There’s been some interesting commentary of late about how energy development in Canada could provide a genuine stimulus to the U.S. economy.
Recently, an editor at the Wall Street Journal wrote “Canada’s Oil Sands are a Jobs Gusher.” In that piece, Mary Anastasia O’Grady made a compelling point about how Alberta, a center of oil sands production in Canada, has handled the global economic slowdown better than most due in part to the Canadian government’s commitment to oil sands production.
“Canada has recovered all the jobs it lost in the 2009 recession, and Alberta’s oil sands are no small part of that,” she said. “The province is on track to become the world’s second-largest oil producer, after Saudi Arabia, within 10 years.”
But it’s more than just Alberta that can benefit from this “jobs gusher,” as O’Grady clearly points out. She reports there are about 960 American companies that support Alberta oil sands activities, with thousands more jobs that could be created if the U.S. would take steps to promote greater oil sands development – such as approving the Keystone XL pipeline.
The Keystone pipeline would carry Canadian oil from Alberta to U.S. refining centers along the Gulf Coast, creating jobs and providing steady and reliable energy supplies to Americans along the way. In fact, one study has estimated that greater oil sands development as a whole could support 600,000 U.S. jobs in 2035.
The potential for the U.S. to benefit from Canadian energy production is nothing new. President Obama, in a speech earlier this year, supported oil sands development – calling Canada a “stable and steady and reliable” source.
The Keystone XL project is an important part of getting those resources to the U.S., yet only recently have we seen any movement from the Administration on its plans to approve the project.
The State Department recently released its final “Environmental Impact Statement” on the Keystone XL pipeline, which addresses concerns expressed by those who have criticized this major energy infrastructure initiative, including:
- Composition of the crude: The study found that the types of crude coming out of Canada are “similar in composition and quality to the crude oils currently transported in pipelines in the U.S. and being refined in Gulf Coast refineries.”
- Ability to process and transport the crude: U.S. Gulf Coast refineries are successfully processing “heavy crude” similar to that already being imported from places like Mexico and Venezuela, according to the State Department. In fact, more than half of the crude oil imported by Gulf Coast refineries in 2009 was considered heavy crude.
- Safety of the pipeline: The State Department concluded that the Keystone XL pipeline does not pose undue safety risks to people or land.
- Environmental management: The report also notes that the industry has made significant strides in monitoring and managing air quality, land impact, and water quality in oil sands development. The State Department found that “Oil sands mining projects have reduced greenhouse gas emissions intensity by an average of 39 percent between 1990 and 2008 and are working toward further reductions.”
The next step in the project’s permitting process is a “National Interest Determination” – meaning, is it in the nation’s interest to grant a permit for the construction of this cross-border pipeline?
A recent piece by Robert Samuelson with The Washington Post answers that question:
“By all logic, the administration’s Keystone decision … should be a snap. Obama wants job creation. Well, TransCanada, the pipeline’s sponsor, says the project should result in 20,000 construction and manufacturing jobs. Most would be American, because 80 percent of the 1,661-mile pipeline would be in the United States. Continued development of oil sands would also help the U.S. economy; hundreds of American companies sell oil services in Canada. Finally, production technologies are gradually reducing environmental side effects, including greenhouse emissions.”
I’m sure I’m not alone in thinking that we have no greater “national interest” at this time than creating more jobs, attracting greater investment and promoting stable supplies of energy. Supporting greater development of Canadian energy is one way to do that.
Good for Canada but what about the United States? Is there a overflow of jobs into United States? Does Exxon Mobil own the rights to the new pipeline that will be built or would that be the Koch Brothers again. Of course the article would be authored by the Wall Street Journal. Looks like a lot of “outsourcing” will be the main focus.
After 10 years it will be larger than Saudi Arabia looks to me like a lot of food coloing to make excuses for profits.
There are two issues with developing oil sands. Firstly, it is environmentally harmful: open mining, lots of CO2 emissions when burning the natural gas to extract the crude, and lots of dirty water that needs to be disposed off.
The second issue is that crude from oil sands is expensive due to the need to burn natural gas to extract the crude. The cost of incremental supply exceeds the price economies can pay without destroying growth at a given point in time. While hard to definitively prove, there is considerable circumstantial evidence that there is an oil price economies cannot afford without severe negative impacts. Oil sands is one of the new sources of oil like deep water, polar, heavy oil etc. These sources of oil are plentiful but expensive and may be too great for the current setup of petroleum-dependant nations like the US.
Very good points John! Double energy use to produce energy and this applications was started back in the 30′s and communicated during the Arab Embargo. The Major Oil Companies have been spinning their wheels this long to tell us tar sands is the answer. Yet making those very large profits. Who would of thunk?
John: in your note you speak of “considerable circumstantial evidence that there is an oil price economies cannot afford without severe negative impacts” – it doesn’t have to be entirely “circumstantial.”
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If (for a 10 year period, or so) you make a co-plot of WTI vs time along side a good index for the global price of rice (mine is Bangkok no. 5 coarse), you will see that there is Very Little correlation until oil hits a threshold price (not far from $100/ba) after which they track each other almost perfectly.
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I stumbled on this back in the late fall of 2008 when oil was very high and I began hearing of food riots in the poorest nations on all continents (incl. Haiti for N.A.). More important than curves and correlations are the related human stories about the impact of a round of bloated oil prices. In our (Canadian) media, the stories about the riots weren’t acquired except to declare that they took place but it was possible to glean from the internet a pretty convincing over-arching story about the 2008 episode. As I was able to piece it together it can be encapsulated as follows:
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Just as it is… read more »
…with oil, there is only a very small number of countries which produce large quantities of rice I believe they are India, China, Vietnam and (perhaps) the Philippines (Thailand is a significant producer but it’s most important role is in shipping and marketing). As oil got more expensive through the summer of 2008, India got concerned about the possibility of a round of major inflation so they cut off rice exports to protect their domestic supply. China didn’t but Vietnam, I believe followed suite and the supply was decimated and the price got very high.
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So, for this reason, I believe that what you say is quite true – “….. there is an oil price economies cannot afford without severe negative impacts”. This has implications at both ends of the beast: (First) when our producing nations and corporations become irresponsible and exploit situations where supply and demand are not in equilibrium the price goes up and food markets that people rely on fail; (Second, and at the other end of the beast) when oil prices collapse or are unrealistically restrained, the pace of supply maintenance is compromised and a ricochet effect is assured with pretty much the same consequence.
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primarily I set out here to affirm your instincts about a threshold oil price beyond which lots of things “fall apart”. Hope I have.
job gusher? are we so shortsighted??
Are we all so ignorant to the simple facts that oil, natural gas, coal, and non-silicate minerals are non-renewable and will only end in the loss of jobs? The pollution and environmental degradation caused by the use of non-renewable resources, from the mining all the way to the landfill are a waste and everyone knows that any jobs created are only temporary. We only have 40 years left of oil. Tar sands, shales, even natural gas are pointless and those jobs will only last a short whlie. A good example of this are the ghost towns that thrived on coal mines. The same will happen. I’m so glad everyone on this web site cares about their children. Nature can not be fooled.