We live in a society that, like it or not, is dependent on oil (petroleum hydrocarbons) and petroleum hydrocarbon-based products.
Our food is produced on farms that need heavy equipment to operate. That food is shipped around the world by air, water and rail, all of which rely on petroleum hydrocarbons to operate. Petroleum hydrocarbons also serve as the feedstock of the petrochemical industry, which forms the basis of all the things that make our modern world work.
They are the building blocks of our plastics, our computers, the tools we need to keep us healthy and the drugs we take when we are sick.
Irrespective of what activists may claim, Canada did not commit to trashing our economy nor did we agree to abandon all fossil fuels. Canada certainly did not commit to achieving a fossil fuel-free status in less than two decades. What this means is that Canada has an ongoing need for fossil fuels.
I know that the term “ethical oil” has some blemishes on it because of issues surrounding its origin, but I believe in the concept behind the term. I want my personal gasoline purchases to go towards subsidizing medicare and not subsidizing a despot or paying for a tyrant to bomb his neighbour.
I want to know that the oil used in my car was not generated using slave labour in a country without a free press, and where environmental regulations are noted by their absence rather than their application. I want my oil being produced by well-paid Canadians in a country with a demonstrably free press, strong government oversight and a strong tradition of NGOs to watch over the regulator’s shoulder.
This brings us to the Energy East pipeline proposal (Energy East). Energy East is a 4,600-kilometre pipeline designed to carry 1.1 million barrels of crude oil per day from Alberta and Saskatchewan to refineries in Eastern Canada.
“Canadian oil helps support Canadian jobs and Canadian institutions, and provides the funds to pay for our education and medical systems.”
Backers of Energy East point out that Quebec and New Brunswick currently import more than 700,000 barrels of oil every day (b/d) — or 86 per cent of their refinery needs — from countries including Algeria, Iraq, Saudi Arabia and Nigeria. For a full breakdown of the countries of origin of Canadian oil imports see Table 7.2a of the CAPP Stats Handbook.
As indicated, the direction is swinging towards the U.S. but it still represents imports. U.S. oil will be imported by rail, which has been found to be over 4.5 times more likely to experience a negative occurrence than pipelines.
While the supporters of the pipeline are predicting over 700,000 b/d, CAPP reports that refineries in Québec and Atlantic Canada currently import 90 per cent of their requirements. This translates to a potential 640,000 b/d domestic market opportunity for Canadian suppliers.
Opponents of Energy East claim that it is primarily an export pipeline, but as the proponents have repeatedly explained, that is simply not the case. That is why the project includes the Montreal and Levis laterals. Simply put, the majority of the oil running through the pipeline will be available to Canadian refineries.
As for export, a large component of Energy East’s excess capacity could well end up going to the U.S. Gulf Coast to address their heavy crude needs resulting from the cancellation of Keystone XL. This will provide the United Sates with oil from a reliable ally rather than leaving our friend dependent on oil from Venezuela or another hotspot.
As a Canadian I will point out again that Canadian oil helps support Canadian jobs and Canadian institutions, and provides the funds to pay for our education and medical systems while subsidizing transfer payments.
Any rent-seeker who thinks that blocking the pipeline will somehow help them is barking up the wrong tree, because the Saudis, Nigerians and Algerians — who are currently supplying the East Coast refineries — are not paying into our Federation; they are siphoning money out of it. If you want your bridges, roads and sewage plants built/repaired, then you are going to need money and blocking Energy East is exactly the wrong way to obtain those funds.
As I have written numerous times at my personal blog, we need to wean Canada off fossil fuels as our primary energy source. If we are to avoid the serious consequences of climate change, we will need eliminate fossil fuels from our energy mix.
However, contrary to what many say, the process of doing so will take decades, and in the meantime we will still need petroleum hydrocarbons.
So, the question that must be asked is: from whom do we want to source our needs? From Canadian provinces that pay into equalization or from foreign despots who use the money generated to fund wars and underwrite totalitarian regimes?
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