Oil sands to take hit from U.S. bill
Alberta’s oil sands producers and their U.S. refiners face sharply higher costs to reduce greenhouse gas emissions under legislation approved by the U.S. House of Representatives and championed by U.S. President Barack Obama.
The American Clean Energy and Security Act, if passed by the U.S. Senate, could also result in new tariffs on Canadian exporters of energy-intensive goods from cement to chemicals if Washington deems Ottawa’s climate-change regulations to be lacking.
Under the cap-and-trade plan, U.S. refiners will have to buy permits for each tonne of carbon dioxide that they send into the air. While utilities will be provided free allocation of those permits to reduce the impact on power users, the oil industry will have to purchase virtually all of its permits.
Such a system would heavily penalize oil companies that ship oil sands bitumen to the United States because refining the raw bitumen into petroleum products such as gasoline and heating oil is more energy-intensive and higher in emissions than is the processing of conventional oil. U.S. refiners processing the heavier oil sands crude will face higher permit costs, cutting into profit margins for producers and refiners.
Both producers and refiners would likely share that cost. A resulting drop in demand would in turn drive down the price of bitumen.
Many U.S. refiners have been moving to retool their refineries in recent years to accommodate the heavy crude from Alberta’s oil sands.
But the proposed legislation could put all of that at risk.
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mike Says:
If our economies weren’t so closely integrated to the point where such actions would hurt us so badly, I would advocate that we quit exporting oil, lumber and other necessary commodities to the US until they grow up and quit bullying their allies. I hope the poor deluded folks who voted for Obama quickly realize their mistake in time for the 2010 mid-terms.
mid island mike
Posted on June 30th, 2009 at 12:37 pm
beentheredonethat Says:
Well, we’ll just have to wait and see if the Senate has got the courage to stand up to the likes of the O, Pelosi and Reid. There has to come a time, and soon, that Americans rise up and shout enough is enough and read Obama and his cartel of Marxists the riot act. The anger in America could very well some day come down to physical riots when Americans finally get it through the collective thick skulls what Obama ‘et al’ are really all about. Senate elections next year……I give this bill at least a 50/50 chance of failing to pass.
Posted on June 30th, 2009 at 12:54 pm
fernstalbert Says:
I would assume that this cap and trade tax will be passed on to the consumer. How does that hurt the oil sands? The American consumer needs energy and if the price is up they will have to pay.
Posted on June 30th, 2009 at 1:11 pm
John Luft Says:
I’m not sure how the free trade agreement works in regard to oil to the US, but I doubt that it says that the US can decide what grade or type of oil they prefer as to what we will sell to them. I doubt that it allows for the US to walk in as though Canada is a boutique where they can choose exactly the type they want over all others. If that is the case, we simply tell them what we will sell to them. If it doesn’t meet their requirements, tough. They can make up the short fall by buying it from somewhere else. Like Saudi Arabia or Venezuela (no doubt Obama has contacts with his Comrade Chavez). Then Canada gets to work on building the pipelines to the West Coast to ship more oil to the Far East.
That economic imbeciles like Obama and Pelosi have the levers of economic power in the U.S. is absolutely frightening. We may well be witnessing the economic death of the U.S.
Posted on June 30th, 2009 at 4:35 pm
ward Says:
“We may well be witnessing the economic death of the U.S. ”
I’d say that is the exact intent John.
Posted on June 30th, 2009 at 5:10 pm
Cynapse Says:
It’s amazing that the right has such hatred for government regulation … yet complains when a Bernie Madoff is discovered. Do you want absolute freedom to make a buck at any cost or not?
Posted on June 30th, 2009 at 5:15 pm
UV Says:
Also, big corporations when in financial trouble, always come running to the (peoples) government for a financial bail-out.
Posted on June 30th, 2009 at 5:40 pm
Jim in Calgary Says:
Cynapse and UV-are you joined at the hip? One comments and the other follows.
Why not charge the US a tariff for getting our oil. With the funds we could build an series of upgraders to not only bring the gravity of the crude to a higher grade, we would employ hundreds if not thousands to have long term processing plants and export whatever grade of product they require.
If they don’t like it, China would not hesitate to take any and all we could supply. I’m sure the US would not mind importing all their oil from the middle east, chavez, and possibly northern europe. Lefties love paying unnecessary higher prices for the ‘good of the people’.
Posted on June 30th, 2009 at 9:39 pm
gary Says:
if this becomes US law then we simply say pay world prices for the oil or we will ship it to China or India or Japan or any other country that needs oil at world prices. To Hell with the US as the primary market for anything. Canada needs to move very very far away from that country as it is very rapidly driving itself into bankruptcy and collapse. We need to try as much as possible to avoid the collapse there causing the same thing here.
Posted on June 30th, 2009 at 10:06 pm
John Luft Says:
Yeah Cynapse….as if government regulation is always a good thing. What planet are you from?
Posted on June 30th, 2009 at 11:02 pm
Cynapse Says:
There’s quite a difference between always and ever. Your contrary arguments tend towards the latter.
Posted on July 1st, 2009 at 2:45 pm