Question

a. Class, sometimes, companies are too large to break up. Many of these companies have exclusive access to resources that make the introduction of competition impossible. No more is this more apparent than in Canada’s oil sands. Class, please provide some recent statistics on this industry, such as revenues and profit levels. You can do this by researching news articles. Be sure to source where you got the information from. b. One of the issues surrounding the oil sands is the harmful impacts it has on the environment. Class, please outline the positive versus negative externalities? How does pollution imposed on society by companies in the oil sands constitute a negative externality? Why is this harmful from an economics viewpoint? Why are some of the solutions present to neutralize the harmful impacts of pollution in the economy (What can governments do to compensate those that face pollution)? c. Many argue that the oil sands activity should be reduced or eliminated all together given the externalities created by them. Other’s argue that given the economic benefits that come from the oil sands, such activity should in fact be expanded. What are the pros and cons of each approach? Can we find an accommodation in the middle?

Answer 1

The profits and revenue from oil sands is significant to Canada's economy. The report by Parkland institute and the Canadian center for policy alternatives analysed five oil sands corporations that are responsible for 80 percentage of the production. Over the period $31.76 billion was paid to the shareholders by these companies. In 2017 the gross profit of the companies was $46.6 billion.

The positive externalities are that the oil sands contribute to the economic opportunities and also to the security and these are the vital part of the economy , specially for countries such as Canada. Oil sands and supporting sectors are one of the largest employers in Canada.

The negative externalities are that the extraction of fossil fuels create negative environment impact. This happen with the oil sands as well. The green house has emissions for oil sands extraction is larger then for crude oil. Along with the green house has many other pollutants are released .

This is harmful from economic point of view as previously used land cannot be easily used again. The chemicals in the tailings make it difficult. Another reason is that a very large amount of water is required for the extraction of oil sands. The environmental protection agency of U.S has the estimates of global damages due to carbon emissions. It is approximately $6 to $30 per barrel of oil sands produced.

As for the solutions , studies suggest that the intake of anti flammatory and antioxidants can neautralize the harmful effects of air pollution. Various vitamins also help to reduce the harmful effect on one's health.

The government can form local air quality committee or group. It can ban smoking. The government should invest in companies that are fighting air pollution. Organizations and individuals should be educated and asked to apply pollution control strategies.

There are various economic benefits of oil sands activity and there are many environmental impacts as well. The oil sands have made Canada the top oil supplier. It is also a secure energy source for the country. But the methods of extraction are carbon intensive methods. Also the breeding grounds for birds are destroyed to have the land for oil extraction. We can find an accommodation in the middle. The government , the scientists and the oil producing and extracting organizations should make a combined effort to invent more environment friendly methods for the extraction and production of oil sands. An alternate land should be provided for the birds and other species. Till that happen at least a balance should be created and too much extraction of oil sands must be avoided. The government should balance the environment protection with the economic profits.