Here’s where the economic and environmental arguments clash.

Those who want to ship Alberta oil from B.C. say being shut out of Asian markets costs Canada billions of dollars.

That runs smack into the argument that shipping Alberta’s heavy oil from the West Coast is a disaster waiting to happen. Opponents say an ocean spill of diluted bitumen would be far more damaging than one of diesel, gasoline or other refined products.

The obvious question, then: Why not solve the conflict by refining oil here instead of shipping it abroad?

Because the business case can’t be made, say some. Because B.C. has enviro-protested itself out of the game, say others. Because Canada got left behind in the refinery race years ago and is too far back to catch up.

Read more: Vancouver gasoline at highest price in North America

Pfft, says Victoria’s David Black, who continues to push a proposal for a north coast refinery that he argues would address both the economic and environmental concerns.

OK, first, let’s look at the status quo.

Canada has just 14 fuel refineries today (though a 15th, the Sturgeon facility near Edmonton, is gradually going into production). That compares with the 1970s, when the Great White North had 40 refineries before oil-price shocks prompted a switch to other sources of energy — electricity, natural gas — and forced automakers to produce cars with better fuel economy. As a result, demand fell and smaller refineries closed, says Natural Resources Canada.

Analyst Dan McTeague of Gasbuddy.com also cites moves — acquisitions and mergers leading to monopolies — by Big Oil, whom asleep-at-the-switch Ottawa allowed to concentrate refining in the U.S. at the expense of Canadian fuel security.

Still, Canada actually refines more petroleum products than it consumes. The Prairies and Eastern Canada are largely self-sufficient. The two refineries in Newfoundland and New Brunswick have far more capacity than is needed for domestic use.

The western refineries depend on the oilpatch, but the eastern ones rely largely on crude from Atlantic Canada and abroad. Even if they could get access to Alberta crude — in 2017 TransCanada gave up on the proposed Energy East line linking Alberta to New Brunswick — the easternmost refineries aren’t set up to handle heavy oil from Wild Rose Country.

B.C. is the outlier among the provinces, consuming almost three times as much fuel — 200,000 barrels per day, according to the Canadian Fuels Association — as it has the capacity to refine.

The province used to have seven refineries but now has just three, a 55,000-barrel-per-day facility in Burnaby and a 15,000 bbl/d one operated by Husky in Prince George. Chevron sold its Burnaby operation, which produces gasoline, diesel and jet fuel, to Alberta-based Parkland in 2017.

About half of the refined products B.C. uses travel from Alberta: 50,000 bbls/d via the existing Trans Mountain line and a similar amount by rail and truck, the fuels association says.

The rest, 30,000 bbls/d, including biofuels, comes from beyond Canada’s borders, mostly from Washington state’s five refineries. There are four within 60 kilometres of Victoria — the Phillips 66 refinery at Ferndale, near Bellingham, the nearby BP refinery at Cherry Point, and the Shell and Tesoro refineries at Anacortes — with a combined capacity of 590,000 bbls/d.

Note that none of the product from Washington’s refineries is shipped overseas; almost 90 per cent is sold in the U.S., the rest in Canada. Also note that just over half the product travelling through the existing 300,000 bbl/d Trans Mountain pipe is crude that gets diverted to the Washington refineries via the Puget Sound spur line from Sumas. Effectively, they’re buying our oil and selling it back, refined, at a premium.

So why not build a refinery to service B.C.? Because the North American market as a whole is already over capacity. “We have too many refineries,” says Brian Ahearn, vice-president of the fuels association. Demand for gasoline and diesel is flatlining or declining. Vehicles are more fuel-efficient. Bio-fuels, all of which are imported (most renewable diesel comes from Singapore) have made inroads.

The association’s website puts it this way: “Proposals exist to build modern, high-efficiency refinery operations on the West Coast. The price tag: upward of $15 billion each. The payback period: 25 to 30 years. Although petroleum is expected to remain a key transportation fuel for at least four more decades, an investment of $15 billion comes with significant risks. Which is why there is no rush of investors, private or public.”

Gasbuddy’s McTeague, a former member of Parliament, mentions other factors, including the political climate: The “shenanigans” of pipeline opponents have made Vancouver Island, Vancouver and the coast a “no-go zone” for petro-investment. “Unfortunately, we now have a tattoo branded on our communities.”

Also, when Canada goes out of sync with the U.S. in penalizing refineries for missing hard-to-reach emissions targets, the economics chase business south of the border, he says. McTeague wouldn’t be surprised to see more Canadian refineries close.

Even without the political/environmental hurdles, the business case isn’t great, he says. “The economics of building refineries are not the best.” There’s not enough of an internal market, or enough of a distribution network in place, to warrant the investment. (Note that Alberta’s new refinery went ahead only with provincial government guarantees.)

Ok, the domestic market isn’t great, but what about the foreign market? The whole point of the Trans Mountain expansion, adding 590,000 bbls/d capacity to the existing 300,000, is to allow greater access to the Pacific Rim.

Trans Mountain itself says market conditions will determine where — B.C., Washington, California, Asia — the heavy oil from the new pipeline ends up, but most is expected to go “for export off the dock.” The industry has its eyes across the Pacific.

“The opportunity is Asia and India,” Ahearn says.

If that opportunity exists (pipeline opponents doubt it does) is it to sell those countries refined product, or just unrefined diluted bitumen? If it’s the former, there would be competition from the big refineries on the Gulf Coast and elsewhere in the U.S. that are already rigged with the expensive cokers and other gizmos that are needed to handle heavy oil (heavy oil might be expensive to process, but it’s more versatile than light, tight shale oil).

That’s not to mention competition from the refineries in Asia itself. India, which plans to increase its refining capacity by 77 per cent over 12 years, has one complex whose capacity is 60 per cent that of all of Canada.

“The question is: Can a Canadian refinery make refined product, ship it over there and land it at a competitive price?” Ahearn asks.

David Black believes the answer is “yes.” Since 2012, the Victoria businessman has been pushing a proposal for a refinery in northern B.C., one that he believes would allay many of the fears surrounding the shipment of diluted bitumen from the coast.

Sited 13 kilometres north of Kitimat, the Kitimat Clean refinery, when fully built out, would be one of the largest refineries in the world. When announced, the goal was to process 400,000 barrels of pure bitumen from Alberta’s oilsands into 460,000 barrels of gasoline, jet fuel and diesel fuel, plus byproducts such as butane, propane and sulfur pellets. The price tag has ranged from $22 billion down to, more recently, $18 billion.

Actually, it’s lower than that, since these days the focus is on building the first phase of the project: an $8.5-billion facility with a capacity of 125,000 bbls/d.

B.C. politicans have expressed enthusiasm for Kitimat Clean, but the federal Liberals — the ones with the power — haven’t. The project needs petroleum producers to sign off on it, too.

— Times Colonist