The fortunes of Canadian tar sands oil changed overnight
this week. After almost 50 years in power, the Progressive Conservative Party
in Alberta lost big. As in losing 60 seats. Out of 87 total. I guess people had enough with this party. Canadians deserve more, much more than they have been getting. We do not blame them for revolting.
On the other side, the social-democrats of the New
Democratic Party gained 49 seats to take the majority. Liberals lost 4 seats
and the reform-minded conservative Wildrose party gained 16.
It was as hard to imagine as Democrats taking over the Texas
Statehouse and the Governors Mansion.
The new Alberta Premier is New Democratic Party’s Rachel
Notley. She has a different view of tar sands oil and climate change than the
previous Progressive Conservative’s Premier, and certainly different from
Canada’s Prime Minister.
Premier Notley has vowed to negotiate new climate
policies, increase oil and gas royalties, and quit lobbying President Obama
about approving the Keystone XL pipeline.
The economic base of Alberta, and its PC Party, was always
tar sands oil. But over the years, the PC government slashed corporate taxes,
cut government jobs and found itself severely in the red. Its economic future
was tied irrevocably with development of tar sands oil and continued high
global oil prices.
Prime Minister Stephen Harper congratulated Premier Notley,
but must be seething at the results. His conservative power base has always
been Alberta, and his vision for Canada, since becoming Prime Minister in 2006,
has been to develop tar sands oil to the fullest, to see Canada pass China in
oil production, and to have Canada enter the top tier producers along with
Saudi Arabia, Russia and the United States.
Which seemed to be a good idea at the time with oilmen Bush
and Cheney to the south and high oil prices globally. Harper bowed Canada out
of the Kyoto Protocol, and buried the country’s targets for cutting carbon
emissions. His vision included a huge invasion of tar sands crude into the
United States via several routes – pipelines, rail and boat (see figure below
from the NRDC).
Then President Obama took office, the Keystone hit a
political wall, the United States became the largest oil-producing nation on
Earth, and oil prices plummeted.
Now Alberta has gone democrat and Harper’s economy is on
shaky ground.
The problem for the new government in Alberta, however, is
that tar sands are integral to the Province’s economy. Alberta produces about
80% of the oil in Canada, and Canada is the fifth largest producer of oil in
the world:
United States – 12.4 million barrels/day
Saudi Arabia – 11.6 million barrels/day
Russia –
10.6 million barrels/day
China –
4.4 million barrels/day
Canada –
4.3 million barrels/day
So any serious reduction of tar sands production would hit
the economy quite hard. Even so, increasing petroleum royalties and corporate
tax rates a bit, as suggested by the new government, could increase revenue
while slowing any new tar sands operations.
This week’s election in Alberta, Canada replaced the
conservative majority with a social-democratic majority, dealing a major blow
to tar sands oil production and its planned invasion into the United States.
Reprinted with permission from the Natural Resources Defense Council.
But it might be easier for Notley to aggressively pursue
phasing out coal-fired power plants as her initial climate policy change since
coal produces almost half of the Province’s electricity and produces even more
carbon emissions than tar sands oil. She would need to replace coal with a
combination of natural gas, nuclear and renewables, but that would fit in with
Canada’s overall energy goals.
These election results are abuzz in the United States
because of the Keystone Pipeline debate, but they may have little real impact
on it. As described in Vox,
Canada’s political pressure has meant little to the U.S. in this debate and the
new Premier is not actually against pipelines in general.
Notley supports the proposed TransMountain pipeline from
Alberta to British Columbia as well as the proposed Energy East pipeline to the
Atlantic coast. Both avoid U.S. approval, but still have the oil end up at U.S.
refineries. The Energy East line would be even bigger than the Keystone.
But both projects face fierce opposition by First Nations
tribes to the west, and liberal Quebecers to the east. It is not certain at all
that Alberta tars sands oil can ever expand to the levels envisioned by the
previous government, so the new one may be better in line with the future.
In the end, however, the biggest hit to tar sands oil in
Alberta comes from the huge increase in U.S. oil production and the low price
of oil globally.
Elections won’t change that at all.
As the old saying goes, never put all your eggs in one
basket. That was the big mistake of the
prior government, along of course with corruption, misguided tax cuts, lack of
diversification, and so on. People
spoke, but if the new government does not deliver, they will speak again.
Source: http://www.forbes.com