43% of oil becomes fuel for our cars. What about the rest?

MONTREAL, Aug. 29, 2013 /CNW Telbec/ - Filling up at the gas station is certainly the most familiar use of oil, but it's far from the only one. In fact, hydrocarbon by-products are all around us and shape our daily lives, in addition to supplying an entire sector of economic activity built around refineries.

"Someone who wants to free himself from oil would have to make do without telephones, ballpoint pens, clothing made from synthetic fibres like polar fleece, glasses, toothpaste, all kinds of tires, and thousands of other products made from plastic, a by-product of oil. Some of these products are even designed, in Montreal, like Eska water bottles," explains Jean-François Minardi, public policy analyst and author of an MEI Economic Note published today.

Over the years, a petrochemical sector has developed around Montreal's refineries, providing quality jobs for 3,600 workers. One part of this industry is unique in North America: the polyester production chain. This chain connects the Suncor refinery with three companies that, in turn, transform hydrocarbons into different chemical compounds to produce a polyester plastic used in the manufacture of recyclable plastic bottles, food packaging, and carpets, among other things.

"This economic ecosystem, in which one company's products and even waste become the raw materials for another company, is heavily reliant on a steady supply of affordable hydrocarbons. This is exactly what the Western provinces have to offer. The question is therefore not if this oil will be transported to Quebec, but how: using a network of pipelines, most of which already exist, or by train, a riskier option," says Mr. Minardi.

With a refining capacity of 130,000 and 265,000 barrels a day respectively, Suncor and Valero in Quebec City (formerly Ultramar) are small players at the global level. They have to deal with competition from super-refineries like the one in Jamnagar, India, whose daily production is over a million barrels of oil.

The Economic Note entitled The Economic Benefits of Pipeline Projects to Eastern Canada was prepared by Jean-François Minardi, public policy analyst at the MEI, and is available at www.iedm.org. Although released today, this publication was written in June, before the tragedy that took place at Lac-Mégantic on July 6, 2013.

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE: MONTREAL ECONOMIC INSTITUTE

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