This article originally appeared on the Council of Canadians' website.

If you follow mainstream media you’ve probably heard the argument ‘we need to get our oil to tidewater’ ad nauseam.

Be it Natural Resource Minister Carr, Prime Minister Trudeau, Premier Notley or pipeline and tar sands industries, it’s a drum beat that’s building in intensity. As the argument goes, if we could only get a pipeline built and oil shipped, Canada’s crumbling oil industry could recover from its current woes.

Here’s the thing… it’s totally wrong.

I’m not the only one calling this bluff.

In a recent iPolitics piece written by former top senior manager with one of Canada’s top energy companies, Ross Melot (who earlier argued the business case for the Energy East pipeline is shaky at best), stated clearly:  

“…Premier Notley just became the latest Canadian politician to play games with pipelines. She’s telling Albertans a pipeline to tidewater can cure what ails the industry. It won’t — it can’t — because the problem a pipeline to tidewater was intended to address doesn’t exist anymore…Money spent on a pipeline right now would be money wasted. But Notley can’t say that aloud — not while also delivering the bad news on her province’s finances.”

Tar Sands Woes Aren’t Due to Lack of Pipelines

The core premise of this argument is that a lack of pipeline access to tidewater is forcing tar sands crude to be sold at discounted rates. So, with greater access and market diversity will come higher prices for tar sands crude.

But one should keep in mind the price differential between tar sands crude (classified as Western Canadian Select WCS) and other key crude oil price benchmarks like West Texas Intermediate (WTI) has reduced significantly since 2013 (when you could legitimately make an economic case for getting oil to tidewater).

In fact, Scotia Bank Energy Economist Rory Johnson projected that by 2017 there would be no price differential at all.

Several pipeline projects between Illinois, Cushing and the Gulf Coast came online in 2013/2014, relieving a regional transportation bottleneck, allowing tar sands crude to flow further to the U.S. Gulf Coast.

The Gulf Coast refineries are the ultimate destination for tar sands crude. It is home to over 2 million barrels per day of oil refining capacity, much of it geared towards heavy oil.

Current pipelines actually give tar sands producers 500 thousand barrels per day of surplus capacity to the Gulf Coast, and U.S. Midwest, another important destination for heavy oil.

The price differential that exists is explained not by lack of access, but primarily by the quality and remote location of the tar sands. Bitumen is thick and heavy, requiring dilution for transporting by pipeline, creating more havoc when leaked in waterways and generating more carbon pollution when produced.

Bitumen costs more to refine and produces less valuable end products like gasoline (generally $2-$3 per barrel of the price differential). And, simply put, Hardisty, Alberta — the original point for southern bound pipelines — is far from major markets, so this adds to the costs of shipping tar sands crude.

Further, accessing Asian and European markets via Kinder Morgan or Energy East pipelines will do little to fetch more money. The long-distance travel adds to costs and Asian markets have less capacity to refine heavy crude than here in North America. In fact, evidence suggests producers will fetch a lower prices in Asian markets than they get from Gulf Coast and U.S. Midwest refiners.

Oil Prices Decrease While Carbon Policies Increase

Alberta's deficit, one that is causing serious struggles for workers and families across the province and this country (with many workers traveling to Alberta for high paying jobs) is first and foremost, a victim of the global oil price crash. 

Heavy oil in the tar sands is more difficult and more expensive to produce than other sources of oil. And right now it has a lot of competition.

Returning to Melot’s article, he adds further critical context. “Alberta’s problem is twofold: Its oilsands have been buried by fracked American oil that is both higher-value and cheaper to produce…" 

Undeniably, the U.S. is awash in cheaper fracked oil, the production of which is wreaking havoc on communities, waterways and our shared climate. 

Melot also rightly argues that, longer-term, the tar sands will face marginalization in a 'world committed to weaning itself off carbon.'

Energy East is proposed as 40-year infrastructure.

If it is operational in 2020 as TransCanada anticipates, this means Canada will have the capacity to produce and ship 1.1 million barrels of oil at least until 2060.

This is past the 2050 deadline the Paris agreement included as a goal for weaning ourselves off of fossil fuels, which many climate scientists support. It runs in conflict with over 100 scientists in Canada who have publicly called on no further expansion of the tar sands.

Pursuing this kind of infrastructure locks Alberta and Canada into producing and shipping what will become stranded assets within the projected lifetime of the project. This not only puts our climate, communities and waterways at risk — it represents an economic risk too.

The truth is we can meet the deadline and de-carbonize by 2050. It’s not technology that stands in our way, but political will and the powerful fossil fuel lobby.

Image: Premier of Alberta/Flickr.

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