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Tar Sands Politics and Canada’s Real Need for Oil


5 March 2012.  I talked about the huge environmental costs of Alberta’s tar sands industry in Our Dying Planet.  As I read up on the issue I could not believe the extent of the risk being taken.  I still can’t.  It all begins with Canada’s peculiar willingness to remain a producer of raw materials, rather than build an economy based on Knowledge and the manufacture of high value products.  When I was a teenager, too many years ago, I found it unfathomable that Canada was chopping down forests and sending the woodchips to Japan, so that we could buy the chipboard and other building materials back.  I figured Canadians were probably just as clever as the Japanese at gluing wood chips together – it’s neither origami nor rocket science.  We still cut things down, scoop things out of the lakes and oceans, and dig things out of the ground, all to be sold overseas as raw materials for others.  Yet we have a reasonably well-educated society that could be doing much more than chopping, scooping and digging.  In fact, recent studies have shown the educational level of our people is on average significantly better than that of our U.S. neighbors.  Yet they are the ones with Silicon Valley and the greatest rate of creation of start-up companies per capita of any nation.  Are Canadians unimaginative?  Unwilling to take risks?  I do not know.

What I do know is that the Federal and Alberta governments have both bought the argument from the multinational oil corporations that mining the Athabaska tar sands, even though the product is far more costly to produce than conventional oil and very damaging environmentally, is the right thing to do, indeed the only thing to do to ensure Canadian prosperity.  In their defense, we seem to have weathered the 2008-9 global economic downturn relatively well (although try telling that to the unemployed worker in the manufacturing sector in Ontario).  Still, it’s a weak defense for a wrong policy.

What I wrote in Our Dying Planet, and I believe is still largely true, is that the cost of extracting a barrel of oil from the tar sands is the energy equivalent of two thirds of a barrel of oil, plus an inordinate amount of water that is contaminated in ways that mean it can never be released back to the environment.  That is the cost of producing the crude product – there are further costs to ship it and refine it.  The releases of CO2 due to the use of fossil fuel energy to extract this oil are the reason Canada had to renounce the Kyoto Climate Change Treaty, and as the tar sands operations continue to grow the chance of Canada reining in its production of greenhouse gases (GHG) becomes ever more remote.  True, Canada only contributes about 5% of total global GHG, but that is not a reason to not try to reduce the amount.

The consumption of water from the Athabaska drainage may be even more important, in the long run, than the releases of GHG.  At a time when climate change is melting the glaciers in the Rockies, and shifting western Canada towards a dryer weather pattern, the permanent diversion of such quantities of water threatens large areas of northern Alberta, the Northwest Territories and the Yukon.  I do not know of any industry in Canada that has ever been permitted to permanently sequester water on this scale – it seems to be a case of ‘we do not know how to remove the contaminants, so please let us just keep the water, because we have to mine the tar sands’.

But does Canada have to mine the tar sands, now, or ever?  So far as I know there is no fundamental rule of economics that states that available minerals must be dug up and sold.  In fact there are plenty of cases around the world where decisions have been taken to not mine, because of some intrinsic value of the land, or because the risks of environmental damage were too great.  But our governments were too interested in the jobs the mining operation would bring to Alberta – a part of Canada not noted for its poverty prior to the tar sands projects.

Canada does not need this oil now; we are a net exporter.  Data from the Canadian Association of Petroleum Producers show that in 2010, Canada’s production of conventional oil in western Canada and the Maritimes (1.2 million barrels) exceeded Canada’s consumption (about 0.9 million barrels), and the trend in production of conventional oil is more or less steady through 2015.  That is, with zero tar sands production we still would be a net exporter.  Oil sands added about 1.6 million barrels, and the current fuss over pipelines is to permit this production to double by 2020.  In 2015 or 2020 nearly all this tar sands oil will still be for export.  I repeat, Canada does not need to dig it up now, or even in a decade’s time.

If left in the ground, the tar sands will still be there at some future time when other sources of oil are largely gone, when techniques for extracting it are environmentally more sensitive, and when the now much more valuable oil is still needed for the chemical industry if not for fuel.  In other words, the decision not to mine now can be altered at some future time.  The rush to mine, driven by oil corporations’ understandable self-interest in making money, was bought into by both levels of government as an easy way to strengthen the economy, which did not need strengthening at the time.

What has this addiction to tar sands oil done to Canada as a nation?  First, and there may be a chicken and egg problem here, we have a Federal government that has formally prohibited the scientists of its federal science agencies from discussing or publishing any information they may have pertaining to climate change.  Climate change is a particularly inconvenient truth when a government is pushing the mining of tar sands.  So, in a masterfully Orwellian move, the Prime Minister’s Department shuts off any discussion of the topic.  No talk, no news, no problem.  But this muzzling of science departments is a very big problem for a country that has science departments to provide informed advice to government.  How can there be informed advice if certain types of information are off limits, and will a government that has stopped talk of climate change now see possibilities of stopping talk of anything else that creates discomfort for its ministers?  (Footnote – it’s great to see this muzzling effort now getting the media exposure it deserves.)

Second, we are right now witnessing a bare-knuckles fight by our government to cast any opposition to the Northern Gateway Pipeline as foreign-inspired and paid-for intrusion into Canadian sovereignty.  The Northern Gateway Pipeline is now doubly important, given that the Obama administration has rejected the Keystone XL Pipeline.  Both pipelines – Keystone to Texas and Gateway to the Pacific coast – are essential if the planned rate of growth of the tar sands projects is to occur.  (And Keystone XL will come back with a slightly modified route, and pressure to approve it will be intense, once the U.S. election is over.)  Governments, that are supposed to regulate business ventures, and that put in place review processes to regulate such things as new pipelines across sensitive , and sometimes virgin landscapes, are not supposed to engage in a bare-knuckle war against any opposition to the business venture.  Who is the Canadian government working for?  The people who elected it, or the multinational oil companies that are making a mess of Alberta so they can sell oil to Europe and Asia?  It’s a sad and sordid story indeed, and will develop further in the coming months as numerous Canadians stand up to argue for why the Northern Gateway Pipeline should not be built.  The real argument, of course, should be about why the oil sands projects exist, and why they are being encouraged to grow as quickly as they possibly can.

5 thoughts on “Tar Sands Politics and Canada’s Real Need for Oil”

    1. As a chemist and egennier I marvel at the stupidity of the american public. On the one hand they demand bigger and better SUVs and on the other they want cheaper and more plentiful gasolene supplies. Unless all the supplies of hydrocarbon fuels available(oil sands, oil shale,offshore California and Florida plus Anwar) are put into the equation,the US can kiss goodbye to its relatively cheap energy.We must make use of the available sources of energy, Nuclear, Coal liquifaction Natural gas,geothermal energy where it is available and minor sources such as solar power, wind energy. We have very large amounts of natural gas which should be used to replace the use of oil for heating.Finally ethanol should not be made from corn, the energy required for conversion makes it a lousy tradeoff.

      1. I think the push to make the oil sands development acubtncaole for the environmental impacts is excellent. However, I agree with Mr Bishop above conservation should lead the way. The American and world public should fully understand their complaint and for those that are still driving, the hypocrisy of their environmentalism. I have found that while extraction of a barrel of oil requires emission of 80 kg of CO2, the burning of that barrel of oil will yield 530 kg of CO2. If you want your SUV, consider the alternative costs of your war in Iraq. Maybe you should do a environmental assessment of that mess! Americans have among the lowest fuel taxes for the G8 countries and the per capita fuel use is the highest. In Alberta we think that it would be entirely appropriate if Americans would pay an environmental fuel export surcharge that could be used to lower our carbon footprint.

        1. Where do you stand on Preston Manning’s advocacy of full cost ancuocting for all the water, soil, natural gas, on both inputs/extraction and outputs/emission of Tar Sands?And, where do you stand on the questions of natural capital ancuocting in general (UN TEEB etc.)?I suggest also you should distance yourself strongly from Lorrie Goldstein who is an open racist, asserting among other things that all carbon offset projects in developing nations are inherently scams, and whose lies in other matters are well documented. In the long run you are better off disavowing him and explaining what constitutes a good ethical offset regime and what does not, if that’s of interest. But don’t let him speak for you nor claim (as he does) that based on your analysis that the entire Canadian transport sector needs to be shut down by some date. As an economist you should be aware of the abuse of aggregates. It’s no more valid to say that than to say that we can no longer flush toilets as of some date because we are moving to a 6 litre rather than 13 litre standard. Goldstein is a dangerous individual whom you shouldn’t help. He does not employ logic but lies and fallacy.

          1. I think its widely recognized that full cost accounting for use of natural resources, and for clean-up of wastes would be an excellent step to take. Our economics cleverly hide the way in which benefits and costs are discounted.

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