Join 3,432 readers in helping fund MetaFilter (Hide)


I'm shocked, shocked to find that gambling is going on in here!
October 3, 2011 7:01 AM   Subscribe

A series of emails released through a Freedom of Information Act request shine light on collusion between the United States government and TransCanada, a corporation building a controversial pipeline from the Canadian Athabasca oil sands into its southern neighbor. The controversy extends beyond the currently poor safety record for delivering oil between the two countries, and beyond the environmental and health consequences of the oil extraction process for locals and the cost of climate changes it will contribute to, all the way to legal wrangling between Canadian media and Saudi Arabia over the "death panels"-like term "ethical oil", based upon a conservative group's advertising that argues that the purchase of Canadian-sourced oil is a morally superior act, because of oppression of women and human rights violations by the Saudi kingdom.
posted by Blazecock Pileon (73 comments total) 18 users marked this as a favorite

 
conservative group's advertising that argues that the purchase of Canadian-sourced oil is a morally superior act, because of oppression of women and human rights violations by the Saudi kingdom.

Nice false dichotomy you got here, be a shame if something happened to it.
posted by DU at 7:10 AM on October 3, 2011 [3 favorites]


It should be noted that the "oil sands" were originally called "tar sands"; this acceptance of this new name is a huge PR victory for the oil industry.
posted by KokuRyu at 7:11 AM on October 3, 2011 [27 favorites]


Nothing would surprise me about the oil industry in Canada, by the way. Thanks to the oil industry, and all its money and power, Alberta is a beachhead in Canada for American-style conservatism, wrapped up nicely with a palatable name: the Calgary School.
posted by KokuRyu at 7:14 AM on October 3, 2011 [4 favorites]


It should be noted that the "oil sands" were originally called "tar sands"; this acceptance of this new name is a huge PR victory for the oil industry.

"profit sands" didn't test well.
posted by odinsdream at 7:15 AM on October 3, 2011 [8 favorites]


oil sands : tar sands :: corn sugar : high fructose corn syrup
posted by hippybear at 7:17 AM on October 3, 2011


Blazecock Pileon: "that argues that the purchase of Canadian-sourced oil is a morally superior act, because of oppression of women and human rights violations by the Saudi kingdom."

I hate to give conservative groups credit, am generally supportive of global trade, and want to see vastly increased development of renewables, but I'm having a really tough time disagreeing with them on any of those points.

I've always been more than a little unsettled by the fact that the US has been comfy-cozy with a handful of Middle-Eastern nations (far beyond the point of "tacit" approval) that are led by obviously-reprehensible regimes, and are also clearly _not_ our friends.

This year seems to be the first time that any US public official has openly speculated as to whether or not Pakistan should be considered an ally. I certainly wouldn't mind steering some of the Tea Party's rampant nationalism toward our alliance/dependency on the Saudis. Given the rest of their ideology, they should be up in arms about our dependency on OPEC, and even in spite of the fact that I do support free trade, I'm inclined to agree.

Even in spite of all the recent nastiness, I'd much rather funnel money into an oil company operating under US/Canadian laws than Saudi Aramco. Developing renewable energy is preferable to either, but given the choice between two evils, the better option seems blindingly obvious here.
posted by schmod at 7:18 AM on October 3, 2011 [3 favorites]


You are not limited to the two evils and don't help them by implying you are.
posted by DU at 7:22 AM on October 3, 2011 [6 favorites]



the "death panels"-like term "ethical oil"

Well, at least we're not editorializing or anything.

While I have no doubt that oil companies get pretty special treatment from basically every government on the planet including the US, this seems like much ado about not much actual do.

Based on what the article actually says, the claims of collusion are coming from avowed opponents of the pipeline and are based on the fact that State Dept. "officials" (or, at least, some guy in the embassy in Ottawa) have had the temerity to actually hold meetings with officers of a corporation that wants to build a pipeline that would carry as much as A QUARTER OF A BILLION BARRELS OF OIL A YEAR across the United States, and brief them on developments. You know what? I'm actually OK with that. No matter how you feel about the project, the potential consequences are enormous and far-reaching, and it would be deeply fucking irresponsible for the state department NOT to hold meetings with the corporation in question.

And as to the petty "OMG they got them invited to a party!" claims, those strike me as coming from people who don't actually understand what embassies DO. Which is have parties. And invite people to them. Including and especially people who are involved in projects that could have enormous and far-reaching economic and environmental consequences. That's what diplomacy is, in large part.
posted by dersins at 7:24 AM on October 3, 2011 [9 favorites]


...that argues that the purchase of Canadian-sourced oil is a morally superior act, because of oppression of women and human rights violations by the Saudi kingdom.

Here's the thing...
Tapping the Canadian tar sands is not, and never will be, an offset, or replacement, of Saudi oil. The Canadian resource will be used in addition to Saudi resources. Talk that implies we would actually reduce Saudi imports if we tap the Canadian sands is willful misdirection.
posted by Thorzdad at 7:26 AM on October 3, 2011 [17 favorites]


DU: "You are not limited to the two evils and don't help them by implying you are."

What's the third option, then? My impression is that any third option is going to require a great deal of time and money, and that the Canadian Tar Sands were a convenient stop-gap measure to get us over that hurdle... I'd really love to be wrong here.
posted by schmod at 7:27 AM on October 3, 2011


You are not limited to the two evils and don't help them by implying you are.

Not sure that labeling one thing as "morally superior" to something else actually means that it's the only alternative choice.

If you're buying oil, it's probably a morally superior choice not to buy from an oppressive theocratic kingdom which oppresses women. There are other choices which would be higher up on the "morally superior" scale, but given those two choices, one is indeed morally superior to the other, I think.
posted by hippybear at 7:27 AM on October 3, 2011 [1 favorite]


EthicalOil.org has managed to get petroleum from red herrings.
posted by Horselover Phattie at 7:31 AM on October 3, 2011


So, the State Department invited some people from Canadian industry to a 4th of July party at the embassy in Canada. Wow, clearly they are out of control! It's as if they believe that securing access to all that bitumen from Canada before the Canadians can arrange to sell it to China instead is somehow in their national interest.

I wonder how this level of "complicity" compares to that between say the US government and General Motors.
posted by sfenders at 7:31 AM on October 3, 2011


Canadian Tar Sands were a convenient stop-gap measure

There's nothing "convenient" about tar sands oil. It's a shittier, more labor-intensive kind of crude, only made profitable by the increasing prices and which yields much more pollution and other problems than even the normal shitty oil.

Seriously. Seeing it as a "convenient stop-gap" is not smart.
posted by mediareport at 7:39 AM on October 3, 2011 [4 favorites]


One day I'd love it if Alberta made international media for being something other than the asshole of Canada. I like this place.
posted by Stagger Lee at 7:43 AM on October 3, 2011 [6 favorites]


There's nothing "convenient" about tar sands oil. It's a shittier, more labor-intensive kind of crude, only made profitable by the increasing prices and which yields much more pollution and other problems than even the normal shitty oil.

But the ads on the TV tell me that they can return the land back to state of natural wonder, even better then it was before. So it must be okay!
posted by papercrane at 7:43 AM on October 3, 2011


One day I'd love it if Alberta made international media for being something other than the asshole of Canada.

Obvious solution: expand WEM again. Phase V & VI or bust!
posted by aramaic at 7:50 AM on October 3, 2011 [1 favorite]


KokuRyu: "It should be noted that the "oil sands" were originally called "tar sands"; this acceptance of this new name is a huge PR victory for the oil industry"

How is "Tar Sands" worse?
posted by ArgentCorvid at 7:52 AM on October 3, 2011


mediareport: "There's nothing "convenient" about tar sands oil."

As a matter of economics, if the difficult-to-extract, labor-intensive tar sands oil is still cheaper than importing Saudi oil fro halfway around the world, yeah, it's more convenient. Especially so, when you consider the (comparative lack of) political implications.

Also, in this case, the fact that it's nasty and dirty is a feature, and not a bug. When we see the effects of our consumption patterns in our own backyards, we might be a bit more likely to seek out sustainable alternatives.

As it stands, the idea of widespread deployment of sustainable technologies in the US as a complete substitute for foreign oil is dead in the water. Not gonna happen. I'd love for this to not be the case, but right now, we'll be lucky if we get to that point during any of our lifetimes.
posted by schmod at 7:55 AM on October 3, 2011


You know what? I'm actually OK with that. No matter how you feel about the project, the potential consequences are enormous and far-reaching, and it would be deeply fucking irresponsible for the state department NOT to hold meetings with the corporation in question.

I read through all the emails and I agreed with this "so what" view initially. However, I changed my mind when I read that David Goldwyn, who was one of the State Dept officials that oil lobbyists seemed to have special access to, shortly thereafter the State Dept to go lobby on behalf of the oil industry ... But still, I think the problem here is not so much the access that lobbyists have to government (because environmentalist and oil companies alike should be able to lobby government), but rather the super-fast revolving door between lobbyists and government.
posted by yarly at 7:59 AM on October 3, 2011 [2 favorites]


... shortly thereafter left the State Dept ...
posted by yarly at 7:59 AM on October 3, 2011


Not sure that labeling one thing as "morally superior" to something else actually means that it's the only alternative choice.

That's the funny thing here; the logic depends on only considering the two bad options. Oil is risky. It has serious environmental impacts all the way from extraction to transport to burning. Oil from tar sands is only "ethical" in comparison to oil that comes with human rights baggage.

Dirty energy is unethical in many ways. But they've managed to make it look ethical by putting aside something arguable more unethical. One would only call tar sands oil "ethical" if you're severally restricting the set of things to be compared.
posted by Philosopher Dirtbike at 8:00 AM on October 3, 2011 [4 favorites]


the tar sands aren't cheaper than importing Saudi Oil - that's now how the math works, that's not how commodity markets work. Saudis can make money pumping oil at like $10/Barrel. The Saudis will always pump and sell as much oil as they can or want to. Tar Sand oil doesn't somehow damage the Saudi's in anyway.

Actually I could formulate a non-silly argument that increasing the marginal cost of the tar sands by adding environmental surcharges onto their production or something, might eventually lead to demand destruction and then lower oil prices and, less money for the Saudis.
posted by JPD at 8:00 AM on October 3, 2011 [2 favorites]


I don't like the comparison of "death panels" and "ethical oil".

"Ethical oil" is a way to spin or leverage the public's differing views of Canada and Saudi Arabia. "Death Panels" were an outright lie, with no basis in reality at all.
posted by Steakfrites at 8:01 AM on October 3, 2011


NB: My logic is also why "cruelty free diamonds" are also a lie.
posted by JPD at 8:02 AM on October 3, 2011


Tapping the Canadian tar sands is not, and never will be, an offset, or replacement, of Saudi oil. The Canadian resource will be used in addition to Saudi resources. Talk that implies we would actually reduce Saudi imports if we tap the Canadian sands is willful misdirection.

This warrants repeating. US oil demand is something like 19 million barrels per day. Current tarsands production is about 1.5 million or so, and a very rosy scenario would see that expand to about 5 million by 2030, and many in the industry would like to see a big portion of that flow head to China (warning: defensible self-link). The primary justification for building Keystone XL is that the Texas Gulf coast has excess refining capacity in place, so it's more economical to ship Alberta crude there than to build more refineries outside Edmonton.

Also worth noting: the "dirty oil" rallying cry of the anti-Keystone crowd actually reinforces the "ethical oil" argument in the public debate by accepting the same basic framing - that tarsands oil is a unique commodity that can be isolated from the 86-million-barrel-per-day global flow and treated as a thing that operates under a fundamentally different set of rules. It implies that we should be weighing the larger carbon footprint of tarsands oil against the claims to ethical superiority by the Canadian government. A great many people would probably accept the dirty side of that scale in exchange for the promise of liberation from OPEC.

Both arguments are mostly horseshit. The problem is fossil fuels. All of them. Any other argument slides away toward deck chair feng shui on the Titanic.
posted by gompa at 8:03 AM on October 3, 2011 [14 favorites]


Wait, the Obama administration is releasing possibly damaging records because of an FOIA before the deal is completed? They can't do anything right.
posted by Terminal Verbosity at 8:03 AM on October 3, 2011 [1 favorite]


As a Canadian, though, it does please me we are leveraging something as hideous as the tar sands to get at those bastards in the House of Saud.
posted by KokuRyu at 8:06 AM on October 3, 2011


As a matter of economics, if the difficult-to-extract, labor-intensive tar sands oil is still cheaper than importing Saudi oil fro halfway around the world, yeah, it's more convenient.

As a matter of economics, only if you ignore external costs.
posted by eriko at 8:10 AM on October 3, 2011


As a matter of economics, only if you ignore external costs.


its not even a matter of economics - its just wrong.
posted by JPD at 8:14 AM on October 3, 2011


The other blind-sided aspect of this discussion is that if you don't extract a non-renewable resource now, you can always do it later.

One can coherently oppose Keystone XL and be in favor of bitumen extraction at the same time. The bitumen's not going anywhere. We can always dig it up later. In fact, it might be more profitable to extract it later, or more sensible to decide not to after some second thought.

Except the benefits won't flow into the current promoters' pockets, so you'll never get that argument acknowledged.
posted by anthill at 8:21 AM on October 3, 2011 [1 favorite]


I'm not sure how well it would go down diplomatically if this were explained as, "Hey, House of Saud: Canada's calling you guys a bunch of dicks!"

Tar sands development would collapse completely if there were any form of carbon pricing. We're seeing concerted, well-funded PR attacks on renewable energy in Canada. The two surely can't be related ...
posted by scruss at 8:22 AM on October 3, 2011 [1 favorite]


One can coherently oppose Keystone XL and be in favor of bitumen extraction at the same time. The bitumen's not going anywhere.

To be clear, the approval or rejection of the Keystone XL project will have a negligible impact on the long-term prospects for tarsands development. It might slow things down a tiny little bit in the near term, but there's already two million barrels per day onstream or soon to be, and all other things being equal the industry will start rapidly expanding as soon as global demand starts pushing prices north of $100 a barrel again.

One of the great obfuscations of the anti-Keystone protests was the idea that stopping Keystone would have any lasting effect on the overall development of the tarsands. I can see a half-dozen global-oil-giant logos from my bedroom window each morning telling me otherwise.
posted by gompa at 8:28 AM on October 3, 2011


Tapping the Canadian tar sands is not, and never will be, an offset, or replacement, of Saudi oil. The Canadian resource will be used in addition to Saudi resources. Talk that implies we would actually reduce Saudi imports if we tap the Canadian sands is willful misdirection.

The "ethical oil" term is a very clever and very insidious lie. Even if we were to grant Athabasca crude as, indeed, a "better" ethical choice, reducing imports of Saudi crude would just raise the prices (and profits) of the tar sand-derived product even further.

It's a brilliant strategy, really. Like Betsy McCaughey's lies about "death panels", framing this as an either/or choice (when it never was) not only salts the earth of discussion, but it puts the narrative control in the hands of oil companies.
posted by Blazecock Pileon at 8:30 AM on October 3, 2011


Well, we Canadians also have a lot of maple syrup. So let's say.....one little bottle of the sweet stuff per gallon of the tarry black stuff. Eh? How's that? We have also have some spare Mounties to raffle off. C'mon you guys, you know you want it.
posted by storybored at 8:35 AM on October 3, 2011


Saudis can make money pumping oil at like $10/Barrel. The Saudis will always pump and sell as much oil as they can or want to.

Um, but they make a lot less money pumping it at $10/bbl than they do at $80/bbl. Nobody is saying that opening up the tar sands will result in less oil being pumped out of the Gulf. But the idea is that by increasing the supply, the price goes down, and thus less money gets funneled to the Saudis.

Although as you point out, a better way of hurting the Saudis, if we were really so inclined, would be to find ways of destroying demand for petroleum, e.g. through import taxes on the stuff that would raise the price and encourage alternatives or at least more judicious use.
posted by Kadin2048 at 8:56 AM on October 3, 2011


As much as I hate the guy, Bush said it best: "America is addicted to oil." we're consumers, it has been etched into our way of life to constantly consume anything and everything around us.
Tar sands will be our methadone.
posted by Bridymurphy at 8:58 AM on October 3, 2011


One of the great obfuscations of the anti-Keystone protests was the idea that stopping Keystone would have any lasting effect on the overall development of the tarsands. I can see a half-dozen global-oil-giant logos from my bedroom window each morning telling me otherwise.

So are you saying the oil companies are tricking the environmentalists into attacking a particular pipeline while developing the real problem scot-free?

Wish people would spend half the energy they put into protesting developing a non-fossil fuel solution that is actually cheaper than oil. That's how this battle is won. Far-off consequences are hard for capitalism to gague. Why not create something economically cheaper?

And do so while laboring under the issues we face now. There's no Steve Jobs doing this now?
posted by Ironmouth at 8:59 AM on October 3, 2011


So are you saying the oil companies are tricking the environmentalists into attacking a particular pipeline while developing the real problem scot-free?

No, I'm saying the environmentalists chose a convenient proximate target and conflated it with the entire problem. In particular, James Hansen of NASA - who in general I respect enormously - touted a pile of stats painting a portrait of a "carbon bomb" whose fuse wasn't already lit and whose detonation was solely dependent on Keystone XL. Neither claim holds up to scrutiny.

One of those stats, widely cited, was the idea that developing the tarsands would add 200 ppm to global CO2 concentrations. Andrew Leach of the University of Alberta - whose blog you should bookmark and Twitter feed you should follow if you are truly interested in energy issues - crunched the numbers and found that using very robust tarsands development scenarios, it would take till around the year 3316 to reach Hansen's worst-case scenario of 200ppm. The full explosion of this carbon bomb is 1300 years off, and Keystone's impact on global CO2 emissions is, in fact, not especially significant.
posted by gompa at 9:07 AM on October 3, 2011 [3 favorites]


As much as I hate the guy, Bush said it best: "America is addicted to oil." we're consumers, it has been etched into our way of life to constantly consume anything and everything around us.

Plenty of people said it before him, and some of those people even tried to do something about it. But yes, we are addicted to oil, and it is destroying us.
posted by entropicamericana at 9:08 AM on October 3, 2011


the tar sands aren't cheaper than importing Saudi Oil - that's now how the math works, that's not how commodity markets work.

Arabian heavy oil is currently selling around $100/bbl I think. Depending on how far it's upgraded, tar sands crude sells near or at a discount to WTIC. The stuff that sells at a premium is better compared to lighter oil though I suppose. Canada is getting ripped off, basically. The tar sands are probably 20% cheaper than importing oil from elsewhere at the moment, due to lack of pipelines or other means of exporting the stuff from Canada. The proximate cause is new production in North Dakota and such places, not so much the continued gradual expansion of Alberta production which would've been easy to plan for.

The market is somewhat broken, here. So yes, building the pipeline would marginally decrease world oil prices and Saudi revenue.

If Canada is to act in its national interest it will have to either get one pipeline or another built, or start reducing output from the tar sands to keep the price up (i.e. join OPEC). You can guess which is more likely.
posted by sfenders at 9:19 AM on October 3, 2011


Also, in this case, the fact that it's nasty and dirty is a feature, and not a bug. When we see the effects of our consumption patterns in our own backyards, we might be a bit more likely to seek out sustainable alternatives.

Did oil consumption change in any significant way following the Deepwater spill? If not, then why do you think anyone will care about strip-mining and poisoning vast swathes of remote Canadian wilderness?
posted by twirlip at 9:39 AM on October 3, 2011 [1 favorite]


"Ethical oil" is a way to spin or leverage the public's differing views of Canada and Saudi Arabia. "Death Panels" were an outright lie, with no basis in reality at all.

"Ethical oil" is, in fact a lie. There's no such thing as ethical oil.
posted by klanawa at 9:43 AM on October 3, 2011


Arabian heavy oil is currently selling around $100/bbl I think.

Its selling for $100/bbl because its pricing against Oil Sands that produce at $100/bbl. The marginal cost of Arabian oil is much lower. If Arabian oil were the marginal producer it would sell for its marginal cost.

The Oil Sands or maybe some of the deepwater offshore stuff is marginal production from a cost perspective - that's what determines what everyone else gets paid when the market is in equilibrium - that last think I saw showed marginal costs for those markets was something like $70-$90/barrel.

All the pipeline would do is reduce the marginal cost of the oil sands - they wouldn't actually make more money, it would just reduce costs and price.
posted by JPD at 9:46 AM on October 3, 2011 [1 favorite]


It's ethical in the same way Canadian diamonds are ethical. You still need an environmentally destructive mine, but it's happening in a country with a better human rights record.
posted by Pruitt-Igoe at 9:47 AM on October 3, 2011


I read somewhere TransCanada was significantly partially owned by Saudi companies. I can't find anything to confirm/deny that. It seems pretty crucial to the "ethical oil" argument to establish whether or not TransCanada is actually owned by Canadians or not.
posted by joannemerriam at 9:50 AM on October 3, 2011 [1 favorite]


"Ethical Oil" in the sense that Canada's indigenous people are to the people making the choices, and writing the scripts, and "teaching" us which words to use, just as Saudi Arabia's women are to those people.

Side shows to profit; props. Obstacles.

And just like the oppression of women in Saudi Kingdoms, is unlikely to be addressed by tapping Canadas' sweet thick tar (as noted, the idea that Canadian oil is "substituting" for that "bad bad Saudi oil"; is both untrue, and, were it not such a tragic, absurd situation, nearly laughable in the dishonesty); the people in Canada who will suffer the first consequences are seemingly to be simply ignored. Another in a long line of maliciously using abuse of women of another land as the driving force for colonialism and domination of indigenous people.

Some realities of the health concerns (keep in mind principles of Bioaccumulation, and Biomagnification when reading);
Opponents of oil sands development are concerned about the potential for adverse health effects if the leaking wastewater contaminates drinking water supplies. George Poitras, former chief of the Mikisew Cree First Nation, says chemicals leaking from tailings ponds “affect anybody or anything that relies on water as a source of drinking or a place to live in [including fish, moose, and birds]. The majority of our people rely on the traditional diets, on moose.”

Ecologist Kevin P. Timoney of Treeline Ecological Research believes the 11 million liters/day estimate is conservative; the actual rate, he says, is probably much greater. In A Study of Water and Sediment Quality as Related to Public Health Issues, Fort Chipewyan, Alberta, published in November 2007, Timoney described his analysis of published data on water and sediment quality indicators at the titular community, which is located at the northernmost edge of the Athabasca oil sands. He noted that Fort Chipewyan lies within a depositional basin in which metals and other contaminants tend to accumulate in fine-textured sediments. Concentrations of arsenic, mercury, and PAHs are especially high in water and sediment, and many other metals (including cadmium, chromium, cobalt, and lead) and agricultural chemicals also are present.

Timoney’s analysis further noted that studies of local fish have shown that all the walleye and female whitefish and almost all the male whitefish tested exceeded U.S. guidelines for mercury consumption. Although treated local water appeared safe, untreated water in Lake Athabasca had levels of arsenic, total mercury, and PAHs sufficient to pose a threat to wildlife or humans.

Glen Van Der Kraak, a professor in the Department of Integrative Biology at the University of Guelph, Ontario, says studies of fish exposed to oil sands wastewater consistently find endocrine disruption and impairments of reproductive physiology. For example, in research published in the 1 May 2008 issue of Aquatic Toxicology, Van Der Kraak and colleagues found that goldfish exposed to wastewater from tailings ponds had dramatically lower plasma levels of testosterone and 17β-estradiol than control fish. The prime suspect behind these effects, says Van Der Kraak, is naphthenic acids, compounds that are often present in tailings pond water.

Following the massive lawsuit filed by the Beaver Lake Cree Nation (and the one filed by the Woodland Cree), the Chipewyan Prairie Dene First Nation came forward to file their own lawsuit against the Alberta government.

Those links are years old, none were successful. Last week.

Hundreds have been arrested on Parliament Hill while protesting the proposed Keystone XL pipeline. The protests have been organized by First Nations and environmental organizations, and are endorsed by Dene Nation.


Dene National Chief Bill Erasmus has joined the protests, and spoke to the crowd of one thousand about the impacts of tar sands developments on Dene.

“Toxic tailings ponds already cover hundreds of square kilometres , and are growing by the minute,” Erasmus said. “Millions of litres of contaminated water leak each day from these tailings ponds into groundwater and tributaries in the Athabasca River watershed. These waters flow through Denendeh, from northern Alberta to the Arctic Ocean, and any pollution in the water impacts our communities. This is one of our main concerns about tar sands development.”

The band claims the developments have forced band members out of traditional areas, degraded the environment and caused a decline in wildlife, making it impossible for them to meaningfully exercise their Treaty 6 rights to hunt, trap and fish.

“Nobody respects who we are,” Chief Vern Janvier said with tears in his eyes at a press conference. “There’s no consideration for us and there never has been.”

Just for some context, lest any and all questions of "ethics" be put to bed by Marketers, Sloganeers, and Ideologues.
posted by infinite intimation at 9:50 AM on October 3, 2011 [7 favorites]


Wish people would spend half the energy they put into protesting developing a non-fossil fuel solution that is actually cheaper than oil. That's how this battle is won. Far-off consequences are hard for capitalism to gague. Why not create something economically cheaper?

Except that the money won't be invested in non-fossil fuels if there are safer bets on tar sands, or deep sea exploration *and* if the perception is that extending exploration to higher cost deposits will solve the problem at least in the near term (and the near term is all that matters.) Making tar sands oil products more expensive for the US market has a direct effect on the investment climate for alternative energy.

Plus, there is the larger political environment which probably has an even larger effect. Given the interest rates, it's positively insane that there isn't a massive government-led investment going into the power transmission infrastructure needed to make wind power work in the US. If you can score points in that political battle by blocking the pipeline, more power to them. If you could trade support for the pipeline for a real government investment in the energy infrastructure, more power to them.

Shit flinging is important and useful, even if the issue isn't as important as the decibel level would lead you to believe.
posted by ennui.bz at 10:01 AM on October 3, 2011


Opps, meant to note that the environmental assessment come from here (NIH.GOV "Oil Sands A Risk Worth Taking?) and the reason this --"Although treated local water appeared safe, untreated water in Lake Athabasca had levels of arsenic, total mercury, and PAHs sufficient to pose a threat to wildlife or humans." -- matters so urgently is that through chronic underfunding and neglect, services that seem basic, like systems to treat water for indigenous communities are far too frequently not in place.

Issues that might have been mitigated at various stages if there had been any sort of consultation, or dialogue before jumping straight into "saving the world, one gas tank fill-up at a time", are beyond any sort of "do a study" stages... peoples bodies are now the experiment grounds. Fortunately (for those profiting from the land)... they don't live down river.
posted by infinite intimation at 10:02 AM on October 3, 2011


I read somewhere TransCanada was significantly partially owned by Saudi companies. I can't find anything to confirm/deny that. It seems pretty crucial to the "ethical oil" argument to establish whether or not TransCanada is actually owned by Canadians or not.


TransCanada's largest shareholders are basically big money managers. There are no direct investors who are Saudi or any othe sort of Sovereign Wealth Fund. This is disclosed in their financial filings. They may however own JVs that have other investors in them.
posted by JPD at 10:09 AM on October 3, 2011 [1 favorite]


Why not create something economically cheaper?

I could be wrong, but my impression is that getting oil from the tar sands is not cheap and has required huge amounts of investment over 50 or more years to get where it is today.
posted by Hoopo at 10:12 AM on October 3, 2011


JPD: The Oil Sands or maybe some of the deepwater offshore stuff is marginal production from a cost perspective - that's what determines what everyone else gets paid when the market is in equilibrium

The market is not in equilibrium. What I was trying to point out is that oil at Cushing, Oklahoma is currently selling for a lower price than oil of equivalent (or worse) quality elsewhere in the world. Most commonly it is compared to Brent, and the current market price is 'wrong' by over 20%. I make the generalization that oil from Alberta trades roughly with WTI since it's currently connected to there by pipeline. This sort of thing is not supposed to happen, normally. But it has been stuck like this for a year or something, due to a lack of pipeline capacity to take oil away from the market where it's relatively abundant, that which Alberta is connected to, and send it to where it's relatively less abundant and higher-priced, which is everywhere else. It begins to look like natural gas, which for slightly similar reasons obviously does not have one world price that's the same for everyone.

I never would have expected it to last this long, this crazy WTI-Brent spread. Of course the situation will not last forever, but either building new pipelines or else working out a less-efficient alternative (which will probably only happen on a large enough scale if everyone is convinced no pipeline will be built) is pretty much what's required to end it. When it does end, oil from Alberta will cost a bit more and oil from most of the world will cost a tiny bit less, ceteris paribus.
posted by sfenders at 10:17 AM on October 3, 2011


You still need an environmentally destructive mine, but it's happening in a country with a better human rights record.

Not so much where the indigenous people who still live off the land are concerned.

why do you think anyone will care about strip-mining and poisoning vast swathes of remote Canadian wilderness?

Well, we could try the Ecuador approach -- pay us for not developing the resource and saving the planet for y'all.
posted by binturong at 10:22 AM on October 3, 2011 [1 favorite]


The Brent-WTI spread thing though is different from a discussion of the marginal cost of oil and the oil sands vs the saudis.
posted by JPD at 10:29 AM on October 3, 2011


You don't think I'm right to say that tar sands crude trades with WTI? Or do you think the spread is caused by something that this pipeline wouldn't affect?

I'm not saying the Saudi would sell any less oil, just that they'd theoretically get a slightly lower price for it if this pipeline gets built.
posted by sfenders at 10:38 AM on October 3, 2011


I find it a little hard to swallow when Canadian companies takes the moral high ground with respect to the oppression of women, especially considering that for all the talk of bitumen I have not once heard any Alberta oil execs make reference to their plans for bituwomen.
posted by Hoopo at 10:49 AM on October 3, 2011 [2 favorites]


If you look at the google satellite view over: 57.02,-111.65 you can see approximately 100 square miles strip mined. No way this would be in anybody's back yard without them screaming bloody murder.

Also, oil is now at 79 $ / barrel, not a hundred. This is about what it costs to make a barrel of oil out of Canadian tar sand. The oil companies are taking a bath on this for now, which doesn't help anybody but if they just strip mined a hundred square miles in your neighborhood you might take some small consolation from that.
posted by bukvich at 10:59 AM on October 3, 2011


Making tar sands oil products more expensive for the US market has a direct effect on the investment climate for alternative energy.

So the plan is to make the consumer pay more at the pump. And you are "shocked" why the government would "collude" with people to work to get the price down for the people that elect them.

Christ, you write Big Oil's scripts for them.

Sometimes "shit flinging" is just an ego boost for the flinger, because they seem not to care where it lands.

The idea is to beat big oil with cheaper energy. You can't fight the need for people to optimize their scarce resources, including enegy costs. Its like fighting physics. You have to beat them flat out on price.
posted by Ironmouth at 11:26 AM on October 3, 2011 [2 favorites]


I'm not saying the Saudi would sell any less oil, just that they'd theoretically get a slightly lower price for it if this pipeline gets built.


As long as the Tar Sands are marginal, yes I agree with this. But its the difference between making 55 a bbl and 65 a bbl. Not 0 and 10 as it sounds like some people (not you) are trying to argue as a reason for the pipeline

(and if demand grows you probably end up with marginal production being somewhere even higher cost anyway)
posted by JPD at 11:40 AM on October 3, 2011


The idea is to beat big oil with cheaper energy. You can't fight the need for people to optimize their scarce resources, including enegy costs. Its like fighting physics. You have to beat them flat out on price.


I dunno - a lot of freshwater economists would tell you if society wants to disincentivize something they should tax it rather than regulate it. Intentionally keeping oil prices high is pretty shitty tax in that you give all the tax revenue to producers, but it does incentivize reducing demand.

(that ignores political reality I agree, but its not as crazy as you make it sound)
posted by JPD at 11:43 AM on October 3, 2011


Ethically sourced oil. Hahaha.
The idea is to beat big oil with cheaper energy. You can't fight the need for people to optimize their scarce resources, including enegy costs. Its like fighting physics. You have to beat them flat out on price.
Do you mean coal or should we magically just make wind and solar cheaper? Actually solar energy has been getting cheaper and cheaper over the years, as Chinese solar companies continue to push down margins on polysilicon panels. But the prices are what they are given current demand. If demand shot up prices would have to as well.

We have to do something before waiting for the magical technology fairy to save us. In this case 'doing something' simply means pricing oil based on the total cost of using the product, rather then the cost of extraction alone.

Right now, when you burn oil, you do a lot of damage to the world, in terms of global warming as well as just particulate mater and so on. People who burn oil (and coal) should have to pay for everything. And when you do that, the costs are not as cheap.
posted by delmoi at 11:49 AM on October 3, 2011 [2 favorites]


If you look at the google satellite view over: 57.02,-111.65 you can see approximately 100 square miles strip mined. No way this would be in anybody's back yard without them screaming bloody murder.

Not to mention the tailings ponds. Groundwater contamination is a serious concern, although the evidence for effects on human health is still sketchy. (Worth reading: Does the Alberta Tar Sands Industry Pollute? The Scientific Evidence.) And the area waiting to be developed is enormous.

The problem, as infinite intimation points out, is that the people in whose backyard this is happening don't have a lot of political clout, especially compared to the oil companies. Alberta's promise to look into the health effects of tar sands development (mentioned in the FPP) is coming years later than it should have. That's pretty typical where indigenous people are concerned in Canada. It took years of lobbying to get anyone to look seriously at elevated cancer rates in Fort Chipewyan a few years ago.

Well, we could try the Ecuador approach -- pay us for not developing the resource and saving the planet for y'all.

As a Canadian, I approve of this plan.
posted by twirlip at 12:56 PM on October 3, 2011 [1 favorite]


Biggest problem, Ironmouth, is that the markets aren't pricing in the full cost of fossil fuel use as it is.

Think about this: Who pays for the waste bi-products your car produces and dumps from its tailpipe into the air we all breathe and share?

The answer, right now, is nobody. Fossil fuel use remains one of the few waste-producing activities that we don't require anyone to clean up after.

Dump your trash on the side of the road, you pay a fine. At the very same time, you can dump as much of the output of the internal combustion engine that propels your car into the air as you like.

The markets don't currently price fossil fuels properly, and they won't, until government steps in and does its job without whinging about it and acting like people have a right to dump their waste into the air without paying a dime for it.
posted by saulgoodman at 1:01 PM on October 3, 2011 [2 favorites]


JPD: As long as the Tar Sands are marginal, yes I agree with this.

Looking back, I see that I missed what you were getting at. You think that the anomalous WTI-and-friends market price is set by the marginal cost of new production from the oil sands; fine, close enough I imagine, or will be quickly enough if the price tries to go below that level.

But you also say that prices far away in Arabia are already set by the marginal cost of oil sands production (plus the cost of transportation absent the pipeline I guess), which seems very unlikely indeed. Those refineries in Texas who would be served by the proposed pipeline cannot currently buy that crude and bitumen in quantity from Alberta at any price unless they build their own pipeline, or hire a million currently-unemployed people to deliver it by bicycle, or something. It's not as if customers of Saudi Arabia have the option to buy tar sands bitumen instead and have it delivered by hot air balloon for $100, thus keeping the price down to that level. The world seems to have arrived at the $~100 price for oil it now enjoys without that much input from Canada. 99.x% of oil sands exports go to the US, and whatever the cost of the current impediments to exporting them elsewhere, they're obviously quite high, otherwise it would be happening already in amounts more measurably above zero, given the price differential. Since it's not happening for whatever reason, it has no real influence on world prices aside from reducing the need for some Americans to import some fraction of whatever quantity they obtain this way.

Total world price would go down a little if the pipeline is indeed effective in connecting the markets because whatever small fraction of Americans (or American refineries) are enjoying the lower prices now wouldn't be buying quite as much at the newly higher prices, and tar sands production might expand a little faster if that's even possible. In closing the spread between the two, the WTI price would go up by substantially more than the world price would come down, since it is the smaller market. Perhaps the world price would come down to the long-run marginal cost of typical tar sands product eventually, wherever it ends up as costs rise or fall. But it would probably take a few decades at least for them to ramp up production to the degree that would be required. There's no way it could happen so quickly that Canada's terms of trade wouldn't be substantially improved for a long while until then. In fact it will probably not happen before peak oil, so it will not happen at all. I mean how much oil do you think it takes to bring the world market down by $20? It's not as if they can just add another weekend shift of workers over at the Suncor operation to come up with that much additional supply. Even back in the days when everyone hung on the latest word from OPEC, it'd take a million barrels per day announced increase in their quota to move the market half that much, which is rather a tall order for Canada alone to come up with when they're already digging away at very near full speed.

Saudi Arabia may not be the "marginal producer" in the sense you mean, but neither is Canada right now and they don't have anywhere near the capacity to instantly become that even if given the opportunity. Okay, so maybe someone in Canada, some guy with a shovel who's willing to sell his upgraded bitumen at $98 per barrel would be the singular marginal producer at some moment in time, but his existence does not mean that the big oil co's whose costs would not actually change much "wouldn't actually make more money" when the price they get for their product goes up to his price.

bukvich: Also, oil is now at 79 $ / barrel, not a hundred.

That would be the WTI price. Brent, a less-valuable oil, which is closer in price to what the rest of the world pays, is more like $101.
posted by sfenders at 1:52 PM on October 3, 2011


yes there is some margin between refining sweeter and sour crudes - most of that gets captured by the refiners tho. But thats because there is more capital investment in refining heavier oils. Sometimes, like now when the issues in Cushing are creating all sorts of problems the market can do weird things - like making the sour refiners a lot of money if they can get the oil

Saudi Arabia is most assuredly not "marginal" - if I implied that I did not mean to, but that rather the global marginal producer is what sets prices, and the Saudis are pure price takers. The Saudis are going to sell their oil for the costs of the marginal producer for the marginal buyer. These costs will include transportation and refining differentials due to grade.

That marginal producer will vary by where you are in the world and what you can refine of course. In the US its probably the Tar Sands, in Europe its maybe something else.

(By marginal I don't mean future production expansion I mean the last bbl of oil that clears the market - just to be sure we are on the same page here)
posted by JPD at 2:10 PM on October 3, 2011


Yep, agreed on all that. Sorry for going on at such length. I'm just saying that if it becomes easy to export WTI to the coast, the demand for it will increase and whoever is currently the marginal supplier of that last barrel out of Cushing will no longer be. It'll be someone whose price is a lot closer to $100.
posted by sfenders at 2:17 PM on October 3, 2011


Yeah - but I think that'll still be the oil sands or maybe some new deepwater field.

I think the real point I was trying to make is that making oil sands production a little cheaper to get to the east coast isn't going to have a tremendous impact on cash in the door for the House of Saud.
posted by JPD at 2:22 PM on October 3, 2011


If TransCanada's plan falls through, it will be interesting to see what happens to Enbridge's Northern Gateway proposal. There's a lot of opposition to tanker traffic in BC, but without Keystone XL, I imagine there would be a lot of pressure to make the Northern Gateway pipeline happen.
posted by twirlip at 2:47 PM on October 3, 2011


They'll build either Keystone XL, the Northern Gateway, or something else before too long.
posted by sfenders at 4:00 PM on October 3, 2011


gompa writes "The primary justification for building Keystone XL is that the Texas Gulf coast has excess refining capacity in place, so it's more economical to ship Alberta crude there than to build more refineries outside Edmonton."

Interestingly this is one of the anti talking points: That we shouldn't be exporting raw bitumen and instead that it should be refined in Canada so the refining jobs benefit Canada.
posted by Mitheral at 4:39 PM on October 3, 2011


Former Keystone Pipeline Inspector Says Construction Shortcuts Are Tied To Leaks
posted by homunculus at 4:58 PM on October 3, 2011 [1 favorite]


I dunno - a lot of freshwater economists would tell you if society wants to disincentivize something they should tax it rather than regulate it. Intentionally keeping oil prices high is pretty shitty tax in that you give all the tax revenue to producers, but it does incentivize reducing demand.

I'm pro-tax to recover the costs in environmental reclamation.
posted by Ironmouth at 5:30 PM on October 3, 2011 [1 favorite]


Seriously, Ironmouth, saulgoodman's point is key here:

the markets aren't pricing in the full cost of fossil fuel use as it is.

For political reasons we aren't even seeing - let alone paying - the real cost of fossil fuel use. Ignoring that element of the problem when framing your opinion is a huge mistake.
posted by mediareport at 4:28 PM on October 4, 2011 [1 favorite]


« Older Alain Resnais' Night and Fog (1, 2, 3)...  |  There's no place like home. It... Newer »


This thread has been archived and is closed to new comments