Photo by Gab Pili on Unsplash

April 24th, 2018, Victoria, BC – regular gasoline is $1.549 per Litre. The highest it has ever been. I might be on the ‘tree-hugger’ side of this particular debate – however I am also practical and so I made the pilgrimage to my local gas station before the hike from $1.459 went into effect for the benefit of the non-electric vehicles I am responsible for.

This hike occurs at an interesting time and is the third so far this year. So being an inquisitive soul, I decided to do some digging and figure out what is going on.

The interesting time? The BC government does not want the expanded Kinder Morgan pipeline built from Edmonton to Burnaby, near Vancouver, which would increase tanker traffic from the Fraser and out through the Salish Sea and the Strait of Juan de Fuca by a factor of 7. This proposed traffic would be carrying Dil-bit (Diluted Bitumen) on which, the scientific consensus on cleaning up spills is; well, there is no scientific consensus. The science has not been done to figure out how the hell to clear up a spill of this stuff. If it has been done it is being kept awfully quiet. If it were easy, why not talk about it?

The gasoline price hike is NOT about the Kinder Morgan expansion. However the ‘interesting timing’ makes that comparison being made likely. An awfully convenient bit of timing to exert that bit of financial public pressure that cannot hurt the cause of some…

The Alberta government wants the Kinder Morgan pipeline expansion built. It really does. The meagre tax revenues they have realized from oil production depends on the margins for the Tar Sands continuing to make them viable [4]. It is so important to the Alberta government that BC wine was boycotted for a while in a most bizarre show of – well, whatever the show was. Between Trudeau (Liberal – Federal government) and Notley (NDP – Alberta) the language is of putting pressure on the BC government to halt its opposition and let the pipeline be built already… In the ‘National Interest’. Not exactly sure who gets to say what that is, but I have an idea. Stick with me.

To allow Alberta to ship the spoils (and I use that word advisedly…) of the Tar Sands offshore to China (apparently) or more likely to the US as a discounted feedstock for the refineries that can handle this heavy muck; otherwise known as Western Canada Select (WCS). Meanwhile the oil market appears awash in conventional lighter, sweeter crude oil[1]. The big names have pulled out of the Tar Sands – leaving smaller players to do everything they can to reduce production costs to compete in a world of sub $70 crude oil selling their product on the world market at a steep discount compared to conventional crude (calculated by the author on 2018 figures at 40% from [2]).

The West Texas Intermediate (WTI) price of oil, often a world reference price quoted in the media, averaged US$62.23 a barrel in February 2018, 16.4% higher than it was a year earlier. Western Canada Select (WCS), the price obtained for many Alberta producers for oil, averaged US$37.72 a barrel in February 2018, 3.6% lower than it was a year earlier. [2]

I have a bias – might as well say it now. I oppose the building of this pipeline. It is inconsistent with the urgency of dealing with Climate Change outside of the whole (and massive issue) of spill preparedness and response.

It is also really bad business for BC. BC has already been screwed by the oil industry; 30 years ago. Which is why the price hikes are happening today. It is a systemic flaw which has been created and perpetuated [3].

REFINERIES IN BC’S LOWER MAINLAND:

• Chevron, Burnaby (55,000 bbl/day)
• Shell, North Burnaby (closed, 1993)
• Imperial Oil, Port Moody (closed, 1995)
• Petro-Canada, Port Coquitlam (closed, 1993)

(from [3])

 

In short, in the early 90’s the large oil players decided to expand refining in Edmonton and pipeline final product to BC. BC were only ever meant to be consumers. All the value was to be added upstream in Alberta. There is only 55,000 barrels/day of refining capacity in BC in the Chevron refinery in Burnaby. This is 30% of the area’s gasoline demand. There are periodic shortfalls as increasing populations in Alberta and the lower mainland have strained the supply. Victoria is another step in the supply chain away. There is a case for refining in the Vancouver area – see [3]. Instead when there is a shortfall, the large refineries in Washington state, fed by oil from Alberta sell refined products back to BC – again, at a premium. After all – they have added the refining value. BC are after all, just consumers…

And now the Kinder Morgan expansion – that will solve this right? No. Not at all. It will not address it in the slightest. This expansion is to get DilBit to foreign markets as cheaply as is humanly possible to allow Alberta to strain the last filthy dribbles of ancient sunlight from beneath the destroyed Arboreal forest of the Athabasca basin.

So what now?

Well, how about we get a different conversation going? The oil industry has not cared about Canada for a long time. By the tune politicians in Alberta, Ottawa and Saskatchewan are singing, it only cares to bend the permission of the people to allow it to do more of what it has been doing. Meanwhile the planet heats up fast, promised Jobs in construction would evapourate as quickly as they arrive. Operational costs would be driven to the lowest possible level. And boys and girls, we all know what happens when costs are driven down don’t we? Probability of failure increases.

I think it is time that BC plotted a new course outside of being consumers and a maleable populace at the end of someone elses’ supply chain. How about these as ideas?

• Refine in BC. State-of-the-art refining capacity in BC creating jobs in BC, using our low electricity costs. Whilst we wean ourselves off of the crude stuff – let’s benefit in BC.
• Set BC on a radical new trajectory in Energy. We have some of the best wind resources in the world – untapped. We have some of the best tidal flow capacity in the world – untapped. We get a lot of sun. Untapped. How about we forget pipelines and build the High-Voltage DC lines to sell cheap renewable power across the continent and cut our own energy bills.
• Provide the tax incentives to promote new industries; wind, tidal, solar production HERE. Electrification of transport. Build jobs that have a future. Wouldn’t it be nice to be able to thumb our noses at the Oil Industry and their $1.50 gas, because we have figured out a different solution that does not need them?

That is all I have for now.

References:

[1]https://oilprice.com/Latest-Energy-News/World-News/Surprise-Build-In-Crude-Oil-Stocks-Rattles-Market.html

[2] WCS vs. WTI oil price; http://economicdashboard.alberta.ca/OilPrice

[3] Refining capacity in BC; http://www.oilsandsmagazine.com/news/2016/3/03/why-vancouver-desperately-needs-a-new-oil-refinery

[4] Norway and Alberta; https://www.huffingtonpost.ca/2017/09/19/norway-s-oil-fund-hits-1-trillion-meanwhile-in-alberta_a_23215451/