The Common Good and Common Sense Say Refine it in Alberta, Capitalism Says No

The red line is an outline of the Alberta tarsands 54,000 square miles area. Please check out this hauntingly beautiful pictorial essay.

Common sense and the common good are meaningless concepts in our capitalist culture. As anyone whose read the book or seen the documentary knows, a corporation serves only one master - shareholder returns. If the board of directors or CEO of any corporation is found to be putting the common good ahead of shareholder profits they are sued and fired immediately. The tarsands are exploited under contractual conditions between the corporations and the governments. The only party responsible for protecting the common good in the tarsands, or anywhere else in a capitalist country, are the governments.

The governments of Alberta amd Canada have different jurisdictions, different rsponsibilities. But, for today, we'll stick to the corporate economics that determine why they won't be building any new refineries or upgraders in Alberta unless the governments provide huge compensation packages that guarantee profitability. Despite this reality every environmental group, all of the opposition parties in both Alberta and Canada and almost everyone else understands that refining or at least upgrading tarsands crud would eliminate the need for the highly toxic diluents from the inevitable equation. But that's not the deal our governments made with the corporations so...

Why aren't we building refineries or upgraders in Canada? According to most analysts, the precise cost of a new refinery is difficult to pinpoint, some put the initial capital outlay at more than $10 billion. As yesterday's post showed it's getting more profitable by the day for the corporations to send their over-capacity diluent to Alberta to thin out the crud then pipeline the resulting dilbit to their refineries. The upgraders and refinery expansions stateside tend to occur at refineries owned by the same U.S. corporations that are developing Canada’s tarsands. Most of our industry is American owned, and they've decided to build refining capacity elsewhere, rather than in Canada, because it's more profitable.

Official opposition NDP's energy critic Peter Julian says, "Canada’s failure to compete in the refining industry has been as much a result of government policy as economics." And he's right, but that failure has occurred not just under the current Harper-Redford watch, the tarsands have been being mined since 1967 so under successive administrations the situation has gone from bad to worse.

The Liberals, well they're the Liberals, when they were in charge they played kiss-ass with the corporations now they bitch about the situation they had a huge hand in creating. So IMO their opinion is worthless.

The Greens, as Elizabeth May says, "oppose moving bitumen out of Alberta.  It has to be (at least) upgraded to synthetic crude before shipping to refineries. We favour refineries in Alberta.  But this only makes sense in the larger context my article sets out -- a sensible energy policy, carbon reduction plan, and a stabilized planned oil sands production -- ending the crazed plan to triple output." But the politicans won't say how, they won't admit that only through massive subsides can that happen. That contracts have been signed so no government can simply order the corporations to be altruistic, only money talks now. Where that money would come from none of 'em, NDP, Liberal or Green, want to comment on because it'd have to come from either higher taxes on citizens or cutbacks in programs for citizens or by borrowing from future citizens.

Meanwhile, in Alberta, despite a public opinion poll that suggests that the overwhelming majority support government taking steps to increase the amount of oil sands crude that is processed in the province, the move does not appear likely. Premier Alison Redford made clear earlier this year that she intends to let market forces dictate future bitumen upgrading projects, calling the deal the province struck with North West Upgrading “a commitment made by the previous government .”

According to Andrew Leach, an associate professor at University of Alberta School of Business, in explaining the ‘economics’ of upgrading, the degree of government involvement in the NWU project that Redford refers to, means it should not be seen as evidence of the viability of new refineries and upgraders. “What this shows is that with the type of contracts the government is offering, you can get a private company to build a refinery," he said, "but the first part of that sentence is really crucial, because it doesn’t tell you that private companies can make money on refining.”

The 'refine it in Alberta' mantra is nothing more than wishful thinking according to industry analysts. Wonderfilled, moving, prose like in Elizabeth May's article 'Time to Put the Pieces of the Puzzle in Place' that says: "the cover of the box, a glorious sustainable energy roadmap, would depict where we want to be, with: a meaningful carbon reduction plan; phasing out coal across the land; bringing in energy conservation and efficiency standards; producing far more energy from renewable sources; applying cleantech solutions broadly; paying attention to energy security; and shifting from a strategy of rapid export of unprocessed product to managed production at a steady rate of upgraded and refined product, with value-added creating far more employment in oil production while energy efficiency targets create jobs everywhere in overhauling our built infrastructure." Is just that, "where we want to be", not where we are.

Tomorrow we'll focus on how governments of Alberta and Canada have deceitfully avoided their responsibility to protect the common good through their neo-conservative policies and contrast those policies to other jurisdictions like Saskatchewan and Norway.