David Black’s proposal to build a refinery in Kitimat isn’t quite complete vapourware, in terms of the viability of the idea. But it’s pretty close to it – and the nattering online and in offices following Black's announcement has quickly pointed out its more obvious shortcomings.
- it still requires the oil pipeline with all of its risks to fish, other wildlife, habitat, and communities
- it still requires a diluent pipeline
- it still requires tankers galore carrying petroleum products out to sea
- it's a diversionary ploy to take eyes of the Northern Gateway project itself
But its fundamental problem is economic, and is the same reason more refining of tar sands bitumen isn’t happening in Alberta. The refining of crude oil usually makes better sense done close to the demand centres. Alaska crude is refined in Cherry Point, WA, and San Francisco and Los Angeles. Crude from everywhere in the world is refined from Texas to Louisiana along the Gulf coast. Only 8 of the largest 42 refineries in the world are located in countries which are primarily producers (Saudi Arabia, other Persian Gulf, Indonesia, Venezuela).1 David Black knows that.
China and Korea and Japan are not going to volunteer to pay more than they need to for petroleum products, and they sure as heck aren’t going to be eager to pay extra for products refined in Kitimat if they can do it themselves at less cost.
Just to reiterate a basic element: Enbridge builds the pipeline. Shippers pay Enbridge to use the pipeline. Shippers may be independent, or they may be associated with producers or they may be associated with consumers.
But now Mr. Black pops up with his refinery. He’s going to have to compete with those other users of the pipeline for feedstock. No small competition, this, either, since Black says he's going to use ALL the capacity of Northern Gateway. Intending to be a monopoly buyer in the market, he has to bid up the price. And when he wants to sell his refined products, he’s going to have to include his full costs in his selling prices, plus his profit. The economic consequence of a refinery in Kitimat is inflationary, and may even drive users of Northern Gateway, away – to other places in the world. Fine, we say, but it’s not easy to believe that this is Black’s real motive.
His project is unwanted by the tar sands producers, and it isn’t wanted by the Asian or Californian buyers. It is inflationary. It creates a big new horrible pollution source. It solves no problems. It’s stupid. But Black isn’t stupid. So what’s it doing here today?
This idea is so odd, that perhaps we need to look at the individual promoting it. Black has stepped away from managing his newspaper empire. He has time and money to indulge himself in anything he wants. Perhaps he is presuming to the godliness presumed by other retired rich men like Gwyn Morgan and Bill Clinton and Bill Gates.
Whatever. This refinery project certainly hasn’t appeared out of concern for First Nations. And we’re not likely to find much criticism of the idea in Black’s papers.
In 1999, David Black forbade editors of his dozens of newspapers across BC from publishing any comment in support of the Nisga’a Treaty. "This treaty establishes apartheid throughout British Columbia forever," Black wrote in a … newspaper article. "It also sets up 50 to 60 communistic territories within British Columbia forever."2