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Gold/Mining/Energy : Canadian Oil & Gas Companies

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To: axial who wrote (19130)	5/6/2012 5:17:37 PM
From: westslope	4 Recommendations Read Replies (5) of 24928

re: Please explain why "public subsidies" are essential for economic success of east-west pipelines and refineries [in Canada]. Jim: The distance is great; the terrain is difficult, ergo construction will be costly, toll fees will high. Bitumen and diluent require parallel lines. Refineries are a difficult business. They can be capital sinks for decades at a time. Old refineries are closing down at a good clip on the US eastern seaboard. A number have closed down in eastern Canada over the past few years. Bitumen requires new refinery technology. Not in my backyard (NIMBY) politics drives up costs and make new greenfield refineries expensive if not impossible. One option is to force western Canada producers to sell at below market prices to eastern buyers as was done under the National Energy Policy in the 1970s. Western Canada won't stand for it. Moreover, it might sound patriotic and generous (sic) and fair (sic) but it is bad economics. A policy of cheap energy for consumers is bad economics and bad social policy. I don't see any consortium of multinational oil companies trying to sell a west-east bitumen/diluent pipeline set to the Canadian public. Do you? If money were to be made, wouldn't profit-oriented pipeline companies and others ahave already proposed a Canadian west-east bitumen/diluent pipeline? If you think there is an opportunity to make money on a west-east Bitumen pipeline, why not go into the private sector and promote the idea? You could potentially make a lot of money. Put together a presentation. Crunch some numbers. Estimate various kinds of rates of return. If you impress, I'll back you financially. If you want a heavy oil refinery in your neighbourhood, I think that is great. I once flew over refinery alley along the US Gulf Coast after backpacking for 10 days in the Golden Trout Wilderness in the SE Sierra Nevada mountains in California. I saw one long row of smoke-spewing refineries and petrochemical plants. Ugly is the first word that comes to mind. If the Americans want to refine our bitumen, I have no issue with that. "Drain America first" energy policy rhetoric is very popular in the USA. The self-sufficiency talk appeals to lots of folks. Just because it is popular doesn't mean that it is a good idea. In my view, Canadians should not rush to exploit energy sources unless they fetch global market prices for it. Leave it in the ground. As for managing resource wealth, please see Norway for ideas.

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