bc-forest-industry-economic-impact-study
bc-forest-industry-economic-impact-study
bc-forest-industry-economic-impact-study
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US $ per Barrel<br />
48<br />
It is estimated that for an average industrial customer, a 9 percent electricity rate increase equates to about<br />
$139,000 per month. 122 In response to rising energy costs, the <strong>industry</strong> has responded by investing in<br />
bioenergy projects to produce energy from wood residuals. Most BC pulp mills now have power generation<br />
capacity that helps to offset costs and creates opportunity for sale of excess power back to the grid. For<br />
example, the West Fraser Cariboo pulp mill’s investment in a turbo generator has helped the mill achieve<br />
energy self-sufficiency and sell surplus power to BC Hydro. .123 West Fraser has also undertaken power<br />
generation projects at two sawmills in BC, and has long-term contracts to sell surplus power to BC Hydro. 124<br />
Mercer’s Celgar pulp mill has an agreement with BC Hydro to supply surplus power and in 2013 generated<br />
approximately $12.3 million in revenue from energy sales. 125 The use of wood residuals to generate energy<br />
minimises or eliminates wood waste and helps to increases the <strong>economic</strong> yield from BC’s <strong>forest</strong>s without<br />
necessarily increasing the harvest level.<br />
Trucking and freight costs represent another significant cost for the <strong>industry</strong>’s operations. Transportation<br />
costs are closely linked to fluctuations in crude oil prices. Figure D-6, shows how the price of crude oil has<br />
increased over time and is higher than the 10-year average price of $76 per barrel.<br />
Figure D-6: Monthly Crude Oil Spot Prices (US$ per Barrel)<br />
$140<br />
$120<br />
$100<br />
$134<br />
$101<br />
$80<br />
$60<br />
$76<br />
$40<br />
$20<br />
$0<br />
1986 1989 1992 1995 1998 2001 2004 2007 2010 2013<br />
Cushing, OK WTI Spot Price FOB<br />
10-year Average (2004 to 2013)<br />
Source: US Energy Information Administration<br />
122<br />
“10 Year Plan for BC Hydro”, Ministry of Energy and Mines, November 2013<br />
http://www.newsroom.gov.<strong>bc</strong>.ca/downloads/Presentation.pdf Accessed June 2014<br />
123<br />
CNBC, “China’s Red Hot Housing Market Shows Signs of Easing”, available here: http://www.cn<strong>bc</strong>.com/id/101346957<br />
124<br />
West Fraser, Management Discussion and Analysis, December 2013<br />
125<br />
Mercer, Annual Report, December 2013<br />
BC FOREST INDUSTRY: ECONOMIC IMPACT STUDY<br />
MNP LLP
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