Discussions surrounding the need for new pipelines to transport Canada's oil to market have been a dominant economic, environmental, and political issue for the past several years. Canada's overwhelming reliance on the United States as a customer, the U.S.'s growing energy self-sufficiency, and limited pipeline infrastructure have placed a low ceiling on the prices Canadians are able to secure for our energy exports.

New pipeline infrastructure to East and West Coast ports is key for Canadian resource companies to diversify their customer base and to raise Canadian export prices relative to global benchmarks. But the cause of new pipelines 'not to mention the reassignment of existing ones' has become politicized and run into opposition.

At present the debate has reached a stalemate of sorts. The economics of greater market access for Canadian resources has run directly into an environmental backlash led by some with concerns about pipelines in particular and some who are just generally opposed to fossil fuel resource development.

One aspect of the debate that seems to have attracted little attention however is the impact that the current impasse has had on government finances. Specifically, low energy prices stemming from limited transport options have come to reflect themselves in less revenue for Canadian governments.

The economic case for new pipelines is well-documented. Canada has the world's third largest proven oil reserves, is the fifth largest exporter of crude oil, and is the fifth largest producer of crude oil. And that is only expected to grow. According to the Canadian Association of Petroleum Producers (CAPP), production of oil from Alberta's oil sands is expected to more than double between now and 2030, rising from 3.2 million barrels of oil per day to 6.7 million barrels per day.

What are the economic benefits of such development? A 2011 study by the Canadian Energy Research Institute projects that investments and revenues from new oil sands projects would be over $2 trillion between 2010 and 2035. This would result in a $2.1 trillion increase in the Canadian economy, and job growth in the oil sands industry from 75,000 in 2010 to over 900,000 by 2035. And it is worth noting that this study's estimates are based on considerably lower production forecasts than those published by CAPP.

The lack of safe, low-cost transportation capacity to move oil to world markets is the major barrier to this substantial economic development. Oil transport limitations are reducing revenues from Canadian oil sales by at least $17 billion per year and depending on market fluctuations, those losses could reach $25 billion per year according to a 2013 study.

The fact is Canada's current price discount for its energy exports also means less tax revenue for the federal and provincial governments. The numbers are considerable. Alberta collected $2.4 billion less in oil sands royalties in the most recent fiscal year while Saskatchewan has also lowered its projected royalty revenue by $287 million in 2012-13.

Governments are further affected by lower personal and corporate income tax revenues resulting from slower employment growth and reduced business profits. The federal Department of Finance, for instance, has estimated that if Canadian prices for crude oil and natural gas were to return to historic norms for crude oil and half the prevailing natural gas prices in Europe, the federal government would collect an additional $4 billion in revenues.

To put this in perspective: $4 billion in new revenue would almost wipe out the $5.5 billion budgetary deficit the government is currently projecting for next year and is more than the size of budgetary surplus it anticipates for 2015-16.

So the potential for additional government revenues is not insignificant, and they could be put to good use increasing Canada's tax and economic competitiveness. For example, this additional revenue could be used to lower personal incomes tax rates in Canada which are high relative to other jurisdictions such as the United States. It could also be used to reduce government debt and in turn lower debt servicing costs freeing up room for other budget priorities.

The current debate about new pipeline construction typically fails to account for the potential impact on government revenues. It is important aspect of the issue and, as we head into government budget season, one that should not be ignored.