Monday, June 09, 2008

Passing Gas

With gas prices in the US at a record average of $4.02 a gallon, and a lingering war that was supposed to stabilize oil access instead of contributing to a supply shortage, one wonders what could possibly make the situation worse.

How about knowing that there's oil that the government isn't buying?

In 2006, the U.S. was practically begging Canada to ramp up its oil sands production.

Old news, right? Well, no. As the author of this article explains:

Just two years ago (when oil was less than half of today's price of $108 per barrel), U.S. officials were asking the Canadian government to increase their oil sands production by fivefold.

That comes out to about five million barrels per day.

If anyone has a better way of phrasing the U.S.'s desire for Canadian heavy oil, I'm all ears. It's clear we were looking to switch our Middle East oil addiction with Canadian oil sands.

Now here's the $64,000 question: Why would news that is over two years old be of any consequence?

The fact is that production from oil sands has been increasing. Although it's not even close to the desired five million barrels per day, production from the Alberta oil sands is projected to be just under three million barrels per day by 2015....

The point?

The U.S. Energy Independence and Security Act, signed last December, could be a roadblock for the oil sands. Section 526 of the legislation prohibits the U.S. government from obtaining transportation fuels with higher life cycle greenhouse emissions than conventional petroleum.

Yes, you guessed it: that blocks the purchase of oil from the oil sands.

Alberta's premier has the daunting task - in the wake of an oil sands environmental issue - of trying to sell the U.S. on taking product from the oil sands.

"Stelmach should be back home cleaning up the oil industry, rather than running around Washington as an oil salesman," said Liz Butler, organizing director for ForestEthics, a Canada-U.S. organization.

"The U.S. does not want Canada's dirty oil."

Um, really? Well, what does Stelmach have to say to that?

Mr. Stelmach told an energy forum although the myth about the oil sands project has gained some traction south of the border, it would be foolish to restrict the project now.

"There are ongoing attempts in some quarters of this country to slow down or even stop oil sands development. Those attempts don't reflect reality and they don't make sense," he said.

"Even worse, they could serve to jeopardize this country's energy security at a time when Asian markets are clamouring for oil."

The comments have been drummed up as a threat (do business with us or else) and (of course) opposition parties are lashing out and criticizing.

As a long-time resident of Alberta, I could certainly give my own spin on this. I disagree that Alberta puts the concerns of citizens and the environment ahead of energy production - as someone who was forced to sell their mineral rights, I have first-hand experience with that. We were given one offer for drilling the natural gas reserves, and told to accept it or they'd apply to the EUB and force the sale....

Which the company did. In that case, someone else decides that you don't get to make decisions about what you own, forget about environmental concerns, and trying to get anyone to listen was a waste of time. That damn energy company came to town with a slide show and plan that included putting a well in town, in front of someone's house. I have a high level of animosity towards them, to this day.

However, the reality is, with soaring gas prices and people desperate for more access to oil, I do find it surprising that it would even be suggested that anyone turn away 1.25 million barrels of oil per day.

I'm cautious about saying I'm not an environmentalist. I recycle, I believe in the three Rs. I care about the environment. Where I draw the line is in balance - sometimes, there has to be give and take. We can think only about the environment now, but we also have to think long-term. If the markets tumble, economies collapse, if a different part of the world has all the resources and ability to use them and we find our part of the world regressing because of a lack of access to resources, we'll be vulnerable. WWII wasn't good for the environment or business, unless you manufactured military goods, I guess. There's already a bit of a crisis in the U.S. with the highest foreclosure rate since The Great Depression. Seeing people lose their homes, their livelihood, their ability to provide for their families and their hopes and dreams isn't helpful either. When that happens, you think they care about the environment? They only care about survival.

Let's look at the long-term impact of soaring oil prices. Outrageous gas prices. People unable to afford to get to work, or bringing home less and less from their paycheque, compounded by rising costs of all products in stores. In Canada, the postal service has added a fuel surcharge. So people are taking home less, spending more. Hence, losing homes, struggling to get by. Companies going out of business because they can't stay afloat. More foreclosures. Fewer people buying cars, flying on planes, so car manufacturers going out of business, car salesmen struggling, real estate agents unable to move houses. It's a cycle. I'm not saying it's good or right, but part of the backbone of our society is built on oil. We can't just snap our fingers and eliminate that dependence. What we need is a long-term plan. Right now, we need oil, and we need to fund development of products that will lessen our dependence so that we have long-term stability.

A healthy environment stems from a healthy society as a whole. The U.S. needs it. Right now, it needs oil. And hey, if California doesn't want it, fine. Sell it to other parts of the country that do. Or does everyone really think it's better for Canada to sell it to China, or the latest country Canada's signed a free trade agreement with, Columbia? Hell, why are gas prices so high in Canada when Canada produces its own oil (is it really the world's second largest oil reserve, as stated in the one article? Then why should we ever be at the mercy of the middle east?) and is in a position to sell it elsewhere? Imagine if Canada decided to keep its resources for itself...

The truth about the oil sands is to be found somewhere between Stelmach's endorsement and the criticism of the environmental groups. Truth is, I'm not sure how countries that didn't support Kyoto can even start pointing fingers over greenhouse gases. There are a lot of businesses that do a lot of environmental damage, and in many cases do more damage than the oil sands. The attention on the oil sands is good for ensuring that environmental concerns will be addressed, and I'm all for that, though I feel outright rejecting the oil at such a critical economic time as this is baffling.

After all, how much oil is coming into the country with the price of human blood coating the barrel?

And as much as I'm concerned about the environment, nothing tops the cost of human lives.

Anyone else for regulation instead of rejection? Can't we find a way to make this work, for both countries and the benefit of the average person, just trying to get by?


colman said...

Petrol or gas in the UK at the moment is approx £5.25 per gallon, what that converts to in $ I don't know.
Price is going up on a weekly basis.........ouch, seeing as my job has just relocated further away from my home

Sandra Ruttan said...

That's outrageous Colman. I know it's always been more expensive in the UK, but that's really ridiculous.

In truth, gas is cheaper here than it was in Canada, so I'm still not as outraged as most people are.

Sandra Ruttan said...

(I think that works out to something like $10 per gallon US, btw. Depending on the exchange rate day to day.)

Austin Carr said...

$4 a gallon gasoline is the best thing for America. People will start cutting back, and other technologies, now competititive, will be developed. Politicians want to blame the oil companies, but the problem is us--gobbling up one-third of the world's energy.

Sandra Ruttan said...

Ultimately, I agree Austin, although I'm worried this bill means they won't accept bio-fuels either, and that's part of the necessary diversification needed to lessen the dependence on oil.

What we need are enough resources to stabilize the market, but only just barely enough to motivate development of other fuel sources and lessen our dependence, imho. But not trying to make people cold turkey cut out the use of gas and oil - that's impossible.

Ali Karim said...

I guess you haven't watched the award-winning Peak Oil Documentary


Well worth wtaching


Sandra said...

I haven't even heard of it Ali. Was it a BBC production, do you know?

I was watching a feature this morning about cars running on natural gas. Exactly the kind of diversification needed, I think, to transition us off of oil dependence.