I don't think Wendman's comments really respond to the concerns expressed in the Mayes article.
Mark Wendman's argument is essentially:
- the delays have been caused by the protests in the U.S., now four years old, and we should really have gotten past that by now. We should just get on with it, and get past the hand-wringing.
- the potential for tax revenues is much larger from oil sands development than it is from (other sorts of) innovation (though innovation in the oil sector would be welcome)
- mining is dirty, but people involved in mining know that and quickly get over it
- technology innovation in Canada should be funded by private capital seeded by tax policies
Stated this way (as opposed to long and convoluted non-sentences) the argument is transparently weak, though I have tried to present it in its best light. It is essentially an argument that there is no bubble, and if these is a bubble, we should have and can still take advantage of it while it's still a bubble.
The argument in the Mayes article raises some points not addressed here specifically related to the cost of extracting oil from the oil sands:
- the oil is land-locked and requires an expensive pipeline system
- the oil meanwhile also requires massive investments of energy and water to extract
I would add, related to this, that the short window of opportunity for oil extraction in this way has passed, and that Alberta oil is not cost-competitive with new discoveries, and particularly with recent gas discoveries employing hydrofracking.
For these and related reasons, Mayes questions the need to buiild the pipeline at all. Given the cost, and therefore undesirability, of Alberta resources, "not building the pipeline would have almost no impact on jobs; on US oil supply; on heavy oil supply for Gulf Coast refineries; or even on the amount of oil sands extracted in Alberta." One would then necessarily question the wisdom of building the pipeline.
The second thread of the Mayes article focuses on the harm caused to the Canadian economy caused by an over-dependence on oil and gas."Canada has historically been a natural resource based economy, which has led to complacency and neglect of investment in innovation."
Wendman responds that the revenues from oil and gas dwarf those from innovation, but this does not respond to the concern that, outside of oil and gas revenues, Canada's economic development has been flat, according to OECD. This raises the significant question of what happens should the oil and gas revenue go away.
That's why Mayes argues, "Canada is now locked into the urgent need for the pipelines, with no other options or strategy," either to sell oil to the U.S., or to China, or to whomever cannot obtain more conventional sources.
As I mentioned above, I don't think Wendman's comments really respond to the concerns outlined in the Mayes article. Moreover, I think that the concerns go beyond what Mayes outlines:
- first, there is a concern that Canada's dependence on oil and other resource exports has a direct negative effect on other sectors. This is created when these exports push the value of the dollar artificially high, making Canada's other industries less competitive. This is the 'Dutch Disease' Thomas Mulcair has cited, and a convincing response to that argument has not been forthcoming.
- second, there is a concern that Canada's dependence on oil and other resources has created a significant disincentive to develop clean alternatives to energy production. Should global warming persist and intensify (an all signs suggest it will) other economic concerns will force a global divestment from oil and gas extraction. This leaves Canada with no alternatives, since development in alternative energy is underfunded or non-existent.
Finally, I would point out that Wendman's criticisms misrepresent the underlying argument against the Keysone pipeline and oil sands development generally. Yes, it's true that mining is messy, and the oil sands especially so, but people have not protested the extraction of aluminum or iron ore with the same vehemence.
The argument against the oil sands and the keystone pipeline relates directly to the appropriation of investment in energy directly related to global warming, at a time when we should be focusing our attention and resources at emissions-free energy production.
The development of the oil sands and related pipelines may serve short-term economic interests, but at a significantly greater cost in the not-too-distant future. It is this fact that makes these investments unwise, not simply from the wider perspective, but even in terms of the viability of the short-term returns, as the end of the current oil and gas era will come suddenly, and urgently, leaving investors holding the bag.