Secure Our Fuels

Today, the Vancouver Sun’s Barbara Yaffe reports that a liberal Washington, D.C. think-tank recently released a report “urging the Obama government to think twice before introducing environmental measures that would disadvantage Alberta’s oil sands.” The Council on Hemispheric Affairs, or COHA, warns that “Washington may find that if it pushes too hard or too fast with carbon-cutting legislation targeting the oil sands, its friendly neighbor might finally grow tired of being taken for granted when it comes to oil.”

The report, enitled “The U.S. Targets Canada’s Oil Sands: Washington Should Tread Lightly with its Environmental Legislation, so that Carbon Cuts will not Come at the Expense of Canada’s Energy Sovereignty or U.S. Energy Security,” finds that:

Canada can and likely will push back, especially since China is more than happy to step in and purchase oil … if the U.S. chooses not to. That prospect is taking on enhanced credibility as planning proceeds for the Northern Gateway pipeline project to carry oil sands petroleum to Kitimat in northern B.C. for potential shipment to Asia.

In addition to COHA’s concerns about China moving forward to aggressively acquire affordable and secure Canadian energy reserves if the U.S. decides to turn its back on its closest and most strategic trading partner, the think-tank highlights concerns with a Low-Carbon Fuel Standard (LCFS):

If enacted, a national LCFS would disproportionately target Canada’s oil sands sector. While at first glance it may seem like a good idea to enact legislation incentivizing the consumption of low life-cycle carbon fuels, these policies carry with them negative consequences for U.S. energy security.

Under a national LCFS program, all vehicles would be required to fill-up with a blended fuel. As the production of bio-fuel in the U.S. is not currently enough to satisfy a one-to-one ratio blend with gas coming from the oil sands, in the short-term the blend will likely favor conventionally extracted oil, at Canada’s expense. Due to Canada having less conventional oil reserves than oil sands reserves, a shift in U.S. demand toward conventional oil would redirect trade away from Canada. If the U.S. comes to depend less on Canada’s oil sands, it will surely come to depend more on conventional oil reserves from less dependable countries overseas.

As COHA highlights in their report, eleven Northeastern states recently signed agreements to implement a regional LCFS to ban Canadian energy from reaching consumers in their states. A host of other states are also considering similar job-killing LCFS policies. However, some states are realizing the consequences – both from an energy supply and economic competitiveness standpoint – associated with an LCFS. In fact, today’s New Haven Register reports on Consumer Energy Alliance’s (CEA) campaign against an LCFS. In the article “Low-carbon initiative could pose problems for state”, Angela Carter writes:

Michael Whatley, vice president of the nonprofit Consumer Energy Alliance, said Monday that the transportation sector does not yet have the infrastructure that would be needed if a low-carbon fuel standard is adopted.

“Connecticut doesn’t have any refining factories,” which would make bringing alternative fuel into the state costly, he said, adding that there are not enough alternative vehicles available, or newly designed pumps or electric charging stations in the market. “Every gas pump in the Northeast would have to be replaced.” Whatley said the alliance is concerned that petroleum supplies from the Canadian oil sands, southern U.S. and Mexico would be “off the table.”

And in Wisconsin, where LCFS legislation was recently introduced, labor unions are speaking out about how this proposal that will increase prices at the pump for struggling consumers and deepen America’s dependence on unstable regions of the world to keep our economy moving. Terry McGowan, of the International Union of Operating Engineers Local 139, writes this in a Sheboygan Press op-ed entitled “Oil Sands: Jobs, energy security at stake”:

Despite our national and energy security considerations, the future of Canadian Oil Sands production for the United States is not assured. Certain groups promote low-carbon fuel standard legislation by arguing that American refineries should not process crude oil with a higher carbon footprint than that of petroleum derived from places like the Middle East. While Oil Sands’ carbon footprint is slightly higher than crude from places like Saudi Arabia, it is comparable to oil found in Venezuela, Mexico and California.

The International Union of Operating Engineers Local 139 believes that, because the oil and natural gas industry is vital to American energy security and job supply, we should encourage Canadian Oil Sands production as part of a sound energy strategy.

As states in the Northeast and Midwest toil with enacting far-reaching LCFS schemes akin to California’s, groups like COHA and labor unions are speaking out about the harmful effects that an LCFS will impose throughout the U.S. In order to stop LCFS policies, it is critical that concerned consumers continue to send Congress the message that an LCFS will kill American jobs, increase greenhouse gas emissions, deepen our dependence on unstable regions of the world and drive prices at the pump even higher.