I recently discovered that Canada holds the world's second-largest oil reserves, after Saudi Arabia. Also Canada is the largest single supplier of oil and refined products to the U.S., with over a million barrels per day coming from the oil sands of Alberta.
This region of Alberta is a freak geologic formation created by the remnants of marine life left behind by an ancient inland sea that once covered much of Alberta. In 1719, a Cree Indian presented a sample of bitumen to a white explorer with the Hudson Bay Company. But for the longest time, the tar-like goo that pooled along the banks of the Athabasca River didn't seem good for much. The Cree and Chipewyan used it to fill smudge pots and ward off mosquitoes, or warmed it into a gum to waterproof their birch bark canoes. But the engineers and fortune seekers who played with it — boiling, spinning and treating it with chemicals — succeeded mostly in blowing themselves up or going bankrupt, or both.
The heavy crude oil or crude bitumen extracted from these deposits is a sticky, solid or semisolid form of oil that does not easily flow at normal temperatures and pressures, making it difficult and expensive to process into gasoline, diesel fuel, and other products. Despite the difficulty and cost, oil sands are now being mined on a vast scale to extract the oil, which is then converted into synthetic oil by oil upgraders, or refined directly into petroleum products by specialized refineries.
So why are Canadians paying so much for oil, even more than our US counterparts?
Taxes, that is what is putting the price up. Something like 34% of the cost of gas at the pump in Canada are taxes.