Record-breaking gasoline prices don't look like good news to most Canadians. But for the environment, the recent hike in oil prices is a step in the right direction. And if governments make the right choices, we should end up saving, not losing money. Here's why.
First off, high prices get us thinking about ways to cut gasoline consumption. Less gas means lower costs AND less pollution. Car-owners can start with no-brainers like cutting out idling and maintaining tire pressures. And car-sharing, public transit or cycling can be practical alternatives for many commuters. Using transit or car sharing just two days a week makes a big difference for both costs and the environment.
For those buying a new vehicle, it's worth paying attention to fuel economy figures. In city driving, a Toyota Corolla uses 40% less gas than a Dodge Caravan and 50% less than a standard GMC Sierra. Smaller vehicles are fine for most people's needs, and savings like these would comfortably outweigh the recent price increases.
But the heavy lifting has to come from governments. The federal government is studying the idea of "feebates" — cash rewards for the buyers of efficient vehicles, and penalties for gas-guzzlers. And all levels of government recognize the need to make transit attractive to a much greater number of Canadians. High oil prices should prompt governments to turn these ideas into action. The environment would benefit, and many of us would end up saving.
There's another reason why expensive oil should be good news for the environment while saving money for Canadians. It's that high prices and record profits enable oil companies to make a much greater financial contribution to meeting Canada's international obligations to cut pollution. Under the Kyoto Protocol, Canada has to meet a fixed target for greenhouse gas emissions. That means every extra tonne of emission reductions assigned to industry is a tonne that taxpayers no longer have to pay for.
Under its Kyoto plan, the federal government will set mandatory emissions targets for oil producers and other heavy industry sectors. Companies will be allowed to meet their targets by buying credits that represent emission reductions achieved elsewhere. Unfortunately, while heavy industry is responsible for close to 50% of Canada's emissions, the federal plan proposes industry targets that represent only 13% of the emission reductions needed for Kyoto.
Canada's oil and gas production facilities and pipelines alone release 16% of our greenhouse gas emissions — and those emissions are projected to double between 1990 and 2010. This is largely due to new oilsands facilities planned in Alberta. But the federal plan says that targets for new facilities will be set at the level of "best available technology." Oilsands producers would like this to be interpreted as the technology they are actually implementing — meaning they wouldn't be required to reduce emissions at all under Kyoto.
This would be a truly ludicrous outcome — allowing Canada's number one source of rising emissions to avoid taking any responsibility for them. Even having to buy credits to offset 50% of their emissions would cost oilsands producers less than 75 cents (Canadian) a barrel — not even one hundredth of the price that oil is now selling at.
And to make matters worse, oilsands producers are on the receiving end of substantial federal spending. A Pembina Institute study released earlier this year found that the federal government spent $1.2 billion on tax breaks and other benefits to the oilsands industry between 1996 and 2002.
Surely today's record oil prices, and the record profits that Canada's oil producers are reaping, can embolden the federal government both to cut subsidies and set mandatory targets that require oil companies to take responsibility for a fairer share of Canada's Kyoto effort. That would be good for the environment and taxpayers alike.
If we want to be serious about shouldering environmental responsibilites in a market economy, we need prices to reflect environmental costs, not just conventional costs. That's why a cut in gasoline taxes is the wrong way to go. Canada's gas taxes are already amongst the lowest in the industrialized world.
The right way to go is for governments to implement policies that encourage Canadians to substantially reduce gasoline consumption, and to start to apply the polluter pays principle to oil producers. Both the environment and most Canadians would be winners.
