Monday, March 27, 2006

The Cost of High Oil Prices

As a rule, Filipinos dread any increase in oil prices. Higher oil prices generally leads to higher prices for basic necessities like food, transportation and electricity. And with 30 percent of Filipinos living below the poverty line, who can blame us?

On the other hand, I always thought that high oil prices can benefit the environment. High oil prices will lead to people cutting back on petroleum use, thus limiting emissions. High oil prices will also make alternative energy sources more competitive.

Unfortunately, these are not the only consequences of high oil prices. In Canada, the Asian Wall Street Journal (March 27 edition, pages 22 and 23) is reporting that :
"These (oil sand) deposits were once dismissed as 'unconventional' oil that couldn't be recovered economically. But now, thanks to rising global oil prices and improved technology, most oil-industry experts count oil sands as recoverable reserves"
But recovering oil from oil sand has environmental consequences.
"Canada...already is having trouble meeting its pledge to cut CO2 emissions, largely because of its mushrooming heavy-oil production. By 2015, Canada's Fort McMurray region, population 61,000, is expected to emit more greenhouse gases that Denmark"
"Mining oil sand generates enormous volumes of liquid waste that are stored in toxic lakes...where there is currently no demonstrated means to reclaim fluid fine tailings"
Canada allows this because
"there is a strong economic incentive to ...to let oil sand development gallop ahead. Alberta added nearly 26,000 jobs in resource extraction in the past two years...For the first time, every Albertan received a C$400, or $340 check from the government earlier this year from an unexpected fiscal surplus"
The tug of war between preserving the environment and economic development again confronts a government. And like most governments, economic development wins.