-largest sum in the universe. From hydro dikes to atomic power workss to oil littorals to natural gas, Canada ‘s diverse energy system is a mosaic of beginning working together to supply the energy Canada demand for her domestic energy ingestion and the national industry back up our economic system straight, affects the support of all.

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Canada Energy Militias

Canada is the largest manufacturer of natural U, bring forthing tierce of planetary supply, and is besides the universe ‘s prima manufacturer of hydro-electricity, accounting for 13 % of planetary production. Canada besides produces crude oil, natural gas, coal, sulfur, C2H6 and oil for energy.

Harmonizing to the Oil and Gas Journal, Canada had 178 billion barrels of proved oil militias as of January 2009, and a staying constituted militias of conventional rough oil at 1.5 billion barrels ; exploratory and development boring, every bit good as new enhanced recovery strategies, added entire modesty of 130 million barrels. Canada is a net exporter of oil, with 2008 net export of 1 million barrels, about all of the state export flow to the Unites States, and it is systematically the top provider of U.S oil imports. Canada ‘s oil production was 3.35 million barrel in 2008, Canada ‘s oil production has steadily risen over the last decennary, as new oil littorals and offshore undertakings have come on-stream to replace ageing, mature Fieldss. Canada consumed an estimated 2.32 million barrels of oil in 2008.

Canada had 57.9 trillion three-dimensional pess of proved natural gas militias. Canada is the 2nd largest manufacturer of natural gas in the Western Hemisphere, after the United States. Canada is besides an of import beginning of the United States natural gas supply ; in 2008, it exported 3.6 trillion three-dimensional pess natural gas to the United States, stand foring 16 per centum of United States natural gas ingestion and 90 per centum of entire United States natural gas imports that twelvemonth. Like the oil industry, Canada ‘s natural gas production is concentrated in Alberta. Even though there have been some new conventional natural gas discoveries in Western Canada Sedimentary Basin, surveies predict future natural gas production will probably center on coal bed methane and shale gas sedimentations, and offshore natural gas Fieldss.

Staying established militias of C2H6 is estimated at 762 million barrels as 2008. The bulk of C2H6 was used as feedstock for Alberta ‘s petrochemical industry. The staying constituted militias of other Non Gas Liquids: propane, butanes, and pentanes is 1014 million barrels in 2008, and the staying constituted militias of sulfur increased to 186 million tones, sulfur and other Natural gas Liquid demand are expected to bit by bit increase. The staying militias of all types of coal are about 37 billion dozenss. This monolithic energy resource continues to assist run into the energy demands of Canadians, providing fuel for about 59 per centum of Canada ‘s electricity coevals. Canada ‘s entire coal production was 32.5 million dozenss of marketable coal, most of which was sub-bituminous coal destined for mine power workss. Canada ‘s coal militias represent over a thousand old ages of supply at current production degrees. … . The export market for coal remained strong due to the continued, though reduced, demand in the Pacific Rim states for steel production.

Canada had produced 66 398 gigawatt hours of installed electricity bring forthing capacity in 2008. Canada produced 595 billion kWs of electric power while devouring 530 billion. Hydroelectricity represents the largest portion of Canada ‘s electricity coevals, followed by conventional thermic and atomic.

Canada Domestic Energy Consumption

Canada is one of the universe ‘s most energy intensive economic systems on a per capita footing. In portion this is due to the state ‘s size, clime, and weight of energy-intensive industries such as aluminum, mush and paper. Canada ranked 4th in most entire energy per individual of all states, 8,411 metric tons of oil tantamount per individual in 2008. Canada ‘s use is much greater than most other developed states, and good about other huge states, and states with rough climes, states such as Sweden, Australia and Russia. In 2008, the largest beginning of energy ingestion in Canada was oil, 32 per centum, followed by hydroelectricity, and natural gas ; 25 per centum. Both coal and atomic constitute a smaller portion of the state ‘s overall energy mix, around 7-10 per centum.

Canada Energy ‘s export

Canada is the United States most of import energy trading spouse, bask an mutualist energy relationship, trading oil, natural gas, coal, and electricity. Almost all of Canada ‘s energy exports go to the United States doing it the largest, Canada sends over 99 per centum of its rough oil exports to the United States, and it is one of the most of import beginnings of United States oil imports. Canada besides sent over 520,000 barrels crude oil merchandises to the United States, the single-largest beginning of United States crude oil imports. Canada has extended oil grapevine connexions with the United States. Canada ‘s company maintains connexions between major Canadian metropoliss and Chicago, seamlessly inter-grading the Canadian and United States constituents of its web. Canada besides exported 3.9 trillion three-dimensional pess of natural gas to United States yearly. Canada exports over half its coal production, largely to Asia, with the remainder traveling chiefly to Europe and Latin America. Canada have an extended electricity trade with United States, and the electricity webs of the two states are to a great extent integrated, Canada exported about 33 Billion kW of electricity to United States. And it ‘s oil littorals manufacturers have attracted increasing attending from foreign oil companies, particularly Asiatic companies seeking to fulfill turning demand in their states and unafraid equity oil bets. Korean National Oil Corporation purchased 250 million for rough oil, China ‘s Sinopec purchased a 40 per centum interest in an oil littorals undertaking, and the Chinese National Petroleum company ain geographic expedition rights in Alberta.

Problems caused by Canada ‘s energy

Economy

Canada ‘s oil militias are one of the largest oil militias and provider, brining great among of luck, most economic systems with such abundant natural resources have really experienced economic troubles. This phenomenon referred to as the Dutch Disease, occurs when big exports of natural resources lead to a strong currency which, in bend, hurts local industries. The traditional Canadian fabrication sector is confronting challenges because of such factors as international competition, high input costs and a comparatively strong Canadian dollar. The sector ‘s economic troubles coupled with big exports of natural resources, have led observers to theorize that Canada may be sing its ain version of Dutch Diease ; an addition in grosss from natural resources will finally de-industrialise a state ‘s economic system by raising the exchange rate, which makes the fabricating sector less competitory and public services entangles with concern involvements.

The Canadian economic system is executing good, GDP is turning near to its possible, rising prices is low and the federal authorities is bring forthing budgetary excesss. Furthermore, the per centum of unemployment is low. However, the Canadian economic system has been losing fabrication occupations since the center of 2003. Canadian exports are progressively natural-resource-based. While Canada ‘s chief exports in recent old ages have alternated between the automotive sector and the machinery and equipment sector, energy was Canada ‘s individual largest export as of 2008. Huge sums of resources are used in order to pull out it from the land, in an economic system near to it full productive capacity, which Canada is, some production factors, such as capital and labor will non be available for other sectors of the economic system as they are directed towards oil extraction. The resource sector therefore crowds out the remainder of the economic system. Furthermore, Canada ‘s existent trade shortage in non-resource goods had been widening in recent old ages. The rise in the comparative value of the Canadian dollar since 2002 is a complex phenomenon but many analysts have attributed it, at least in portion, to the lifting monetary value of oil. A recent working paper by the International Monetary Fund found a positive correlativity between Canadian oil exports and the value of the Canadian dollar. Furthermore, an article in the Economist asserts that foreign exchange traders now treat the Canadian dollar as a petro-currency, significance that its value is strong correlated to the monetary value of oil. The find of oil, as an it is an of import measure of a natural resource, it is frequently associated with big foreign direct investings and particularly in a little unfastened economic system such as Canada ‘s, with big export grosss. This influx of money from abroad puts upward force per unit area on the domestic currency, which appreciates and therefore makes other exporters less competitory by increasing the comparative monetary values of their goods and service abroad. The influx of resource money may besides make extra demand in the domestic economic system. The monetary values of production factors, such as labor, besides rise, go forthing some sectors of the economic system unable to get by with increased production costs.

The Canadian economic system is exhibiting many systems of the Dutch Disease: a lifting resource-led export sector coupled with a fighting fabrication sector and a lifting currency. Contract to the Netherlands ‘ experience in the 1970s, nevertheless, labour costs have non yet increased significantly. Rising labor costs were one of the chief factors restricting the fight of the Netherlands ‘ non-oil exports. Unit labour costs, which addition when labour compensation additions more quickly than labour productiveness, have been comparatively stable in Canada although there is clearly an upward tendency since the beginning of 2005. A lifting unit labour cost is normally a forerunner of rising prices and a good index that there is extra labour demand in the economic system.

However, many export-oriented companies are utilizing currency derivative merchandises, such as currency options, which shield them from any negative impacts of currency volatility. Furthermore, works closings and restructuring programs are normally long-run consequence of the Dutch Disease. As the Dutch experience indicates, energy grosss can hold long-run impacts on the economic system. The extent of the job in the Netherlands became to the full evident merely towards the beginning of the 1980s when the grosss from gas resources started worsening. The other parts of the economic system, which had been neglected, were unable to replace the sudden loss of gas grosss, and a period of slow growing and high unemployment followed.

Environment

Coal Bed Methane are the gasses, chiefly methane, formed in coal seams, The methane is presently add to natural gas in some countries of Canada to better the power provided. Coal Bed Methane is formed through the biochemical and physical procedures during the natural decay of works affair into coal. The bacterial re-separation causes gasses such as methane, butane, propane, C2H6, C dioxide, and N to organize. Coal Bed Methane is most normally found in countries with once high sums of works affair, such as the Southern country of Canada. In order for Coal Bed Methane to be refined into a power beginning, it needs to be flushed to the surface. Running H2O through the unfastened Coal Bed Methane good separates the gasses from the coal. During this procedure, the H2O becomes extremely sodic, because of the high concentration of Na contain in the H2O. In many Coal Bed Methane developments, the H2O is pumped onto the land, the H2O is disposed of by either deluging a piece of land or by misting it into the air. If the H2O is pumped onto the land, it destroys the ecosystem by killing off works life, and animate beings as of nutrient concatenation consequence. If it is misted into the air, it kills off works life in a much larger country. IN add-on, the H2O has a high sum of gasses left in it, terrorist would now hold a new chances to great mass onslaught by dispatching pipe of the contaminated H2O and light it on fire.

Coal Bed Methane is being considered for usage chiefly in Western Canada and the Maritimes. This engineering which is used on a big graduated table in the United States, has been the cause of many ailments from both husbandmans and occupants of the countries in which it was developed. The development of the Coal Bed Methane brings great dangers to the environment and unequal development to Canada ‘s regional development. Company who disregards the environment safety and sustainability will hold an unjust economic advantage.

Policy Deduction

Norway ‘s state of affairs shall be used to assist Canada to avoided the resource expletive, and how it used oil grosss to beef up its over economic system. Canada need to restrict pay additions to avoid an economic system downswing. As celebrated earlier, lifting labor costs exacerbated the loss of fight of Dutch fabrication companies. In Norway, salary additions were limited to the rate of growing in productiveness of the fabrication sector, partially having to Norway ‘s extremely centralised pay dialogue system. This construction allowed employers and brotherhoods to see the broader image instead than give to the demands of peculiar involvements. Norway was therefore able to avoid a state of affairs where important pay additions in the turning resource sector led to upward force per unit area on rewards in the remainder of the economic system. A centralised pay dialogue system would about surely non be executable in Canada because of really different traditions sing labour dialogues. Nevertheless, authoritiess can guarantee that wages within their domain of influence are linked to growing in productiveness in order to restrict upward force per unit area on rewards and monetary values.

Canada need to avoid inordinate authorities disbursement in order to cut down the force per unit area on the domestic economic system and the domestic currency, for illustration, the Norse authorities adopted financial policies that involved financial subject, debt decrease and the constitution of a crude oil fund. When authoritiess may be tempted to utilize resource royalties for big additions in public disbursement, such disbursement may ensue in inflationary force per unit areas. In the Netherlands, public expenditures as a per centum of GDP rose by more than 10 % in a decennary. By 1977, Dutch authorities disbursement represented a larger portion of GDP than was the instance in any other West European state. Norway, on the other manus, was more disciplined in its financial policies. Within Canada, the Alberta authorities has shown similar subject, and has eliminated its net debt ; it now has net assets transcending $ 15 billion. It has besides used some of the grosss from natural resources to take down the general degree of revenue enhancement.

Furthermore, puting up a fund for resource grosss may be one tool to protect an economic system from the Dutch Disease. Because of the volatile nature of resource grosss, a fund can be used to even out authorities grosss between good and bad times. A resource fund besides reduces aggregative demand and the inflationary force per unit areas associated with it. A fund denominated in a foreign currency, as in the instance of Norway, can besides assist in controling a bullish domestic currency and the associated negative impacts on non-resource sectors. Non-resource sectors are frequently associated with positive outwardnesss, and that a diminution in these sectors consequences in spillover loss. In Norway, this loss may hold been reduced because of the degree of engineering required for oil extraction. Unlike states with more conventional energy militias, Norway ‘s seaward oil extraction requires much capital and technological expertness. Norway ‘s oil sector is, hence, associated with invention and know-how. Furthermore, the capital-intensive nature of the sector has mitigated concerns about upward force per unit area on rewards.

A similar statement can be made about Canada ‘s oil sands militias, which require a high grade of technological invention and capital for their extraction, authoritiess could seek to minimise the negative impacts of the Canadian dollar on other non-resource industries associated with positive outwardnesss.

With Western Economic Diversification Canada authorization to advance the development and variegation of western Canadian economic system, it works closely with other federal sections, western provincial authoritiess and industry to back up the development of new engineerings that have the possible to bring forth societal, environmental and economic benefits for the West and Canada as a whole. As new procedures and engineerings to pull out coal bed methane from deep coal being studied carefully to find if development is both economically and environmentally executable, Canada shall maintain a close partnership with Western Economic Diversification Canada to mandate and back up invention in the West, particularly of the development of engineerings that permit the sustainable development of natural resources, in peculiar, the development of new engineerings for geological storage of C dioxide and survey on the feasibleness of shooting C dioxide into deep coal beds as both a agencies of sequestering nursery gases and displacing of course happening methane. The ultimate purpose of these surveies is to develop new engineerings that will ensue in decreased nursery gas emanations and let for the recovery of clean firing methane for commercial usage. In add-on Canada ‘s authorities shall post a public audience procedure to turn to concerns about the impacts of coal bed methane development on communities, and modify their policy base on the populace ‘s concern, and the bulk ‘s benefit. Canada ‘s federal authorities shall compose guidelines and ordinances for the industrial development of coal bed methane to guarantee nation-wide environmental criterions.

Decision

As noted earlier, lifting labor costs exacerbated the loss of fight of Dutch fabrication companies. Canada needs to restrict pay additions to avoid an economic system downswing. A centralised pay dialogue system would about surely non be executable in Canada because of really different traditions sing labour dialogues. Nevertheless, authoritiess can guarantee that wages within their domain of influence are linked to growing in productiveness in order to restrict upward force per unit area on rewards and monetary values.

Canada needs to avoid inordinate authorities disbursement in order to cut down the force per unit area on the domestic economic system and the domestic currency. Furthermore, puting up a fund for resource grosss may be one tool to protect an economic system from the Dutch Disease. Furthermore, Canada needs to develop new engineerings that will ensue in decreased nursery gas emanations and let for the recovery of clean firing methane for commercial usage. In add-on Canada ‘s authorities shall post a public audience procedure to turn to concerns about the impacts of coal bed methane development on communities, and modify their policy base on the populace ‘s concern, and the bulk ‘s benefit. The ultimate purpose of these policies is to cut down nursery gas emanations and let for the recovery of ozone while in effort to maintain the Dutch Diseases into its minimum consequence to its domestic economic system and labour capital.

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