Opposing energy projects has a price

Michael Campbell
Vancouver Sun
September 10, 2005

Problems arise when new energy supplies don't keep pace with rising demand

COMMENT: This begins like a column that should be an engaging read, but Michael Campbell stays well away from any useful analysis of the problem he identifies. Yes, our fossil fuel energy demands have outpaced industry's ability to deliver. Yes, communities are objecting with increasing strength to ugly, poisonous, dangerous energy projects in their neighbourhoods. Yes, the system is highly utilized, with no tolerance for breakdown.

But Campbell seems to suggest that the solution is for NIMBYs to get off the case, and allow the growth that might otherwise take place. He doesn't follow through to a proposal for serious uptake on conservation and more efficient use of existing supply. He doesn't go anywhere near talking about investing in sustainable technologies.

Heck, he doesn't even acknowledge that the five year sustained resistance against the GSX Pipeline and the Duke Point Power project has saved British Columbians hundreds of millions of dollars. - Arthur Caldicott

They are protesting the Sumas 2 power project. They are protesting offshore oil drilling. They opposed the Duke Point power project. Some residents in South Delta are up in arms over the proposal to put higher-voltage power lines in their neighbourhood in order to transport electricity. And no one dares mention nuclear power in North America in spite of the fact that it may be the best existing solution to our energy needs.

In other words, at every opportunity there are individuals and groups ready to oppose the expansion of energy resources. I'm not saying that I want a brand-new power project in my neighbourhood either, but our reluctance to further our energy supplies and infrastructure presents a problem.

The growth in our consumption continues to outpace our increase in supplies. There are more cars, more home computers, more data centres, more electronic gear, more energy needs for manufacturing, bigger houses to heat and numerous other demands that are relentlessly increasing our energy needs. Even our push for alternative sources of energy often relies on energy inputs from other sources. For example, methanol from corn takes more energy to produce than it creates.

What this spells is an obvious problem that Hurricane Katrina simply exacerbated when it comes to oil and gasoline. There is no mystery why gas prices have spiked up in the wake of the U.S. losing 10 per cent of its refining capacity. Demand continues to grow while the supply of gasoline through the refiners was curtailed.

North American refineries have been operating at full capacity for years and had no ability to absorb the loss of 12 refineries. The question should be: Given that we had capacity problems that inevitably would lead to gasoline supply shortages and higher prices, why weren't more refineries built?

The answer is that nobody wants them in their area. While demand for gasoline has been steadily growing, there has not been a refinery built in the U.S. in 25 years. Forbes magazine has just reported on Arizona Clean Fuel's application to build a refinery in the desert near Yuma Arizona. Now keep in mind that Arizona Clean Fuel has been cited many times for its friendly environmental record, but when it came to building a new refinery that made no difference.

It has taken 10 years to get the state and federal environmental approval, which means the company can now enter the permit phase, where it will face more organized opposition. It's anyone's guess how many legal challenges and other hurdles will need to be overcome before the project is finally started.

As I said, when demand continues to rise and supply doesn't keep pace, we have a problem. What's scary is that in the face of such obvious problems we're being greeted with solutions like the proposal to nationalize the oil industry, which a Leger Marketing poll suggests is supported by about half of Canadians.

Even leaving aside the avalanche of problems such a solution would immediately trigger, it still wouldn't negate the fact that regardless of who is the owner we still need to expand capacity and infrastructure. Yet there is still vocal and effective opposition to any such proposal. I'm not passing judgment on the merits of the opposition, I'm simply pointing out that it has consequences in terms of supply and that means higher prices.

Michael Campbell's Money Talks radio show can be heard on CKNW 980 on Saturdays from 8:30 a.m. to 10 a.m.

© The Vancouver Sun 2005