David Holt, President of Consumer Energy Alliance, submitted the following Op-Ed to Washington Examiner on September 20, 2009. View here.
Why are we conceding Canadian oil to China?
It takes 13.5 hours for United’s direct flight from Dulles to reach Terminal 3E in Beijing. But if news out of Canada is any indication, the trip required to visit our friends from China may soon prove a lot shorter than that.
In a recently announced deal, state-owned oil giant PetroChina agreed to invest $1.7 billion to help develop two promising oil sands fields in Canada’s Alberta province. Why would a Chinese company help produce an energy resource it currently has no means of transporting back to China? Just wait. All the major pipelines may run north-to-south right now, but China’s involvement in the oil sands means an east-meets-west pipeline is just around the corner.
Consumer Energy Alliance, of which I’m proud to serve as president, has started a nationwide campaign to educate the American public on the perils of a Low-Carbon Fuel Standard – a policy that some in Washington believe would kill off the Canadian oil sands market for good, by depriving the market of its primary buyer and consumer (us). No Canadian oil sands means no Canadian oil, and that’s sits just fine with LCFS proponents.
Well, so much for that idea. Whether the United States decides to use these secure, affordable energy resources or not – the Canadians don’t appear all that interested in waiting around for a final decision.
And who can blame them? In China, they’ll have a partner that values those energy resources, stands ready to help produce them, and eventually will provide the Canadians with a massive new market in which to sell them.
Whither the United States? We’re currently debating an LCFS policy in Washington that aims to ban Canadian crude from crossing the border. Quite the contrast.
How does an LCFS work, and why would Canadian crude be put squarely in its cross hairs? The way it’s being sold to the American people, you’d think it was a plan to encourage cleaner gasoline in our fuel tank, and less carbon dioxide emitted from our tailpipe. You’d be wrong. An LCFS doesn’t seek to make the fuel we use today any better or more efficient; it seeks to make the fuel we use today scarcer, and less affordable.
Canceling Canadian crude would certainly be the way to do it. Currently, nearly 800,000 barrels of Canadian oil travel into U.S. refineries every day, with plans for that figure to expand by leaps and bounds over the next few years.
Opponents of affordable energy, for their part, have seen the direction this ship is headed for some time, and for years have worked feverishly to develop a Rube Goldberg-type machine capable of drying up those supplies without directly confronting the consumers and producers whose lives and livelihoods depend on them. They found such a device in the LCFS.
The LCFS playbook, such as it is, was drafted in California, adopted in full by President Obama while in still in the Senate, and expected to make its return to the Waxman-Markey cap-and-trade climate-change legislation this fall.
The basic mechanics for the program are these: The Environmental Protection Agency would be given unilateral authority to determine which sources of oil are OK for refiners to process, and which are not. It would use a calculus known as a “lifecycle” carbon score to justify those decisions, with Canada, Mexico and much of the oil produced in the United States deemed to be the losers, and oil from some of the most unstable regions of the world deemed to be the winner.
Does Canadian oil have more carbon in it than oil from the Middle East? No. Does gasoline derived from Canadian oil emit more carbon dioxide than gasoline from Middle East oil? Nope. But none of that matters: Under an LCFS, “heavy” oils – wherever they come from – get the boot, and light oils – no matter how unstable their source – are given the glass slipper.
The upshot? States, especially in the upper Midwest, that rely heavily on Canadian crude to run their economy get to decide between going without gas, diesel and heating oil, or paying an outrageously high price for the energy essential to their lives.
Both outcomes work just fine for LCFS proponents — whose objective has nothing to do with producing cleaner fuels, and everything to do with making sure Americans are able to afford less of them.
The ends justify the means, LCFS supporters say – as long as we’re reducing carbon emissions, and saving the planet. Too bad we’re not. As the announcement from PetroChina makes plain, the Canadian oil sands will be just fine, thank you, with or without the exportation of that energy to the United States.
But instead of simply piping that energy down the continent and into the homes and heating and fuel tanks of American consumers just a couple hours away, that energy will be transported to the Pacific coast, loaded onto a barge, and shipped 6,500 miles across the ocean to be processed in Chinese refineries.
How again does that scenario result in fewer carbon emissions? It doesn’t. But don’t tell that to LCFS proponents. Might as well be speaking Mandarin.
