Problems Without End

More than a little ink has been spilled over the promise of the tar sands, the gluey sand mined in Alberta and cooked to make oil. According to some, the tar sands promise a new Saudi Arabia, without the Saudis. (We Canadians aren't nearly as successful terrorists.)

There are, however, a number of problems with the vision of Canada replacing the bin Ladens and Chavezes of the world.

The first is simply fuel. Making the tar sands in to fuel takes more energy than the fuel itself contains - as much as three times more, according to some estimates. This was affordable when natural gas was cheap and oil was less so. If the price of oil were the only determinant, the oil sands would indeed be a plentiful source.

The problem is that natural gas supplies are getting stretched tighter and tighter. North American production peaked a few years ago, and it has hurt the plastics and fertilizers industries hard. As conventional an authority as you could ask for - Lee Raymond, former head of Exxon - has said that the North American decline will continue even if political obstacles are surmounted and Arctic gas is finally brought in to production.

The second problem is, of course, environmental. For a more thorough list of the environmental problems you can look at the Pembina Institute, but the short version is that tar sands production is awful for ground water, consumes vast amount of water itself, and pollutes the ground and air. Incidentally, tar sands production is one of the largest reasons for Canada failing to slow its CO2 emissions.

As if that weren't enough, this Saturday's Toronto Star has a whole page devoted to the manifold problems of Canada's rising dollar. The recent increase in the value of the Canadian dollar has been largely attributed to the rise in commodity prices, including oil.

The problem is that Canada's economy is largely export-driven, and the higher dollar is leading to problems for many of our industries. Name the industry - filmmaking, manufacturing, agriculture, tourism - and it's probably suffering from a high dollar. This is in addition to the high costs of oil, itself an economic problem.

And these problems all come from a pretty pathetic level of production - about 1 million barrels per day. Some optimistic projections call for that to quadruple by 2020. How Canada will manage to meet the natural gas demands alone is a mystery.