Thursday, January 19, 2012

Get Halifax on the other line!

So the big right-wing talking point on the collapse of the Keystone Pipeline from Alberta to the USA is that now "Canada" will sell all that oil to "China" (we use the quotes because discussions of the oil market tend to take a bizarrely centralized view of decision-making) --

A Republican Hill staffer sent the report [of Obama-Harper phone call re the pipeline] out this evening with the subject line: “Get China on the other line!”

There's just one problem. One nearby customer that Canada currently doesn't have for Canadian oil is ... Canada! As acknowledged by PM Stephen Harper in an interview with CBC 2 days ago:

MANSBRIDGE: All right. Last point on this whole issue of diversification to foreign markets: there are some people who are puzzled by the fact that a good chunk of Canada itself is still dependent on foreign oil, whether it's Atlantic Canada or Quebec, whether it comes from the North Sea, depleting resources there, or from the Middle East, vulnerable oil markets as you've already just suggested. Does it not seem odd that we're moving oil out of Western Canada to either the United States, markets in the United States, or new markets to Asia, when a good chunk of Canada itself does not have domestic oil?

HARPER: Well, look, Peter, on a certain level, I agree with you. It does seem odd, and I do think there are people out there in the marketplace looking at dealing with that particular sensitivity or insecurity. That all said, the fundamental basis of our energy policy in this country is essentially market driven. You know, we made the switch some 25, 30 years ago, and it's served the country well. As a market-driven supplier, we're now the only — in the developed world and in the stable world — we're really the only supplier that is secure and is increasing its production. So I think it's served the country well. It's served government revenues well. It's served creation of jobs well. But it is fundamentally a market-based decision. We don't dictate pipelines go here or there.

The more general issue here is that conservatives gleefully speculating that oil that would otherwise have gone through this pipeline will now go to China seem to have ignored the minor issues of distance and oceans. For one thing, to even get that Alberta oil to the point where it can be exported, there will have to an, er, pipeline, and one facing at least as many environmental challenges as Keystone.  In short, given the difficulties of moving oil over land, that oil in Alberta is going to have to be sold to some place relatively close to Alberta. And it's not going anywhere while that market is being figured out.

UPDATE 9 JULY: Canada's strange internal economics of oil are a factor in the Lac Megantic disaster.