There is lots of information out there on pipelines being generated from both sides, while most of the population is in the middle wondering who and what to believe. I will take an honest shot at it.
First, who are the customers for Alberta Oil? We have three major players. The United States, Canada and Asia. There are currently multiple pipelines going to the coast of BC and we do export oil thru BC waters. We use and consume as much oil as we can internally. There isn’t a shortage of petroleum in Canada at the pump, ever. Sometimes in remote areas, but that isn’t a supply problem its logistical. Our refineries are running as much as they possibly can. Then why not build more refinery’s? Seems simple enough. But who will buy the product? Currently all the refinery’s in Canada are producing enough petroleum products to satisfy the domestic market. If we build more refinery’s we need a customer for the refined products. Could be the US or Asia but we still need pipelines to send it to market. Sending highly flammable gasoline or other volatile products down a pipeline is highly dangerous compared to the relatively low flash points of unrefined crude. Unrefined crude contains hundreds of different chemicals that are sold after refinement. Logistically, exporting them all to an international market would be a major challenge. Its much easier to send the product to the end user and allow them to refine it and deal with their own logistics. So as simple as it is for us to say refine more in Canada, it isn’t a realistic option. Every major democracy has enough refineries to support the domestic market, the remainder is exported as raw product.
Energy east pipeline seems like a viable option on the surface but its not as simple as turning the value from one oil source to another. That being oil from Saudi to Alberta oil. Anyone familiar with oil refining knows that refineries are built to accept a specific type of crude oil. In the case of Irving Oil in St. John NB its light crude. The type from Saudi. The do blend it with some heavier oil from AB but the refinery can’t process straight up AB oil. They don’t have a coker (to remove sulfur) and not planning to invest a few billion to change that anytime soon. Plus, anyone remotely familiar with the east coast knows that the Irving brothers own the whole show of oil east of Ontario and some of the northern US border states. The ocean tankers, the refinery, the shipyard that builds and maintains the fleet of tankers and absolute control of distribution to the customers at the pumps via Irving Oil gas bars. None of this is changing anytime soon. These are the same Irving brothers that Alberta told to go F#&k themselves when they wanted AB oil during the elder Trudeau’s NEP rein. Hence the Irving brothers building an empire with total control over sourcing, refining and distribution. The Irving brothers are on record supporting energy east pipeline, but their plan is to buy Alberta Oil cheap and resell it by exporting it using their massive fleet of tankers and shipyards to build more. Forget energy east it isn’t happening. Its doesn’t solve our price gap problem.
When you have more of something than you need, like we do with oil, the option is to export, and we have for a lot of years to the US. Currently 99% of Alberta’s oil goes to the US. Its been a wonderful relationship. Sometimes we feel closer to Texas than we do to the rest of Canada. Oil is an international commodity and the price is set on the stock market where brokers bid on contracts. Democracy and free enterprise at work. So, imagine if the price of oil for January delivery is set at $ 60 US Dollars per barrel on the stock market. That doesn’t necessary mean that Alberta is getting $ 60 USD. I wish, but no it isn’t happening. Like any commodity there are bids. Highest bidder wins the contract. But the brokers are not idiots, they know that Canada has only one market and there is only one buyer. So, we get low balled and there are no other bidders so sometimes the oil is selling for $ 10 USD per barrel compared to the $ 60 it should be getting. This is costing Alberta $ 80 million dollars daily while the buyers in the United States our selling our oil at a $ 50 USD a barrel mark up and are getting extremely wealthy. It can be argued that this is Canadas money not Alberta’s money. With Alberta sending 21.5 billion dollars to Ottawa last year to support the “have not provinces” this number will be considerably lower this year given that we are getting as low as 1/5th the market value for our oil.
The US has also been drilling for Oil at a record rate. They are importing less and less oil from the middle east and could become a net exporter verses an importer. So, our one and only market is shrinking, we are being low balled on the price and we can’t refine more oil internally. Alberta needs a new market and that market is Asia thru BC to the coast. Its Canada’s only option.
But pipelines are dangerous? What about the spills on the coast? I will tell you what’s dangerous! It is loading up 200 rail cars with a flammable liquid and sending them down a railway that’s questionable at 80 km / hour. As shown in Quebec, rail car derailments of oil kill people. Pipelines don’t kill people. When the line is pumping the pressures are constantly monitored, when the pressure drops, something is up, obviously there is a problem and the line is stopped until the problem is fixed. Do they leak, yes. No man-made engineering accomplishments is perfect. But they don’t kill people and they are safe.
What about the spills on the coast? There is a place in Alaska called the North Slope. The US has been drilling there for years and producing oil. Where does that oil go and how does it get there? It loaded up on tankers in Alaska and travels south into Canadian waters off the coast of Vancouver travelling south to US ports. This is a daily occurrence of multiple tankers. The BC government is aware, the Canadian government is aware. Has there ever been a spill? No. Has there been an issue. No. It goes so well that it draws very little attention from anyone. But residents of British Colombia listen up, there are oil tankers going up and down your coast right now and you have no say or control over what they do. The US is a sovereign nation with rights to pass thru the BC waters, perhaps Alberta needs to do the same.
If Canada doesn’t support the pipeline we will go it alone and do it ourselves. Alberta is getting kicked around and low balled in our prices by the US. Canada we are asking for your help, we don’t mind sharing the wealth. People from all over Canada live and work in Alberta. For now we are one strong nation under one flag but be assured, we are tied late in the 3rd period against the US and looking at overtime. Alberta will shorten its bench to win. The road map to separation is in my previous posts. So, Canada, what do you want to do?
If you agree with this post please forward to your friends, governments and elected officials. Please leave your thoughts, insights and points in the comments section.