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Patricia Mohr is an economist and commodity market specialist in Vancouver. She developed the Scotiabank Commodity Price Index, the first of its kind for Canada.

Much has been said and written about the vital need to build oil export pipelines to the coasts of British Columbia and Atlantic Canada. Yet many Canadians still appear unaware of how critically important this is to our economy.

Canada owes its economic prosperity to trade – we are a trading nation – and crude oil dominates. In 2014, before the oil-price downturn, oil generated a $70-billion trade surplus, far outstripping any other export category, and virtually covered large, chronic deficits in autos and auto parts (minus-$15.9-billion), machinery & equipment (minus-$21.5-billion) and electronics (minus-$34.3-billion).

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Even at the bottom of the oil-price correction early this year, crude remains the largest positive contributor to Canada's merchandise trade, contributing more than $30-billion annualized in net export revenue as of August. Canada's trade performance shifted from surplus to deficit in 2015 and is currently minus-$23.3-billion, with the impact of the oil price decline not nearly offset by a pickup in non-oil exports. Strong oil export revenue has much to do with the ability of governments to fund social services across Canada. Western Canada's forte is heavy oil – both blended bitumen from the oil sands as well as conventional heavy from Saskatchewan and Alberta. Strong U.S. refinery demand for heavy oil (a cheaper feedstock than light oil) in the Midwest and in Houston partly accounts for Canada's slight gain in export volumes to the United States in 2015-16, despite the increased availability of U.S. light oil from shales.

However, it is risky to rely largely on one key export market, the United States, as we were reminded by the denial of a presidential export permit for the Keystone XL pipeline. What's more, insufficient pipeline capability to tidewater has reduced the price paid for Canadian crude.

Western Canada's crude trades off West Texas intermediate oil, the key reference price for North America. U.S. refinery outages or seasonally slower U.S. demand often widen the price discounts off WTI endured by Canadian producers. This pattern has been noticeable for some time. Building additional export outlets to the Asia-Pacific or Europe would allow producers to divert volumes to other markets, boosting prices by stepping up international competition for Canadian crude.

Equally important, heavy oil prices in China and Singapore could be significantly higher than in the United States. In October, 2015, Basrah Heavy from Iraq sold in China and Singapore at a price discount off light oil that was half the level for Western Canadian Select heavy crude in the United States, at a time when the light crude marker Oman/Dubai traded at the same price as WTI. Basrah Heavy, similar in quality to WCS, was introduced to world markets as a new crude in 2015 and partly accounts for an enormous 970,000 barrels-a-day increase in Iraqi production since late 2014, much of it bound for China and the rest of Asia.

There is little doubt that refineries in China and India, as well as in Japan and South Korea, would welcome Canadian crude if only the necessary infrastructure were available. Tanker costs in an Aframax vessel (100,000 deadweight tonnes or dwt) from Vancouver to Asian markets can be less than $4 (U.S.) a barrel, and in a Very Large Crude Carrier (350,000 dwt) from Saint John (the Atlantic terminus for the proposed Energy East Pipeline), they have been a mere $1 a barrel to Europe and $3 to India.

The proposed doubling of Trans Mountain Pipeline capability from Edmonton to British Columbia would also allow increased exports of light crude to four refineries in Washington state, where demand and prices have recently been high, owing in part to declining Alaskan supplies. Timing is critical, before competing crudes gain an even stronger foothold. Canada's oil patch is stepping up efforts to reduce its carbon footprint through new technology, such as solvent-extraction techniques, to displace natural gas used in bitumen extraction. Research and development funds from the Alberta and federal governments aimed at cutting greenhouse-gas emissions are also advancing innovation. As part of Alberta's Climate Leadership Strategy, Emissions Reduction Alberta is one of the largest public investors in technology to reduce GHG emissions in Canada.

An enhanced marine protection and emergency oil-spill response program is planned for the West Coast, of particular concern in British Columbia. Should the Trans Mountain Pipeline expansion proceed, tugs will accompany oil-laden tankers all the way between the Inner Harbour of Vancouver and the 12-mile territorial limit in the Pacific Ocean, well past Victoria. The Western Canada Marine Response Corp. will double the capacity of the emergency spill response system and establish five new bases. Double-hulled tankers have been required by the International Maritime Organization since 2014.

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Canada's oil reserves are the third-largest in the world. This is a huge source of national wealth for all Canadians, including First Nations. It is vital that we create the infrastructure for its timely development.

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