Refining has a big economic impact

Jun 11, 2015   | Categories: Canadian Fuels Association, Economy, Energy, Refineries
In oil-rich Alberta, people often think about the enormous economic impact of extracting petroleum resources.

Refining those resources is less top of mind, especially since Alberta is known for exporting oil to the rest of Canada and parts of the United States.

However, Alberta has one of the largest refining industries in Canada, says Matthew Foss. He is the chief energy economist for the Alberta Department of Energy, in the Energy Information and Analysis division.

The industry is characterized by “modern, world-class plants, efficient transportation corridors, and access to the world’s third largest crude oil reserves,” said Foss.

Four refineries, big production

Four refineries, with the capacity to process over 450,000 barrels per day, supply fuels and lubricants to the majority of households and businesses across Western Canada.

“This helps contribute to lower average gasoline prices in Western Canada, with the exception of Vancouver, than the rest of the country, due to the proximity of Alberta’s crude resources,” said Foss.

In addition to the significant value of the resource, jobs in the refining industry tend to be highly paid due to the amount of training and skills required to operate these highly technical processes. The jobs are stable, often located in the same places for a generation or more, Foss said.

That stability has built living communities around the refining industry, he said. Businesses supply services and materials to the refineries, while local families spend good salaries on living, shopping and dining.
 
“With a little bit of thought, you can trace the benefits into other aspects of our society, such as having career opportunities that provide students a reason to pursue education,” Foss added.


Refineries in Canada contribute big time

Canada-wide, the refining sector contributes $5.6 billion to the GDP and employs over 18,000 people, who on average earn 70 per cent more than those working in the overall manufacturing sector

A recent paper (PDF) prepared by the University of Calgary’s School of Public Policy estimated that the refining sector adds about $300,000 to the economy for each worker employed, noted Foss.

Source: Tombe, Trevor. Better off dead: “value-added” in economic policy debates. University of Calgary School of Public policy (2015). Author’s calculations using total output from CANSIM Table 031-0022, depreciation from CANSIM Table 031-0002, and number of jobs from CANSIM Table 383-0031. Education and health care excluded. Data for year 2010.


“This places the industry third behind oil and gas extraction and mining, and well above the Canadian average of $77,000 of value generated per worker,” said Foss.

“Naturally, this is why resource sector jobs tend to pay higher: they add more value to the economy.

“Going beyond the numbers, refineries and other industrial operations are highly sought after by most municipalities for not just the jobs they offer, but the tax base they create,” he added. “The sheer size of the investments involved in refineries, and with life-cycles spanning decades, offer years of relatively stable tax revenues for municipalities.”

For those employed in the industry, there are also powerful benefits on the lifestyle and family side, he added.

“It allows people to go home at the end of a work day and be active members in their families and their communities.”

For more information about refineries in Canada, check out these other blog posts:

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