Far from being economic enemies of Alberta, it appears the crowds of protesters in the United States who want to stop the Keystone pipeline are actually doing us a favour.
They are preventing Canadians — and especially Albertans — from being played for fools.
Topping the economic news over the New Year’s weekend was a story out of the Associated Press that was repeated nearly word for word by both the Huffington Post and USA Today. It said that for the first time since 1949, when Harry Truman was president, the U.S. had become a net exporter of fuels: gasoline, diesel and jet fuel.
Fuel hasn’t been among that country’s top 25 exports for decades. Quite the opposite, the United States has for a long time been the globe’s gas hog. But in 2011, the fuels that we refine from crude oil became the country’s largest export, worth about $88 billion in sales.
The growing economies of Latin America and Asia have been their top buyers, generating big profits for the oil companies, with big spin-offs in economic activity and thousands of jobs.
The United States is by no means energy self-sufficient. They are still the largest buyer of crude oil, by far.
So where do they get their crude, from which all this gas and diesel is made? From a lot of places, but mostly from Alberta.
The vast supplies of surplus fuel that America produces is topped up by the very forces that environmental protesters yearn for: declining consumption in a very wasteful market.
Whether by economic force, high prices, or consumers simply getting the message, burning fuel for transportation (a major contributor to climate change) has been dropping in the U.S. for years.
Total energy consumption — for all uses, like creating electrical power, running cities and factories, etc. — is still rising. But cars, trucks and jet planes have gotten far more energy efficient.
Plus, as the AP story mentioned, there’s more profit selling gasoline to Latin American countries and to Asia, than selling it locally. So that’s where it goes.
Those are the markets Alberta should be selling to. After all, we’ve got the crude, we understand the technology — and if we weren’t so busy trying to pipe unrefined crude out of the province, we’d quite easily develop the means to deliver it.
How can a country that supposedly hadn’t built all that much new refining capacity for a decade suddenly find capacity to make fuels their top export? Government subsidies supplies one explanation. The ability to keep a country’s cars rolling is part of a national strategy. If it becomes important to government that certain things be done, they are done.
Historically, Alberta taxpayers simply wouldn’t stand for public money to be put into a substantial increase in refining ability here. We have had a provincial policy under Ed Stelmach that the government take its oilsands royalty payments from some developments in crude instead of cash, to be refined and sold as fuel. But if anything, that was considered a minor bit of public policy — after all, our take of Alberta’s crude output is pretty small.
But state and federal tax grants in the U.S. have made it possible for that vast energy hog to buy a whole lot of our crude, refine it and make the resulting fuels their top national export, reversing a trend two generations long.
As an Albertan how does that make you feel? A bit like a fool, maybe?
We don’t need vast new continental pipeline projects to ship all our crude to market. We have plenty of capacity already.
We do need a strategy (perhaps backed by government investment, perhaps even a joint project with Canada’s next energy giant, Saskatchewan) to build more upgrading capacity at home. That’s where the money is.
Greg Neiman is an Advocate editor.