The True Cost of Oil – a reflection

Lenz’s presentation exhibited breathtaking views of Canada’s rich ecosystems, juxtaposing them to energy industrial sites tainting their environments with smoke, razing the horizon of natural attributes. His talk was a very emotional plea for action. Perhaps this is very cynical of me but I don’t think emotional talks like this are enough to instigate action. Massive industries, like oil and gas, that fuel our insatiable hunger for more energy will only react to market conditions and regulations. The sad reality is that environmental considerations are pushed aside in our short-term, profit-hungry corporate system. Imposing regulations like carbon tax or caps essentially force environmental consideration into the corporatist system. In this context, the best action citizens can take is petitioning and pressuring government representatives to implement such policies.

Obviously, such changes are difficult to execute. Lenz alluded to the beautiful Alberta region. In Alberta, many jobs are tied to tar sands. As a result, it is likely that the workers, together with the oil companies, will push back against any changes or regulations.

During Lenz’s presentation, I remembered an article I read recently about Canada’s struggling tar sand industry. The talk was filmed on November 2011, when the average price of West Texas Intermediate (WTI) was $100 (US EIA). The current WTI price is $31.35 (Bloomberg Energy). Since then, Canada’s tar sand industry has diminished greatly. Tar sands is one of the most expensive type of oil to extract (BusinessWeek). Since the fall of oil, while production has not stop entirely, total output has diminished as Canadian companies sell their tar sands at a loss of at least $6 per barrel. However, the breakeven price of tar sands is relatively low, at about $44 — depending on the facilities and technologies being used (Reuters).

http://www.oilempire.us/oil-jpg/tartrucks.jpg
Massive tar sand trucks

I also wondered whether tar sands were affected by the recent COP21 (Paris Climate Change Conference). A quick research indicated the while Canada (and PM Trudeau) publicly indicated a commitment to reducing greenhouse gas emissions, there was no mention of tar sand projects specifically.