"Hitching The Economy To Dirty Tar Sands Turns Our Dollar Into A Petro-Loonie, Hurting Mfg."

[hatrack]

If there's one thing that the UN climate change summit in Copenhagen clarified, it's that the Canadian federal government's global warming strategy is really pretty simple and can be summarized like this: protect the tar sands, no matter who it hurts.

When the provincial governments of Ontario and Quebec spoke up against federal inaction, Alberta tried to dismiss them by claiming the tar sands are paying the bills. Apparently, those who want a safe climate for us and our children are supposed to be bought off and keep quiet.

But are those who extol the economic benefits of the tar sands for Ontario and Quebec even right about their own arguments? A less flattering picture emerges when you factor in something that doesn't get enough attention in Canada: how hitching our economy to dirty oil production turns our dollar into a petro-loonie. This hurts manufacturing by pricing our products out of international markets as our currency follows the price of oil ever upward over time.

The graph at right shows how our dollar now largely tracks with the price of oil. We're not economists, but those who are have estimated the degree to which Canada suffers from "Dutch Disease" – a term coined in the 1970s to describe the hollowing out of manufacturing in the Netherlands following the discovery of a large natural gas field that similarly impacted the exchange rate there. A recent study by a University of Ottawa professor and others estimates that 42 per cent of the job loss in Canadian manufacturing over the last few years resulting from the rise in the dollar can be attributed to our rise in oil exports, and identifies the computer and electronics, textile, transportation, machinery, paper and plastics sectors as those most affected. Ontario and Quebec are home to the majority of these industries.

EDIT

http://www.thestar.com/opinion/article/751926--manufacturing-in-trouble-you-can-thank-the-tar-sands

[dkf]

1. Having natural resouces which supports your currency hurts manufacturing?

Hmm. Not sure that is a good argument. These natural resource economies are the ones with the least debt too. I mean if you want to be an importer and run a deficit to deflate your currency you can always do that.

[HeresyLives]

2. The higher the Canadian dollar goes,

the more Canada is priced out of the international market. So manufacturing gets hurt because they can't sell their products.

[leveymg]

3. Palin cut her GOP wings pushing the Trans-Canadian pipeline - Alaska LPG to Alberta, where the gas

is used to cook the petroleum slurry out of the ground for export to China. Palin pushed through a deal that involved a $500 million taxpayer gift to start the Alaska leg of the pipeline. Using public money to convert relatively clean Alaskan LPG into extremely dirty tar sand oil to burned in China. A real American hero, that Sarah!

[TxRider]

4. Most canadian oil comes to the U.S.

We import twice as much oil from Canada than we do from Saudi. We are Canada's #1 export country for oil by an extremely large margin.

Maybe more a case of using public money to convert Alaskan LPG into extremely dirty tar sand oil to burn in your gas tank don't ya think?

And bringing 4.5 billion cubic feet per day of gas to the lower 48 states of the U.S.

Canadian oil exports by destination for 2008, showing the Us at 90%+ of all crude oil exports, light and heavy.

https://www.neb-one.gc.ca/clf-nsi/rnrgynfmtn/sttstc/crdlndptrlmprdct/ttlcrdlxprtdstntn-eng.html

[leveymg]

6. The biggest tar sand company, Husky, was bought by China several years ago.

Hong Kong billionaire Li Ka-shing owns a majority interest in Husky Energy ... A wholly owned subsidiary, Husky Oil and Refining Ltd., was created and ... Another offshore project, Wenchang, located off China's Pearl River and run ...
http://en.wikipedia.org/wiki/Husky_Energy

Here's a couple articles about the entry of China into the Canadian tar sands industry, which was previously 100 percent exporting to the U.S.: http://www.tarsandswatch.org/chinas-oil-sands-push

China's oil sands push
Posted: October 2, 2009
Section: Global Warming

Derek Brower, October 2009, Petroleum Economist--PetroChina has staked China's claim to Canada's oil sands, providing local developers with an export alternative to the US market, writes Derek Brower.

"THREAT to the new energy economy," reads the strapline on literature from the Dirty Oil Network, a coalition of environmental groups opposed to Canada's oil sands and the US' use of them.

China does not agree. At the end of August, one of its state-controlled companies, PetroChina, bought a 60% stake in two new oil-sands projects, paying Athabasca Oil Sands (AOSC) C$1.9bn ($1.7bn) for control of the MacKay River and Dover developments.

The two AOSC properties could eventually produce around 0.5m barrels a day (b/d), based on 5bn barrels of reserves. AOSC has not set a schedule for development of the oil. Previously, the company was planning to export its bitumen to refineries in the US Midwest, where demand for Canadian heavy crude is expected to reach 2m b/d by 2015. The company says it would consider other export routes, too.

Provided the Canadian and Alberta governments approve the deal, the destination of the crude will be PetroChina's decision. Crucially, the Chinese company has backed a new pipeline to the west coast of Canada, which would open up a route for exports to its home market. Enbridge, the company that hopes to develop that 0.525m b/d line, could start building it next year. PetroChina has an agreement with Enbridge to take up to 50% of the capacity.

____________________________________
http://www.tarsandswatch.org/husky-energy-and-bp-announce-integrated-oil-sands-joint-development

Husky Energy and BP Announce Integrated Oil Sands Joint Development
Posted: December 5, 2007
Section:

ENP Newswire, December 5, 2007 -- Husky Energy Inc (TSX: HSE) is pleased to announce that an agreement has been reached with BP to create an integrated, North American oil sands business consisting of pre-eminent upstream and downstream assets.

The development will be comprised of two joint 50/50 partnerships, a Canadian oil sands partnership to be operated by Husky and a U.S. refining LLC to be operated by BP. Husky and BP will each contribute assets of equal value to the business. Husky will contribute its Sunrise asset, located in the Athabasca oil sands in northeast Alberta, Canada and BP will contribute its Toledo refinery located in Ohio, USA. The transaction, which is subject to the execution of final definitive agreements and regulatory approval, is expected to close in the first quarter of 2008 and with effective date January 1, 2008.

"This transaction completes Husky's Sunrise Oil Sands total integration with respect to upstream and downstream solutions," said Mr. John C.S. Lau, President & Chief Executive Officer of Husky Energy Inc. "Husky is extremely pleased to be partnering with BP, a world class global E & P and Refining company. The joint venture will provide better monitoring of project execution, costs and completion timing for this mega project development."

"Toledo and Sunrise are excellent assets. BP's move into oil sands with Husky is an opportunity to build a strategic, material position and the huge potential of Sunrise is the ideal entry point for BP into Canadian oil sands." said Tony Hayward, BP's group chief executive. "In addition this deal will help guarantee a supply of advanced products to major North American markets from Toledo which is a flexible and advantaged site."

The Sunrise asset is located 60 kilometres northeast of Fort McMurray, Alberta, Canada adjacent to Imperial Oil's Kearl Lake project and Suncor's Firebag development. The Sunrise leases included in this transaction cover approximately 42,000 acres and are estimated to contain discovered resources of approximately nine billion barrels. Husky estimated the Sunrise oil sands reserves at December 31, 2006 to be 3.2 billion barrels (probable and possible reserves of 1 billion barrels and 2.2 billion barrels, respectively).

[TxRider]

7. Yes

Working towards developing a route to export a half million barrels a day to Asia in the future.

Meanwhile we import more like 2 million barrels per day to the U.S. now.

[applegrove]

5. You look at all the countries that sell oil and their economies are just screwed up. It warps

things. Not healthy at all.

[phantom power]

8. Something about the phrase "petro loonie" seems... exactly right.

[JohnWxy]

9. In 2008 Canada supplied 19% of U.S. oil imports. Tar Sands oil represents about half of Canadian

oil production. "In 2008, oil sands production represented approximately half of Canada’s total crude oil production." http://www.eia.doe.gov/emeu/cabs/Canada/Oil.html


http://ipsnews.net/news.asp?idnews=47052

"In 2008, Canada supplied the U.S. with 19 percent of its oil imports. That number could rise to 37 percent by 2035, according to CERA."

So that would mean about 9.5% of U.S. oil needs are met with Tar Sands oil whihc is about 3 times as polluting as oil from deep geological formations. If the 3 times as polluting figure is correct that would make the estimate for gasoline GHG emissions underestimated by about 19%. H-m-m-m-m.

--------------fraction of
--------------total supply----GHG emissions weight
tar sands oil:..... 0.095 x 3 = 0.285
Conventional oil:.0.905 x 1 = 0.905
Total GHG emissions-------- 1.19