Tar Sands Income

Canada and the World

Current Events with a Canadian Perspective

Last update

11 April 2011

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Alberta Tar Sands Income

One of Canada’s greatest natural assets is both

a blessing and a curse in that it generates

income but damages the environment

The world’s hunger for energy is outpacing the supply, and Canada sits on one of the planet’s biggest energy reserves – the tar sands of Alberta.

The Syncrude tar sands mine at Mildred Lake, Alberta.

The tar comes in a gooey mixture bound up with sand and clay. It also lies underneath another massive natural resource, the world’s largest boreal forest. The open-pit mining that is necessary to expose the tar deposits means bulldozing down the trees. So, to access one resource another is destroyed.

Processing Tar Sands Causes Pollution

Turning the sticky tar into usable crude oil requires enormous quantities of water and natural gas. According to the Toronto Star (February 18, 2008), “In a list of 207 nations ranked by greenhouse gas emissions, Alberta’s oil sands come out higher than 145 of them.”

And, Environmental Defence published a February 2008 report about the tar sands entitled “The Most Destructive Project on Earth.”

The report outlined some of the side effects of tar sands processing: “If you live downstream, your water is being polluted and your fish and wildlife may be dangerous to eat. If you live in Saskatchewan you are a victim of acid rain. If you live in BC, ‘supertankers’ may soon be plying your shoreline carrying Tar Sands oil to Asia.”

Environmental Defence says the pollution has an impact in Ontario and across the U.S. border.

Tar Sands Impact on Wildlife

Audubon Magazine (March/April 2010) points out that the tar sands development is taking place in the Peace-Athabasca River Delta. This is where four major bird migration flyways converge.

The magazine says studies by the Boreal Songbird Initiative and other organizations looked at how tar sand development reduces bird populations through “habitat loss, water withdrawals, and pollution. At minimum, the study concluded, six million birds will be lost over 30 to 50 years. Worst case, that number could reach 166 million.”

Destruction of the forest has other huge impacts because, says Audubon, it “provides breeding grounds for up to three billion birds.” In addition, “the world’s largest intact forest also offers habitat to black bears, lynx, and great herds of caribou.”

Revenue from Tar Sands Benefits Canadians

On the other hand, there are some positives.

Alberta’s Energy and Utilities Board estimated in 2007 that the tar sands contain 1.7 trillion barrels of oil. At $100 a barrel that’s an awful lot of value (the price reached $147 a barrel in 2008 and will likely hit that again and go higher in the future). That means money in the bank for Canadians.

According to The Globe and Mail (February 9, 2010) Alberta will receive more than $3 billion in tar sands royalties in 2010-11. That will grow to $5.1 billion the following year. But, this is very early days in the tar sands story. Future revenue will zoom upwards as production ramps higher and the royalty rises from the current one percent to 25 percent.

This spike in income is important for Canadians from Leading Tickles, Newfoundland to Bella Coola, British Columbia.

Transfer Payments Boost Canada’s Living Standards

Money from rich provinces such as Alberta goes to Ottawa and is then distributed across the rest of the country.

Equalization payments, health transfers, and other programs will share out $54 billion in 2010-11. This money goes to pay for hospitals, schools, and many other basic services.

Without the cash from projects such as the tar sands it would be impossible for Canadians to enjoy their current high standard of living.

Sources

“Canada’s Toxic Tar Sands: The Most Destructive Project on Earth.” Environmental Defence, February 2008.

“Crude Awakenings.” Audubon Magazine, March/April 2010.

“Oil Sands Revenue Tops Alberta’s Royalty Stream.” Nathan VanderKlippe and Shawn McCarthy, Globe and Mail, February 9, 2010.

“Federal Transfers to Hit Record $54B.” Canwest News Service, December 19, 2009.

“By 2015, the tar sands are expected to emit more greenhouse gases than the nation of Denmark (population 5.4 million).”

Boreal

Songbird Initiative

The Canadian Energy Research Institute estimates that Alberta’s tar sands development will provide 42,000 full-time jobs. However, hundred of thousands more jobs will be created in support functions for workers such as housing, health-care, food, transportation, and retail.