Opinion: Kill the Oil Sands

G. Robert M. Miller, January 26, 2009, DigitalJournal.com -- The Albertan oil sands are a contentious issue in Canadian politics and energy supply. Often dubbed as the savior of the Canadian economy, the oil sands are seen by many as an economic opportunity. But be sure, the negatives far outweigh the positives.

It is often argued by Albertan Premier Ed Stelmach that the Canadian economy is dependent on oil sands production. With the oil sands, so the argument goes, the Canadian economy in recent years has been recording surpluses, and in 2009, as Canada along with the majority of the world faces recession, oil sands production has allowed the Canadian economy to remain relatively sound.

But what are the facts? Without oil sands production (not including conventional oil and natural gas extracted from Albertan oil fields), the Canadian economy would forego no less than $2.394 billion dollars (CDN) – this figure is from 2006-7, which is the latest revenue chart I have found issued by a governmental body.

Oil sands production is due to triple by 2017 (some releases suggest production will increase by 500% in the same time frame), and so, the Canadian economy is on pace to grow more dependent on Albertan oil sands. But this has to stop. As noted in a study by Environment Canada, oil sands production is incredibly dirty; and not just because the extraction of oil sands petrol discharges more than three times the amount of carbon dioxide released in the extraction of conventional oil:

“The June 2008 study predicts emissions of sulphur dioxide, the main ingredient in acid rain, will rise by up to 34 per cent by 2017. Nitrous oxides – responsible for ozone layer depletion – will rise by up to 24 per cent. Ozone depletion is linked to higher rates of skin cancer, among other health problems.
Tiny particulate matter is set to jump by more than 60 per cent in the oil sands and could lead to hazy skies and aggravate existing lung and heart problems.”

So let’s take a step back here. Sure, $2.394 billion dollars is a lot of money; but it surely isn’t enough to justify calling the Canadian economy dependent on it. In 2007, the Canadian gross domestic product (GDP) was $1.432 trillion. It doesn’t take an economist to realize that the $2.394 billion dollar input provided by oil sands production is far from being the catalyst of the Canadian economy. If we do in fact triple the output of oil sands petrol, Stelmach’s assertion may be closer to correct, but the fact of the matter is the toll on our environment will cost far more than the input to our economy. Quoting globalresearch.ca:

“Perhaps the saddest aspect of the rise of the tar sands industry is that all of this destruction is only expected to supply a small amount of the demand for oil. In 2007, about one million barrels per day of tar sands is produced in Alberta -- about one percent of the global consumption of about 85 million barrels per day. It is predicted that with considerable investment, Canadian tar sands production might reach a couple million barrels per day within a decade. This means that an area the size of Florida will be totally deforested, strip mined, drained of clean water, and doused with toxic effluent to meet a small percentage of global oil demand for a couple of decades.”

Sure, those are the words of ‘environmentalists’, but as noted by Thomas Friedman “today, you cannot be either an effective foreign policy realist or an effective democracy-promoting idealist without also being an effective energy-saving environmentalist.”

What’s more? With US President Barack Obama promoting a cap and trade carbon program, the oil sands could well prevent Canada from fostering a 21st century partnership with the United States centered on reducing our impact on the environment. As written by David Crane in a Toronto Star op-ed titled “Canada Delusional About Oil”:

“Canada is bargaining from a position of weakness, rather than strength. It wants an exception from recent U.S. legislation that bars the U.S. government, including the military, from purchasing oil sands oil because of its high carbon content, and also from Obama's plan to establish ‘a national low-carbon fuel standard.’”

If the United States won’t buy our dirty oil, what’s the point in producing it? And even if they do make an exception to purchase the oil, with oil prices fluctuating, Canadians aren’t guaranteed that the industry will remain viable.

In an article penned by Dina O'Meara of the Calgary Herald titled “Oilsands Lose Swagger”, the viability of oil sands production is dependent on high oil prices. Because the extraction of oil from the tar sands is so intensive, the price of oil has to be very high in order for the business to remain profitable:

“Cost escalations, increased royalties and decreased credit, environmental challenges and low oil prices have battered the sector, causing sharp cuts in development. (…) As commodity prices plunged in mid-2008 and a global financial crisis erased ready access to capital, corporations dramatically reduced spending on non-producing projects, and shelved new ones, such as six out of seven proposed bitumen upgraders in Alberta. In the new world order, lower-cost thermal oilsands projects will need between $70 US to$80 US a barrel to be economic, with mining projects requiring up to $100 US a barrel, Dunbar noted.”

The future of energy supply isn’t oil; it’s nuclear, it’s solar, it’s wind, it’s geothermal, it’s everything but oil (and coal).

And so, because of the environmental damage being inflicted, because of the fluctuations in oil prices, because of the future of energy supply, oil sands production needs to stop.

The Canadian economy is not dependent on oil sands production; however, every Canadian is dependent on breathable air. So before the investment in the oil sands industry is too great to abandon, let’s cut the business loose now. The Canadian economy will survive without the Albertan oil sands; but the Canadian environment will not survive with it. It doesn’t take an environmentalist to realize this.