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Who wants Canada's oil?

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Alex Carrick

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Alex Carrick is Chief Economist for Reed Construction Data. He specializes in economic forecasting and statistical services.

Economists

There have recently been reports in the press and over the airwaves that a powerful U.S. House Democrat, Henry Waxman, is launching a strong campaign to block a pipeline that would deliver oil to Texas refineries from Alberta’s Oil Sands. The objection centers on such a source of energy being excessively “dirty” from an environmental standpoint. This is a deeply hypocritical argument.

There have recently been reports in the press and over the airwaves that a powerful U.S. House Democrat, Henry Waxman, is launching a strong campaign to block a pipeline that would deliver oil to Texas refineries from Alberta’s Oil Sands.

The objection centers on such a source of energy being excessively “dirty” from an environmental standpoint.

This is a deeply hypocritical argument. It ignores the strides that Oil Sands producers have made to ensure that their product is extracted as cleanly as possible, with further research into improved technologies underway.

On that score, the industry has launched an information and advertising effort throughout the media to get its side of the story into the broader public domain.

Plus there is the potential for new technological discoveries and sophisticated research jobs in the areas of cleaner bitumen extraction.

The argument also conveniently overlooks U.S. failings when it comes to energy generation.

Leaving aside BP in the Gulf, there are approximately 600 coal-fired electric power generating plants in the U.S. Such plants are far and away the most serious CO2 polluters into the atmosphere among all forms of energy production.

Canada also has coal-burning power stations. In the provinces where such plants are located, there are plans to phase them out. In U.S. states, there are few such similar initiatives.

As for U.S. federal legislation, Washington’s new energy bill specifically grants coal-fired plants an exemption when it comes to possible carbon taxes or a cap and trade system to charge firms for CO2 emissions.

Clearly Canadians must ask where the best markets for its oil reserves are likely to be in the future. The U.S., our closest ally and friend, will continue to be an obvious choice.

But there are other options that must be pursued. It is never a good idea to have only one customer for a product. Sure, it’s great to get the big order in the first instance, but over time the purchaser gains control over the terms of the agreement.

Canada needs to get on with building pipelines to the Pacific Coast. There are plenty of eager customers for our oil within the China-Southeast Asia sphere.

The world will be moving away from fossil fuel dependency. Politicians everywhere are enacting and proposing legislation to ensure this happens. How long it will take to make significant progress is anyone’s guess.

Canada may have only a limited window of opportunity to take advantage of one of our greatest strengths, our vast and almost unique reserves of heavy oil.

Canada has the second largest oil reserves in the world, behind Saudi Arabia.

Canadian oil is easy to access and located in a politically-sound and stable jurisdiction.

Yes, it is expensive to extract. All new additions to oil supply, from the high Arctic to deep in the Atlantic Ocean – off the coasts of Brazil, Angola and Nigeria – will take huge sums of money to develop and will entail considerable environmental risks.

There is much talk and concern about the legacy Canadians will leave their children in terms of a clean environment and less carbon fuel usage.

Equally destructive of future prospects for our children would be the squandering of our bounty in fossil fuel reserves and high-tech job opportunities.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.

by Alex Carrick

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