The government of Alberta is “desperate” to get the province’s bitumen resources to market, as its media echo chamber relentlessly informs us.
And it says it’s equally desperate to pop the “Bitumen Bubble,” the alliterative but misleading term Premier Alison Redford has coined to describe the price differential between bitumen from Alberta’s oil sands and easier-to-refine lighter crude from the United States or the North Sea.
But, given that, the Redford Government sure was quick to disavow the conclusions of its own officials when the Alberta Federation of Labour leaked a secret Energy Department study that concluded it makes economic sense to upgrade bitumen right here in Alberta, adding value to the product, creating well-paid jobs for Albertans and contributing additional royalty and tax revenues to the provincial government’s coffers.
Alberta’s Opposition Wildrose Party, which seldom misses an opportunity to slam the government, was also strangely quiet on this topic.
The government couldn’t even be bothered to send out an elected big shot to blow off the discovery unearthed by the AFL’s Freedom of Information request – a report by the Department of Energy that argued that as the price differential between light crude and heavy oil grows, the economics of upgrading bitumen here in Alberta keep making better sense.
Premier Alison Redford and her cabinet colleagues were too busy touting their not-very-meaningful one-year MLA wage freeze yesterday to deal with important questions about the future of the province’s economy, I guess.
Instead, an Energy Department spokesthingy was assigned the task of debunking his own colleagues’ conclusions.
“You don’t make economic decisions on billion-dollar refineries or upgraders based on a price differential at one point in time,” sniffed Mike Deising, according to the account of his remarks in the Edmonton Journal yesterday.
He explained: “These are 30-year or longer assets and companies look 30 years out onto the horizon. Just because we’re seeing a widening of the differential right now, that’s not going to affect the business case that’s going to be a 30-year asset, it’s just going to be part of the decision-making process.”
Such decisions, he also said, properly belong with the private sector. End of story.
But, actually, making multi-billion-dollar decisions that will affect life in Alberta and the rest of Canada far longer than 30 years “based on a price differential at one point in time” is exactly what the Alberta government is doing right now with its panic-stricken budgeting process. Moreover, it’s what the Harper Government in Ottawa has been doing for months with its tireless push for bitumen pipelines hither and yon, the consequences be damned.
Maybe that’s why Ms. Redford and Energy Minister Ken Hughes didn’t bother responding to the AFL’s revelation – they’re just too busy working with Health Minister Fred Horne and whoever the Advanced Education Minister is this week to upend public health care and public education for generations because of a temporary price differential. (See “Disaster Capitalism.”)
For its part, the media trotted out the usual suspects from business school faculties, who were happy to explain that creating Canadian jobs and revenues right here in Alberta doesn’t really make sense when you can use the profit to benefit folks in the United States.
Indeed, almost everyone yesterday was pointing to the fact that Suncor Energy Inc. is getting antsy about its plans to build the Voyageur Upgrader near Fort McMurray – which is why, of course, a country needs to set up a national petroleum company if it’s got an ounce of sense or gumption.
Look, at the risk of sounding rude, none of this is really all that difficult to explain.
Upgrading heavy bitumen in Alberta doesn’t make sense to the energy companies who are getting a free ride mining the stuff because they already have capacity in place elsewhere, specifically the Gulf Coast of Texas.
Why would they spend a lot of money building an upgrader in Alberta when they already have an upgrader operating below capacity in Texas and it costs less to ship the bitumen out – especially if someone else will build the pipeline?
You can hardly blame oil company managers for thinking this way. It’s just their nature. After all, their responsibility is to shareholders.
Alberta? Albertans? The environment? They don’t give a hang and that’s just the way an unregulated, out-of-control market economy is supposed to work.
No, looking after the long-term prospects of the people of Alberta and their economy and environment is supposed to be the job of the government we elect.
So why is our government uninterested in an idea that would have both economic and environmental benefits, in the latter case because it would allow us to ship by pipeline a lighter, easier to cleanup product? (Boy, talk about “ethical oil”!) Bitumen upgraded here in Alberta, moreover, would over time help solve the “Bitumen Bubble” that has driven this deficit-obsessed polity into a swivet.
Unfortunately, the answer is pretty plain on the face of it. Neither the Redford Government nor the federal government of Prime Minister Stephen Harper really feels it answers to the people of Alberta or Canada in this matter.
Indeed, it sounds very much as if they are working for the petroleum companies.
Perhaps this is why the Wildrose Party – usually eager to jump on any opportunity to assail the Redford Government – is so quiet about this question as well. You’d almost think they were playing for the same team!
And maybe, if you dig a little deeper, this explains why the Harper Government and successive Alberta governments have tried to make it hard for unions to operate in their jurisdictions.
After all, given its constituency, labour may be the only economic player prepared to pull back the curtain on questions our governments would really prefer the rest of us to forget about.
These facts may also provide a partial answer to why Albertans keep electing conservative governments that consistently and obviously don’t look out for their interests.
This post also appears on Rabble.ca.