The Conservative government of Prime Minister Stephen Harper and oil executives have consistently claimed that the dirty Alberta tar sands oil, the Canadian petro state and the proposed Keystone XL pipeline are a boon to U.S. energy security. Here are seven reasons why this isn’t the case:
1. Tar sands cannot break the power of OPEC. The oil cartel, the Organization of the Petroleum Exporting Countries (OPEC), controls the world market for oil, and this will remain true with or without tar sands. The International Energy Agency forecasts show that OPEC’s share of the market is set to increase with or without tar sands growth. Even if the United States were to greatly increase its consumption of tar sands oil, it would not change the dynamic of the market or challenge OPEC control.
2. Tar sands are expensive. Oil from tar sands is among the most expensive on earth because it requires enormous amounts of energy to extract and extra processes to refine. Tar sands oil is only profitable when gas prices are high. In fact, the industry cannot be profitable in a world of low or volatile prices. If you are putting tar sands in your tank, it’s because gas prices are high. We cannot drill or mine our way to low gas prices because oil prices are set on the world market. If the United States produces more, OPEC, which controls more than 75% of world’s proved oil reserves and 44% of global production, will simply decrease its output commensurately. The total oil supply will remain essentially the same and the price of fuel will continue to increase unless we get off oil. Tar sands oil represents a tiny drop in the bucket on the world oil market, and is not worth the costs to forests, water, and human health.
3. Tar sands cannot help if there is an embargo, climate event or armed conflict that disrupts oil shipments. Because of huge infrastructure and capital investments, it takes years for tar sands projects to come on-line and the industry carries no spare capacity. During the so-called tar sands boom between 2003 and 2008, tar sands producers spent five years and $50 billion raising tar sands production a mere 350,000 barrels a day. By comparison, Hurricane Katrina knocked out 367,000 barrels a day of production in a single day.
4. Tar sands are not needed for rising U.S. oil consumption, because (good news!) u.S. oil consumption is not rising. There is a myth that U.S. oil demand will rise for decades, but the good news is that oil consumption is expected to decline. All major forecasts now agree that U.S. oil demand has peaked and will level off under existing regulations aimed at tackling oil consumption. Moreover, many forecasts have yet to take into account the full transformational potential of hybrids, electric cars, and other efficiency measures such as smart growth planning that could vastly reduce U.S. oil consumption. With policies that encourage this reduction, there will be no need for tar sands oil, and much of the predicted rise in tar sands production will not materialize.
5. Tar sands impede the transition to cleaner technologies. Occasionally, one hears the argument that while tar sands are dirty, our clean energy future is still years away, and we need this oil in the meantime. This argument has several flaws. First, exacerbating oil addiction cannot logically be the way toward breaking that addiction. Second, tar sands infrastructure projects last 30 years or more. That’s a long bridge. Third, investing billions in tar sands infrastructure puts cleaner technologies at a disadvantage for decades to come as investors must recoup the enormous sunk costs of that infrastructure. Efficiency can save more oil than tar sands can provide. Efficiency is the solution to our oil addiction.
6. Tar sands projects in the United States will not hinder Chinese access. Some Canadian commentators have threatened that if the United States does not buy tar sands oil, then Canada will sell to China. This is an empty threat as there is no current way to get tar sands oil to China. The proposed Gateway pipeline which would take tar sands from Alberta to the west coast of Canada is not certain. Such a pipeline would have to cross dozens of First Nation territories, defy a de facto tanker ban, and overcome the determined resistance of activists in British Columbia and across Canada.
7. Tar sands do not prevent the dynamic of “peak oil.” Tar sands growth – even reckless and rapid growth – cannot keep pace with future declines in conventional oil production. The good news is that through transformational technologies such as the electric car, we can make “peak demand” drive lower prices, instead of “peak supply” driving higher ones.