Monday, March 10, 2008

Canada's Letter to Robert Gates

The Financial Times today leads with a story about a letter sent to Robert Gates by the Canadian ambassador about the Energy Independence and Security Act 2007. Signed into law in December, this act requires among other things that government procurement of alternative fuels cannot include those whose lifetime greenhouse gas emissions are no better than that of conventional oil. Canada is concerned about its large reserves of oil sands, which would not qualify. The letter to Gates says that Canada "would not want to see an expansive interpretation" of the act, though it is hard to see how the act could be interpreted to favor the oil sands.

Oil being fungible, it is not clear to me that prohibiting purchases by the federal government would have any effect on the overall usage the oil sands. The provision in the act seems to me to be purely symbolic, since private purchases of oil from the oil sands would reduce price pressure on other sources and the federal government would benefit from this just as if it were buying the Canadian oil itself. Canada is apparently worried that the act may provide a precedent which might be copied by state governments and other countries. I would add environmentally consious corporations.

We should not be using this oil, and Canada and the oil companies should have known this before they embarked on the enormous investment which they are now trying to protect. Unfortunately, since I think all of the major oil companies are heavily invested in the oil sands, there is not much we as consumers can do about it.

No comments: