Tar Sands, Solar Panels, & China

The Sundance Kid recently weighed in on Canadian tar sands oil production. At the risk of surprising you, Robert Redford is against it.

In Alberta's great boreal forest, one of the last truly wild places on Earth, tar-sands producers have turned an area the size of Chicago into an industrial wasteland and international disgrace.

One reason to oppose the Keystone XL pipeline across the U.S. is that it will provide a market for tar sands oil. Of course, the delay or cancellation of the pipeline will stop the extraction of tar sands oil only if there is nowhere else for the oil to go.

There is, and it's China. From Yahoo! News:

SINGAPORE/BEIJING (Reuters) - China is set to embrace Canada's offer of more crude, heating up competition with the United States as the world's top two oil consumers jostle to secure supplies and meet ravenous demand…

Canada's plan to ship crude to Asia got a boost after Prime Minister Stephen Harper said his nation would step up efforts to supply the region after the United States delayed a decision on a pipeline supply link.

It seems very unlikely that the Canadians will sit on a valuable commodity. If the oil doesn't go south it will go east. This will cut out the U.S. from that market and it will do more damage to more "boreal forest" than Keystone would do, but at least South Dakota landowners won't have to suffer the indignities of eminent domain. Perhaps that is a reasonable trade.

Another argument for blocking Keystone XL and tar sands oil extraction is that it will encourage the development of renewable energy sources such as solar power. The theory behind this argument is that renewable sources are viable but more expensive than oil. Constrict the supply of oil and/or make it oil more expensive and investment will shift toward renewable sources. Earth saved.

Here the real news from China isn't good for the theory. From Business Week:

Losses for China's largest solar manufacturers, including Suntech Power Holdings Co. and JA Solar Holdings Co. may continue through next year as declining shipments prompt them to slash prices and liquidate inventory…

Cell prices have fallen 59 percent since Dec. 27, according to Bloomberg New Energy Finance. Seven Chinese companies reported lower gross margins since yesterday and three said margins have moved into negative territory, an unsustainable level, said Hari Chandra Polavarapu, an analyst at Auriga USA in New York.

The price of solar panels is indeed falling, but not because an economy of scale is making their manufacture cheaper. The price is falling because the demand is falling. The demand for solar panels is entirely artificial. It exists because governments like it, not because it makes economic sense.

I am guessing that the Keystone XL pipeline will eventually be built. If it isn't, that will not stop oil from being extracted or used. It will not suddenly make solar power viable. It will just mean that the U.S. is cut out of the deal.

Comments

[Giorgio]

The REAL COST of the OIL!!...Well...Governments like oil much more! How do US get our oil from countries like Iraq and Libya?How much does it cost to base our Army, Navy, Air Force and Marines in the Middle East to ensure to have an uninterrupted flow as we mainline 20 million barrels a day of black gold into our veins?If you figure the annual cost of US military into the $3.50 a gallon (or more) you pay at the pump, the price of gas is close to $10 dollars a gallon.Your $500 million in subsidies for solar is chump change compared to the $800 billion we spent in Iraq and the $1.2 trillion a year we spend to ensure the safe flow of oil with our "defense" department.
Care to demonstrate how the use of oil and US and ALL the World military spending is sustainable when all of the money eventually goes up in smoke and out the tailpipe? and we don't consider the cost to clean the ocean because of the Oil Ships, or disasters like the BP one, explosions, CO2....etc.etc...The cost of the OIL is huge and the governments continue to offer some huge subsidies to the oil lobbies...We should double or triple the help for the clean technology research cause in a few years it's already much cheaper than the Oil (if you consider all the costs I showed before)

[duggersd]

Here is an article I read just before coming here to take a look. It appears that pipeline to the coast is not necessarily a done deal. http://hotair.com/archives/2011/11/26/reprieve-on-the-canada-china-oil-connection/

[Jimi]

Giorgio,

We get majority of our oil from (3) sources where we don't to use the military to guard it:

#1 The U.S.A. (25%)
#2 Canada (22%)
#3 Mexico (20%)

The problem with your theory is that even without subsidies oil is still cheaper, because the technology to efficiently shift from oil does not exist. Also, the subsidies for oil are in the form of tax breaks, there is no actual money flowing from the government to oil companies, where as with clean tech requires direct government spending just for research and development which unitl the entire energy infratructure was modified would not contribute anything to the economy. Wind and Solar are only capiable of producing energy on a small scale, and that should be used whever possible, but to system are still too expensive to make it a large scale factor. Since the techonology is not available yet to begin the shift in the energy infrastructure, it doesn't make much sense to quit using oil does it?

The reason people like you don't understand the debate is because you don't understand the efficency involved. You have to lie to everyone and try to scare them into beleiving that irreversable damage is being done. Crude Oil is used for some 6000 products, and for every 42 gallons of crude oil, 19.4 gallons becomes gasoline and the rest of the refinement materials (over 50%) are used to make things like this:

http://www.ranken-energy.com/Products%20from%20Petroleum.htm