Thanks to retired Professor Reimar Kroecher for his seemingly well thought out hypothesis. However linking a strengthening CAD solely to higher oil exports seems myopic. Let's scratch the surface.

The foreign exchange market is very complex. While rates do vary based on whether traders think our economy is going up or down, there are a myriad of other influencers of a country's exchange rate, including:

- it's inflation rate (the higher the inflation, usually the lower the exchange rate)
- it's interest rates (the lower the interest rates, usually the lower the exchange rate)
- it's trade surplus/deficit (a trade deficit or low trade surplus should depresses the exchange rate)
- it's public debt (high debt leads to a lower exchange rate)
- it's political stability (more unrest leads to a lower exchange rate)
- a currency traders appetite for risk (CAD is considered a risky currency) which is in turn is influenced by the strength/weakness of Canada's largest trading partner (USA) and other geo-political (e.g. wars, civil unrest) and geo-economic (e.g. Greece default, EU fiasco) events.

See http://www.investopedia.com/[…]/050704.asp#axzz1k6Swomrz for an explanation of what influences exchange rates.

And certainly if exchange rates rise, Canadian manufacturers (who were decimated years ago) and their exports will diminish as it becomes more expensive for foreign countries to buy Canadian manufactured goods. The exchange rate pendulum swings back.

I encourage you to test Professor Kroecher's hypothesis in light of the above realities. One can only conclude, at best, that higher oil exports MAY cause the CAD/USD to rise.

Yes the CAD is a petro-currency, or perhaps more correctly, a commodity currency (oil, gas, trees, grains, copper, gold, diamonds, aluminum, uranium, etc). The CAD, blessed with an abundance of natural resources, peaks and valleys as the world varies its need for our natural resources. It has always been that way and always will...welcome to Canada!

As for your assertion that "sending unrefined Canadian oil to Asia is self-evidently [not] good", let's look at how much incremental tax revenue will be earned by Canada as a result of exporting via Northern Gateway 525,000 b/d of oil and 193,000 b/d of LNG (combined 718,000 b/d or 262 million barrels annually). See http://en.wikipedia.org/[…]/Enbridge_Northern_Gateway_Pipelines for pipeline volume statistics.

Let's assume for sake of argument, that incremental tax revenue by taxing authorities, direct and indirect, will be $20.00/barrel. Simple arithmetic objectively yields that the public purse would swell by $5.2 billion (yes BILLION) per year.

Now lets add to the above the potential incremental tax revenue if the Keystone XL pipeline materialized. According to http://en.wikipedia.org/wiki/Keystone_Pipeline Keystone XL will export 510,000 b/d of oil to the USA (186 million barrels annually).

Again using a tax rate of $20.00/barrel the public purse would be $3.7 BILLION richer.

Now, I'll let YOU imagine what GOOD THINGS tiny Canada can do with an additional $9 BILLION/year in its coffers.

As for devastations from an oil spill, you've hit the nail on the head...if anyone argues against your point, immediately dismiss them. However we cannot live life in a cocoon. Life by its very existence is risky and change is inevitable.

Each day we venture out into the world risking life and limb. However my car has whiplash protection, roll stability control, traction control, 8 airbags, side impact protection, a backup camera, blind spot information system and collision warning with brake support.

I think you get my point. It is inevitable that I must go out into the world daily, so let it be with the intention that I return home in the same physical condition in which I left, more or less.

"Winners and losers"
Yes there will be winners and losers, welcome to reality. Everyone is not a winner...virtuocracy is a fantasy.

From a personal perspective, I think your efforts would yield far more constructive results if you channeled them towards the CONDITIONS under which Northern Gateway is constructed and run rather than attempting to thwart inevitable progress. Just sayin'...

Hello fellow anonymous: That was certainly a well composed response - I admire your style, A+. I am not an academic, an analyst, a prognosticator of market trends. But I've noticed that issues that present profit on one side and the earth (not "resources") on the other draw the deepest divides. The position you have defended here is founded both in confidence and fear. Confidence that the economics that you describe are part of a free market system that claims inherent equanimity and parity; confidence that this planet has a limitless capacity for toxicity; that extracting and transporting toxins throughout the planet is, like some virtual reality game, for us to play and win. My sense it is fear however is the basis of the opinion and that is what makes it unstable - in spite of submission of many facts. Fear of asking big questions like what is humankinds true relationship to nature, who deserves what standard of living, what are we really capable of when it comes to modifying our means of living on this planet, is our legislative and regulatory system working, do we really have more to offer than to be the extractors of minerals, what happened to the adaptable, creative, enterprising Canadians. Those are the real questions but I can understand why they cause fear. However, that is the conversation towards which we are advancing - any thoughts on those?

Thanks for this other economic perspective Eric, I think it is important to allow Canadians to see that oil exportation and pipelines have their economic disincentives as well.
As for the above commenter, you also make a good point, your argument however carries with it a sort of blind bias towards the status quo of growth in capitalism that you seem to think is self-evidently correct. Your analogy between your cars safety features and the safeguards in place against an oil spill seem convincing, but there is a big difference. We NEED to go out into the world simply in order to live and function (albeit, you could use an alternative like a bus, subway or bike), whereas we don't NEED to export oil to China for 9 billion dollars of extra revenue each year. Sure it would be nice, but we seem to be doing just fine without it. As you soundly pointed out, we are exporting a lot of other natural resources, when does it stop? Finally, all those safety measures in your car are nice and all, but they still don't prevent thousands of accidents from happening each year.

Lets just all take it easy on this notion of growth before anything else. There are plenty of studies that show that prosperity is not synonymous with growth. Here is a good one for those interested: http://www.sd-commission.org.uk/publications.php?id=914

Anthony W. Persaud

I think your points are well thought out. The problem I have with the Dogwood Initiative is that it should be named the Dogmatic Initiative. Their only solution is NO, when it should be, how can we allow for every possible likelihood and apply as many safety systems as possible to prevent environmental damage. That would be a mature response.

Dear whats-yer-name:

You give us a closely-reasoned (if a bit long-winded) argument for the export of crude and the building of pipelines. Unfortunately, some of the arguments you make need to be re-evaluated.
The increase of $9 billion/year in tax revenue will come at a huge cost.
1) Government-fuelled inflation. Conservatives are notoriously spend-thrift and none of this extra money will actually pay down that National Debt (remember the GST?). Instead it will be spent of buying themselves re-elections. And perhaps, gold-plating the government-issue private jet currently being used by Mr. Peter McKay to transport his family from festival to festival. Additionally, this will further tilt Canadian political power towards the East and make the West (where this polluting pipeline will e installed) more helpless.
2) $9 billion is a pittance, when the same oil will IMMEDIATELY sold on the open market for $120 - $200+ per bbl. creating revenues of $50 - $100 billion for the oil companies. These are revenues that will be lost to Canada. This crude should be turned into consumable products in Canada. Current cracking technology allows for extracting gasoline from crude on an almost one-to-one basis, thus creating an additional revenue of $200/barrel+. In addition, this will create high-paying jobs in Canada.
3) The Petro-dollars generated can (and n fact MUST) be used to fund alternate-energy research. At the huge cost of fossil-based energy, there is research aplenty in this area. As soon as the inevitable break-through comes, the Victorian-era engineering artifice that is the combustion engine will disappear. Smart business thinking is that you should be the one to invent the product that makes your current product obsolete.

On a personal note, my dear Anon, I would not really base all my reasoning on Investopeda articles, if I were you. For one thing, it is hardly a social, political or economic knowledge-base; it simply carries articles on currency trading. Second, the articles are not peer-reviewed and, therefore, often espouse diametrically opposite views. Third, currency traders are the hyenas of the body economic -- the old joke about them goes as follows:
Distraught Egyptian Mom: My first born son is dead! My first-born son is dead!!
Currency Trader: Yeah, but I bet you can sell the meat for a lot of money.

There are more things in heaven and earth, Horatio, than are dreamt of in your philosophy.

The focus should be on how do we keep the project as safe as possible. Build the pipeline safely, build a refinery, don't say no, or it means no benefit in BC. The pipeline will get built through us or around us.