The case for the pipeline unconvincing
Welcome to Economics 101.
Justin [Trudeau] will now present his business plan for moving bitumen to market.
Friends, fellow Canadians.
The cost to produce a barrel of bitumen averages $67 U.S., a breakeven point at today’s prices.
Moving bitumen to market requires the construction of a $ 7.5 billion pipeline which to date private investors have refused to support, deeming it “an unacceptable risk to shareholders”.
At tidewater, our bitumen will be loaded onto small, Aframax tankers operating at 50 per cent capacity due to the shallow harbour and the amount of condensate mixed with the bitumen.
By comparison, our competitors are employing supertankers with six times that capacity to deliver their cleaner, less costly to refine, shale oil.
Naysayers point to the recent exodus of several of the world’s largest oil companies from the tar sands, looming carbon taxes and Paris commitments, Indigenous rights and court challenges, oil spills and climate change, but my response has always been…sunny days.
In the future, the price of oil will rise, unless of course it falls as fracked oil increases supply while demand drops in response to a worldwide transition to renewable sources of energy.