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The Economics of Canadian Oil Sands


  • Anthony Heyes
  • Andrew Leach
  • Charles F Mason


We analyze the status of Canadian oil sands and examine future prospects. Our analysis suggests sustained activity in the sector in the medium- to long-term even with challenging changes in the surrounding economic and policy circumstances (in particular low oil prices and a redoubled commitment to more aggressive climate policies by Canada’s provincial and federal governments). However, a combination of an expectation of a sustained increase in benchmark oil prices and the expected relaxation of transportation constraints will be needed to stimulate significant additional growth in production. We provide an overview of the basic production economics, as well as the economics and politics of getting product to market by pipeline and rail. A review of environmental impacts of Canadian oil sands development reveals significant concerns with respect to air quality, water quality, wildlife and other environmental impacts. However, we find that existing research on the environmental and wider social impacts is insufficient to underpin credible benefit–cost analysis of oil sands activities and development.

Suggested Citation

  • Anthony Heyes & Andrew Leach & Charles F Mason, 2018. "The Economics of Canadian Oil Sands," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(2), pages 242-263.
  • Handle: RePEc:oup:renvpo:v:12:y:2018:i:2:p:242-263.

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    Cited by:

    1. Wang, Kai-Hua & Liu, Lu & Li, Xin & Oana-Ramona, Lobonţ, 2022. "Do oil price shocks drive unemployment? Evidence from Russia and Canada," Energy, Elsevier, vol. 253(C).
    2. Yan, Zhaojin & Xiao, Yijia & Cheng, Liang & Chen, Song & Zhou, Xiao & Ruan, Xiaoguang & Li, Manchun & He, Rong & Ran, Bin, 2020. "Analysis of global marine oil trade based on automatic identification system (AIS) data," Journal of Transport Geography, Elsevier, vol. 83(C).
    3. James Macaskill & Patrick Lloyd‐Smith, 2022. "Six decades of environmental resource valuation in Canada: A synthesis of the literature," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(1), pages 73-89, March.
    4. World Bank Group, 2020. "Commodity Markets Outlook, April 2020," World Bank Publications - Books, The World Bank Group, number 33624, December.
    5. Brandon Schaufele & Jennifer Winter, 2023. "Production Controls in Heavy Oil and Bitumen Markets: Surplus Transfer Due to Alberta’s Curtailment Policy," Energies, MDPI, vol. 16(3), pages 1-24, January.
    6. Si, Minxing & Bai, Ling & Du, Ke, 2021. "Fuel consumption analysis and cap and trade system evaluation for Canadian in situ oil sands extraction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    7. Lappi, Pauli, 2020. "On optimal extraction under asymmetric information over reclamation costs," Journal of Economic Dynamics and Control, Elsevier, vol. 119(C).
    8. Lappi, Pauli, 2020. "A model of optimal extraction and site reclamation," Resource and Energy Economics, Elsevier, vol. 59(C).
    9. Charles F. Mason & Rémi Morin Chassé, 2018. "The Transition to Renewable Energy," CESifo Working Paper Series 6889, CESifo.

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