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The rise of the "rail pipeline" may have rescued the Canadian oil sands in the short term. But in the long term it could cost them – not just in profits, but in their future as a Canadian economic engine.

Almost as quickly as oil sands producers (not to mention political leaders) started fretting about the transportation bottlenecks and pipeline inadequacies that were killing prices for Alberta's oil sands crude, the pressure has been relieved and the prices have bounced back. The key has been a major expansion in the use of rail tank cars to transport oil, not just in Canada but throughout North America. And this expansion is only just getting started: Rail industry consultants Rail Theory Forecasts said that at the end of last year there was a backlog of more than 46,000 tank cars on order with manufacturers – more than two years' worth of production.

But Peter Buchanan, senior economist at CIBC World Markets, argued in a report that "rail pipelines" are no long-term solution to the transportation problems in Canada's oil industry. Rail simply isn't a cost-effective alternative to pipelines over the long term.

Mr. Buchanan estimated that rail transport adds about $10 a barrel to the cost of shipping oil sands crude to market. That translates into roughly $15-billion a year of revenue losses for the Canadian energy industry. What's more, those added costs are an impediment to oil-related capital investment in Canada, posing a threat to a key cog in the country's economic growth, unless and until new pipeline capacity is built.

And as Mr. Buchanan points out, Canada hardly operates in a bubble when it comes to investment in oil development. Major investors have an entire world to look at – including some very attractive oil resources in countries that are becoming more welcoming of foreign investment. (Canada, by contrast, has moved in the opposite direction, raising new barriers to major foreign investment in its oil sands late last year.)

Iraq's dirt-cheap-to-produce oil fields are set for a massive expansion, now that the country's oil industry has opened to foreign investment after a long absence. Mexico's new President plans to loosen the country's constitutional prohibitions on foreign investment in its energy resources, aimed at attracting money to unlock the Gulf of Mexico's potentially huge deep-water oil supplies. The recent death of Venezuelan president Hugo Chavez has raised the possibility that the country will become more welcoming to foreign participation in developing its enormous oil reserves, which by some estimates are the most plentiful in the world. And then there's the shale oil boom in the United States.

And here's the kicker: These are all oil sources that, in general, can be exploited at a significantly lower cost than the next generation of Canadian oil sands projects.

If Canada is to keep investment and economic growth in the oil sector from stagnating, it can ill afford the added cost of rail transport in the long term. It was a nice quick problem-solver, but ultimately, we're going to need pipes.

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights , and follow David on Twitter at @ParkinsonGlobe .