Wednesday, February 25, 2015

Buying Back our own Oil?

Here's one for the "believe it or not" column.  The province of Alberta is a very large producer of crude oil, both traditional crude and synthetic crude from the oil sands.  The way I understand it, our crude is already being shipped out of province down to the United States, where it's processed into gasoline and shipped BACK to Alberta -- to be sold at huge mark-ups. 

I have also been told that there are refineries here in Alberta capable of making gasoline sitting idle or producing at a very low capacity.

I obviously don't understand this industry.  Shouldn't these companies who are exploiting an Albertan natural, non-renewable resource be working hard to put as many Albertans to work as possible?  Alberta has always been proud of its highly trained oilfield workers.  Albertan oilmen and women are being employed around the world to help others with their petroleum industries.

Yet jobs are disappearing here at home while our own crude is exported elsewhere so others in other countries may profit refining it!  Stranger than fiction.


  1. Comparative Advantage. A principle the free market relies on.

  2. I recall this question was brought up years ago and the answer was it is not profitable , but apparently we could pipe it to the US or Quebec and the Irving refineries in the east and they can make a profit. Maybe we should have an oil pipeline east .

  3. I won't even pretend to know what Comparative Advantage is, but if it means corporate greed and immorality, then I agree. Maybe the feds should place an additional export/import tax on crude oil destined to come back here as gasoline!

  4. "Comparative advantage" -- in other words, oil companies can maximize their profit margins by shipping raw materials to places where they either have lower safety, labour and wage standards (Texas) that cut costs, or where they receive large government subsidies to carry on their business (Illinois, Texas)... any additional costs, like shipping, they can download onto the consumer.

    It also helps that almost every refinery on the continent is owned by only a handful of companies, after the orgy of mergers and acquisitions over the past 20 years and the advent of "vertically-integrated" companies like Suncor or BP. There's been very few refineries built in the past 25 years, too - only one, in North Dakota, so far as I know.

    It doesn't even matter if having refineries operate in Alberta was profitable; it's simply *more* profitable to ship it to the United States and have it refined, there. So it gets refined there.

    We have never had a government which considers petroleum as a strategic resource, like potash; the priority has always been to get as much out of the ground as fast as it can be extracted, and then sold for export. If it were considered a strategic resource, then the argument could be made that it should be refined in Canada.

    But it isn't, so it won't - and one could argue that it's much too late, now.