Economic analysis

Listen: Andrew Leach talks about fact checking Neil Young

Key facts and a conversation with CBC Radio about the holes in the rock star's attack

Courtesy CBC Radio, here’s Econowatch contributor Andrew Leach in conversation with Jian Ghomeshi on Q:

In a previous post on Neil Young’s ‘Honour the Treaties’ Tour, I wrote that Mr. Young had made a few errors in his various media events which opened the tour.  I thought I’d run a little fact check on three of these statements in particular.  Shawn McCarthy has a similar analysis in the Globe and Mail.

The Size of England?

The first potentially false claim made by Mr. Young was that, “if the tar sands plan goes through until the end, the industrial area will be the size of England.” This comparison has been used frequently in other publications and similar claims have been made by the U.S. NRDC which stated that, “an area the size of Florida will become a wasteland if tar sands growth goes unchecked; most of this land has already been leased for development.” The land area of Florida (170,000 km²) and England (130,395km²) are similar to the land area under which lies Alberta’s oil sands deposits (140,000 km²) , so the implication is that, once these deposits are all extracted, the land area will be disturbed.

So, is the statement false? In this case, it’s hard to say definitively yes because Young used the term industrial area, but he clearly equated oil sands development with the mining projects located north of Fort McMurray and featured in the movie Petropolis. If you don’t want to give him the benefit of the doubt, you can assume that he’s imagining, as this article did, that, “more than 140,000 square kilometres of north-eastern Alberta may be irrevocably altered by mining for sandy oil.” That’s clearly false—only a small area of the oil sands deposit – about 4,750 square kilometres, or 3 times the land area of Los Angeles—is mineable, with the remainder accessible only with in situ extraction or, in some cases, not recoverable at all with current technology. Of that, only about 750 square kilometres has been disturbed by mining to date.

That, however, is far from the whole story. The Alberta government has leased almost 100,000 square kilometers of the oil sands deposit, so the potential certainly exists for an industrial project on the scale of England, if a little smaller. The purchase of a lease does not, of course, guarantee production, and only a small fraction of the area would be mined, but it would certainly count as being disturbed by industrial production.  In a 2006 report, Death by a Thousand Cuts, the Pembina Institute makes the case for the importance of considering not just the mined disturbance, but also the disturbance from in situ production, pipelines, seismic exploration cut lines, etc. For species like woodland caribou, a viable landscape must contain 65 per cent undisturbed land, and even something as small as a pipeline right-of-way creates a 500m effective disturbance in the landscape.

So, let’s be clear – will we ever have a mined area the size of England in Alberta? No. Will we have an area of land disturbed for the purposes of oil sands extraction that is reasonably similar to the size of England? If oil sands production continues to grow as industry predicts, it seems likely.

Going to China?

In his interview with Q host Jian Ghomeshi, Young stated that,  “the Canadian oil coming out of the ground and being bled out of ground and pushed out of the ground and burned out of the ground at an immense cost in CO2…this oil is going to China…this oil is going not to Canada, not the the United States…the Keystone pipeline…they don’t have any idea, the people in those states, that the oil is going to China.”  There is no way to reconcile this statement with the facts.

To a reasonable approximation, Canada’s oil is used in two places – the U.S. and here at home.  Even within the U.S., we can be fairly specific about where it goes.  In the first four months of 2013 (the latest data posted by the National Energy Board), Canadian net exports and domestic consumption were a combined 3 million barrels per day. Of that 3 million barrels per day, 1 million barrels per day were consumed domestically, but it should be no surprise to anyone that we’re a net exporter of oil.  Our exports in the first part of 2013 averaged 2.6 million barrels per day. 75 per cent of these exports moved to the U.S. Mid-west and North-east, 17 per cent went to the U.S. West Coast and the Rocky Mountain states, 5 per cent went to the U.S. Gulf Coast, and the remaining 3 per cent went elsewhere, some of it even to China (h/t to @jrmarlow).

Will that change in the future? Yes and no. The U.S. is likely to remain the largest market for our oil for some time, even if oil sands production grows significantly. West coast pipelines like Northern Gateway or the TransMountain expansion would certainly make more Canadian crude available in the Pacific basin, but even there it’s a stretch to say that all of it would go to China.  In Enbridge’s analysis of the Northern Gateway pipeline, they found that a maximum of 200,000 barrels per day of the 525,000 barrels per day shipped on the pipeline would be shipped to northeast Asia, with a fraction of that going to China.

What about the oil shipped through Keystone XL? Isn’t that all going to China?  That’s certainly what Tom Steyer’s ad suggested would be the case, so perhaps that’s where Young is getting his information.  Again, this is hard to reconcile with the facts.  It would certainly be possible under current U.S. crude export laws for Canadian barrels to move via Keystone XL to the Gulf Coast for export, but you’d have to ask yourself why that would happen. The US Gulf Coast currently imports over 4 million barrels per day of crude oil, a number which is expected to decline but is unlikely to reach zero. Further, even if the Gulf Coast were to become a net exporter of crude oil, it’s still likely to be a net importer of heavy oil, while exporting lights. Canadian oil, in such a scenario, would displace Venezuelan or Mexican heavy.  To think that it would not, and that it would instead be exported, you’d have to imagine a tanker floating in to port laden with heavy oil, unloading its cargo, re-loading with Canadian heavy, and sailing out again.  The parties to that transaction would very quickly see that they could save the loading and unloading costs and send that heavy oil elsewhere in the first place.

Well, won’t that oil just be refined and shipped to China?  Maybe, but right now that’s not happening very much at all. So far in 2013, the U.S. has exported almost 4 million barrels per day of petroleum products, but only a small fraction of that is going to China – about 5 per cent of the total.  The largest volumes were going to Canada, Mexico, and the Netherlands.  The U.S. Energy Information Administration predicts that these net product exports will stabilize over time, and that the U.S. will continue importing approximately 7 million barrels per day of crude oil through 2040. Of course, forecasts can be wrong, but there’s simply no support for Young’s contention (or Steyer’s ad) anywhere in the data.

So, no, Mr. Young, that oil isn’t all going to China.

Two cars instead of one

Young said that, “every day those projects go on, they put out as much CO2 as all the automobiles in Canada on that day..that’s like doubling the number of cars on the road.”  This one is, again, up for debate.  Environment Canada data from 2011 show that emissions from cars, trucks, and motorcycles in Canada were 88 million tonnes, while the oil sands sector had emissions of 55 million tonnes when you account for production and upgrading.  Adding refining emissions to that number would get you closer to 65 million tonnes, but you’re still not at 88Mt.

Again, you could choose to give Young the benefit of the doubt that he was only talking about cars, not trucks, and then you are likely pretty close to the right number for oil sands emissions.  However, given that most of Young’s statements have equated the oil sands with the oil sands mining operations around Fort Mc Murray, it’s worth noting that the mining (and upgrading) of bitumen contributed 32 Mt CO2 emissions to Canada’s total in 2011, and that emissions from mining operations are expected to stay well below those of personal vehicles for some time.  I think it’s likely that someone based that number on the forecasts for future oil sands production where, by 2020, oil sands emissions are expected to be a little larger (101 Mt vs. 90Mt) than those from personal transportation.

Young was very clear in his interviews that he believed Canadians were subject to misinformation from politicians and the oil industry. That is often the case.  However, what’s good for the goose should be good for the gander, so Mr, Young might want to take a little more care himself.