The Quest for Ethical Oil

My latest article published by MercatorNet, lots of hyperlink references in the original at MN.

Oil sands: satanic horror, or priceless jewel? To describe the extremes of the debate over Canada’s large bitumen deposits thus is barely to exaggerate the positions taken up by opponents and supporters of exploitation of this rising source of crude oil.

For environmentalists, oil sands, or as they are technically known, bituminous sands, are the epitome of everything they hate: big business, oil, greenhouse gas emissions, oil, water wasted and polluted, oil, governmental indifference or collusion, oil, threatened animals and trees -- oh yes, and oil as well. A boycott of fuel sourced from Canadian fields is under way and gathering traction.

For many Canadians, however, and indeed for investors worldwide, oil sands represent an entirely different set of circumstances. For young men in depressed rural Ontario, poverty-stricken communities in Atlantic Canada, and job-scarce northern reserves, this resource represents hope of a future, a down payment on a house, and career training they might never otherwise get.

Alberta's riches, at least partly due to this unconventional oil, funds equalization payments and helps to build schools and hospitals in have-not provinces. Ontario alone stands to gain about 55 billion dollars in oil sands related manufacturing and other economic activity over the next 25 years. Even local communities, whom environmentalists like to put forward as victims of commercial poisoning and exploitation, cannot but benefit economically from a massive employment centre in an area which might otherwise be mostly barren.

These considerations aside, there is no question that the optics are not pretty. Strip mining, massive equipment, oil slicks, flaring smoke stacks and dead birds are not warm and cozy images. Questions being raised about environmental impacts, pollution, water contamination, and so forth are legitimate. Extracting crude bitumen produces more greenhouse gases than conventional production, and a recent study alleges that the oil sands are unacceptably polluting Alberta’s Athabasca River.

As a result, there has been a strong push by environmentalist groups to encourage boycotts of oil extracted from bitumen, the people involved with or investing in oil sands, and the entire province of Alberta, greenies and all. One corporation that has taken up the challenge to shun this demonic fuel is Walgreens, a major U.S. drug store chain of 7,500 stores. Levi Strauss, Gap, and Timberland were also reported to have boycotted the oil sands, but have since clarified their stances to avoid the word boycott, possibly in response to calls for a counter-boycott by Canadians. Walgreens, with no Canadian business to lose, has proven more staunch in its commitment to environmentally-conscious corporate ethics.

Corporate ethics is a rather popular buzz word, and not just with humourists at dinner parties. Bending to public pressure, aka the squeakiest wheel, corporations have been inspired to boost their image by reforming overseas labour practices, promoting equal opportunity hiring, aspiring to places on lists of top ethical companies, and funding/donating everything from children’s playgrounds to condoms. Looking after the environment, however, seems to be a popular ethical issue among companies whose brands have become household names through large retail chains.

Especially if it is not likely to cost them anything. Walgreens admits that the oil sands boycott as it currently stands is likely to have little economic effect on the company since they do not use much fuel from that source to start with. The main point of such gestures might seem to be the opportunity to get an image -- and hopefully sales -- upgrade as a result of their “enlightened ethics” rather than out of a disinterested commitment to environmental issues. In an ironic note, critics have also suggested that those who are involved should first take a look at their own morals: Gap has been caught using child labour in Delhi and Walgreens have come under fire for fraud involving Medicare.

But even if we are to take them at their word, that the boycott is a result of an honest commitment to sustainable and ethical business, is boycotting the oil sand industry really ethical? Assuming Walgreens isn't going to switch their trucks to solar or wind power, how ethical are the alternatives? While it may be more carbon intensive (with about 5-15% more emissions based on “well to wheels” analysis than the American average), the oil sands have advantages in other ways.

For one thing, the industry supports a progressive democracy that cares about things like environmental standards and human rights. In contrast, Saudi Arabia's “cleaner” oil, it can be argued, supports tyranny and terrorism. And, while Canada requires ever tighter environmental regulations, other countries ignore such issues; Nigeria, America's fourth largest supplier, has even hanged environmentalists for speaking out against oil interests.

Ezra Levant, author of Ethical Oil, also points out that, metaphorically speaking, every barrel of oil from Sudan contains a teaspoon of human blood, based on the UN death count of 300,000 for the Darfur genocide. He continues to argue that the oil sands are the ethical choice on the liberal grounds of economic justice, minority rights, freedom and, believe it or not, environmentalism.

No one doubts that environmental issues can be very serious, and deserve thoughtful consideration. A convincing argument could also be made that oil sands extraction is not as clean as it could be, and that efforts should be made to remedy the problem. But if, in our assessment of ethics we desire to put the needs of people first, and I would argue that we should, perhaps dragging crude oil out of sand is not the biggest villain in the story.

The industry will ultimately be none the worse for the spotlight on its activities; few honest things are the worse for sunlight as long as a sense of proportion is kept and facts aren't twisted or falsified on either side. But that sense of proportion and honesty has been too often lost in the debate. Even James Cameron, director of the movie Avatar said, "[The oil sands] will be a curse if it's not managed properly, (but) it can also be a great gift to Canada and to Alberta if it is managed properly."

If corporate ethics means anything, it means the application of moral principles to business. If corporations can maintain a culture of honesty, transparency, justice, respect for human dignity, and accepting responsibility for harm they cause, then their actions will indeed deserve to be called ethical. Otherwise, piecemeal efforts to satisfy the most powerful advocacy groups of the moment, with no foundation in a truly ethical worldview, will be in continual danger of achieving little real good, or at worst, of backfiring badly.

What should we say to Walgreens and the other boycotters? Criticize the oil sands if you please, but remember what the alternatives are. The law of unintended consequences is one of the most unforgiving and dangerous we know, and you may be in danger of falling prey to it.