An anecdote attributed to two citizens of a developing country who meet in a market goes: "Bad news", the one says, "They've just discovered oil in our country." There's considerable truth in this when we look at most nations with abundant oil reserves and compare them to those with few or none. Oil too often does become a national curse. At the least, Alberta's oil sands are reducing to a very small degree Western petroleum dependency on some corrupt and authoritarian regimes.
The oil sands are useful for other reasons. One is the many jobs being created in the province and elsewhere to expand and move the increased output of oil. There are much increased federal and provincial tax revenues, which could pay for better social services and provide the financial means — if not yet the political will — to use oil royalties to move towards a more fossil fuel-free economy.
Billions of dollars in new investments — up to $87 billion over only a decade by one estimate — are expected towards exploiting more of the sands. It will triple the output; some expect five million barrels per day by 2020. More construction jobs and investments are needed for pipelines and other infrastructure to move oil to markets in Central and Atlantic Canada, the U.S., India, China and Southeast Asia. Being open for business on export sales should not in my view mean selling control of any more oil sands facilities or oil companies to government-owned businesses in China for various reasons.
A deleterious effect of the exploitation of the oil sands is climate change, an issue which cries for attention. Approximately 36 billion tonnes of carbon dioxide are being emitted around the world yearly now, with about 81% coming from fossil fuels and 19% from deforestation. Canadians and many others worry about the global warming caused by greenhouse gases. Carbon concentrations in the atmosphere have increased exponentially since 1960.
[ David Jones: Existing oil options are more practical than the alternatives ]
Can anyone doubt that this is the principal reason why eleven of the twelve hottest years worldwide on record occurred between 1995 and 2005? Is this summer not one of the hottest ever in many places? Can anyone deny that the rise in CO2 is increasing ocean levels, destroying habitats, transmitting disease, and causing significant changes in agricultural productivity and water availability?
The book Green Oil by Satya Das of Edmonton deals with the opportunities and challenges of Alberta`s oil sands, contending that a far-sighted use of the deposits and vast revenues they generate can give Albertans and other Canadians a leading role in moving to a cleaner energy future at home and abroad. Das is blunt:
Alberta can and must use our $15 trillion of oil sands wealth (180 billion barrels recoverable at today's technology priced $60 a barrel escalating to $90 a barrel over 20 years) to fund, design and build the green future of renewable and sustainable energy for the planet. Thus Alberta becomes best for the world not the best in the world. To me, the only moral justification for developing the oil sands is to use the proceeds to pay for a sustainable planet.
The daily world consumption of oil today is in the 85 million barrel range. The U.S. is importing about 12 million barrels daily, or, as President Obama has put it, Americans are borrowing money from China to buy oil from Saudi Arabia. Many suspect that they are also borrowing from China to pay for oil bought from Canada. How much longer can this continue? Das wants the tyranny of oil to end and thinks prudent stewardship of the oil sands would allow Canadians to develop a clean energy economy and technologies, which can be shared profitably by green entrepreneurs with the rest of the world.
One option in terms of addressing the so-called 'Dutch Disease', i.e. the high Canadian dollar hurting manufacturing jobs because of resource exports, might be to adapt the Norwegian model in which part of the Oslo government's share of oil sales goes directly into an off-shore pension fund, which does not create upward pressure on their currency. The Alberta government could adopt a similar mechanism for part or all of its oil sands royalties.
The Edmonton-Ottawa agreement to create 90 sampling sites to study the cumulative effects of oil sands development on water, air and biodiversity is a step in a better direction. It must, however, be fast-tracked and be overseen by independent boards of scientists.
In short, the oil sands need not be a curse at all for either Alberta or Canada. If handled sustainably, they can continue to benefit Canadians as an enormous asset. The solution lies in balancing economic development and environmental protection.