Question

An alternative proposal is to build a pipeline from Alberta to Eastern Canada and encourage more upgrading and refining of raw bitumen to capture more of the value added from the resource. In addition, by selling oil to the East at the below the world price, manufacturing in central Canada could be stimulated. Discuss the implications of this strategy.

Answer 1

Ans. By building a pipeline from Alberta to Eastern Canada, it will help the Canadians to upgrade its existing technologies and more robust refining of raw bitumen by which more value to the resources are added and thus they are able to raise standards of living and well as capacity to refine more resources. Now, by selling oil to east below world price, manufacturers are able to upgrade their technology to produce more and more oil to supply to the east, as well as with increased volumes of oil produced increases, their profitability will also increase as more sales will lead to more production and thus more revenue and more profit at lower prices.