The recent news report of a meeting held in Houston about a year ago around increasing oils sands production in Alberta on a faster track with streamlined environmental processes has been interesting but mostly it has turned into a political farce.
The political attempts to frame the issue by the Harper Cons by trying to make Dion’s knowledge of this meeting or not is misdirection of the real issue here. It is not about something that trite. It has much more significant import and implications.
There is no doubt Alberta is now the centre of serious geo-political interest and concerns because of the oils sands. On the investment side we have Japan, France, USA and China all participating in projects now, with India showing interest as well. On the environmental side it is the lightening rod for GHG emissions and climate change issues.
On the security of supply for the USA in particular we are the closest, safest, more reliable and politically friendly source of fossil fuels they have. The market competition is getting heated too especially from China and India who are both in need of a secure supply of imported oil.
If the Americans ever cost out what they are actually spending in cash and lives or a barrel of Iraqi oil as opposed to saying the goal is to bring democracy to that nation, they will abandon to “struggle” sooner than later. We have Venezuela nationalizing its oil production and Russia destabilizing parts Europe and Central Asia with threats to cut off supplies to certain nations.
Now Israel is reported to be studying a kind of small surgical nuclear deployment on Iran, as if there were such a thing. The House of Saud in Saudi Arabia is not that secure politically either. Then we add terrorism taking place around the world and looking to emerge in North America. The world is a very complex place when you look at it in terms of the politics of energy.
Quiet, little, stable, safe, secure, close, open, eager and friendly Alberta all of a sudden looks pretty good to Uncle Sam. Alberta, along with Canada, would no doubt be glad to oblige and service more of the American energy demand. We have to ensure it is going to be in our best interests when we do this. That is what we better start getting our heads around…what exactly is in our best interest and how do we best serve it under mounting USA pressures to accelerate oil sands production?
We have pretty much botched the deal so far. We have insufficient production infrastructure like upgraders, refinery capacity, transmission power lines, roads and pipelines to handle the current oil sands production of 1 million barrels per day. We have failed refused or neglected to provide the necessary social and public infrastructure to meet the human needs like housing, health care, school, recreational services and cultural facilities for people working in this industry.
We have now turned most of the province into this same overheated economic engine that is about to blow a gasket given the pressure it is under. We have to provide a much better quality of life for people especially in places like Fort McMurray and Grande Prairie. That means making the investments needed and to take a more moderate, longer term and purposeful approach to the development of the oil sands.
We have talked loosely in Alberta about possibly ramping up oil sands production to 3 million barrels per day within the next decade. We have no sense yet of if we can, at what infrastructure cost and social costs never mind the unknown cumulative costs on the society and environment.
If the Houston talks was really about a target of 5 million barrel per day to meet American demand, we Albertans, our political, business, environmental a social leaders have some serious thinking to do. We have some big decisions to make and we better start planning to do right - and right now!
UPDATE: Finance Minister Flaherty is courting China as a market for oil sands. Dubya is not going to be amused.
Ken,
ReplyDeleteThis is frightening stuff, especially as we don't even have a 'Canada-first' energy strategy. I think Albertans need to be extremely concerned about the possibility that we are giving away our natural resources to the Americans at bottom of the barrel rates while our infrastructure falls apart, the environment is irreparably damaged, our economy remains undiversified and we fail to exploit our oil for all it's worth.
I'm further concerned that under current NAFTA regulations, we would have to keep selling to the Americans at agreed upon rates even if our fellow countrymen were in dire need of Alberta oil (read, we would not be able to divert supplies to other parts of Canada if doing so at all reduced our shipments to the United States).
The Stelmach government needs to deliver on its promise to review royalty rates – and fast; our federal and provincial governments need to rethink the equitability of aspects of NAFTA; and we, as a society, seriously need to have a long conversation about how we want to balance our economic, social, environmental and geo-political interests.
Sean
"I'm further concerned that under current NAFTA regulations, we would have to keep selling to the Americans at agreed upon rates even if our fellow countrymen were in dire need of Alberta oil (read, we would not be able to divert supplies to other parts of Canada if doing so at all reduced our shipments to the United States)."
ReplyDeleteSean, we should simply be able to sell our oil at the prevailing market rate. Thus, I don't understand your reference to rates. However, I do agree with your overall analysis: these are US corporations extracting wealth from our ground and we need a significant piece of the pie.
What is your beef with NAFTA and Alberta oil? Or is that referring to your previous below-fair-market-value comment that I quoted above?
With your reference to fellow countrymen in need of oil - they can buy it at the prevailing market rates. Please, for the love of God, let's not go down the NEP road again. They indirectly obtain revenues via personal and corporate tax collection (as Albertans are, given the boom, paying the most tax per capita). I too want to see Ontario's economic engine restart - but not through Alberta oil at lower than market value rates.
btw, Ken, I'm very pleased that our Government is finally advertising Alberta's oil to China. This can only mean further leverage for Alberta in any negotiations. We should not artificially impede Chinese investment.
Hey eric - I am delighted the Mr Flaherty the Conservative Finance Minister is promoting our Alberta energy sector to China this week.
ReplyDeleteI am not too impressed with most of what Harper is doing as of late but both Prentice and Flaherty are exceptions and very class acts.
BTW - I don't read anything NEP-ish in what Sean has said in his comment. Where in his post do you perceive support for such a move?
Ken, it was this type of language that gave me my perception. I do not think NAFTA explicitly states that we have to send X barrels of oil to the United States per year. As such, if other areas of Canada want oil, I'm certain they can easily purchase as much as they want at the prevailing market rate. In other words, NAFTA does not restrict us sending oil to other parts of Canada AS LONG AS we do so at fair market value.
ReplyDelete"we would have to keep selling to the Americans at agreed upon rates even if our fellow countrymen were in dire need of Alberta oil (read, we would not be able to divert supplies to other parts of Canada if doing so at all reduced our shipments to the United States)"
Eric,
ReplyDeleteThank you for your insight and constructive comments. Perhaps I misused the word "rates." I'm talking about amount / barrels of oil and not the price of oil. My explicit problem with NAFTA is its proportionality clause that forces us to maintain shipments to the US even if we face an oil shortage at home. For more information on this issue, visit the following link: http://www.ualberta.ca/~parkland/research/perspectives/CanadaFirst06OpEd.htm
I'm definitely NOT proposing another NEP. The NEP was designed to shore up the political fortunes of the LPC in central Canada and was shoved down this province's throat. I don't want to see Alberta brought to its knees or forced to negotiate at gunpoint. I don’t want to see another round of “please God, just give us one more oil boom…” stickers and I certainly don’t want to see a return of the tough times that hurt so many Albertans.
What I'm suggesting is a fair and equal discussion between the feds and Alberta where our natural resources and contribution to Confederation are respected and we lead the country in intelligent energy, economic and environmental practices. I'm talking about a discussion that is divorced (as much as this is possible) from partisan politics. I’m talking about a discussion that Albertans, as proud Canadians, initiate and for which we set the agenda, we express our concerns over the future of energy security in this country and we propose measures that benefit Alberta and all other Canadian jurisdictions.
Sean
Thanks for the clarification Sean. Good point: if there was a natural disaster, a series of cold winters, or some other event that affected other areas of Canada, Alberta should be able to supply oil to these parts before the supply to the US (although I believe the price per barrel should be the prevailing market rate).
ReplyDelete