Is Canada's Oil More Ethical than Saudi Arabia's?

Nov. 6, 2011— -- Canada's government and oil industry want Americans to stop thinking of heavy Alberta crude as "dirty oil" and start thinking of it as "ethical oil."

Canadian diplomats have been making the rounds with US policymakers while a lobby group for the industry recently put out a television commercial comparing Canada's record on women's rights with that of Saudi Arabia with the tag line: "Ethical oil from Canada's oil sands. A choice we have to make."

It's an intriguing idea that oil can be ethical depending on where it's extracted. The effort to rebrand the Alberta oil sands comes against the backdrop of increasing opposition from US and Canadian environmentalists and others to the Keystone XL pipeline. The $13 billion project will carry the viscous crude from northeastern Alberta, across several Midwestern states, to refineries in Texas and the Gulf Coast. That is, if the Obama administration approves the transborder development.

RELATED: World's cheapest gas: Top 5 countries "We're not being holier-than-thou about it, but we point out that Canada is a democracy with all the associated rights and privileges ... [and] the human rights benefits that flow from that," says Gary Doer, Canada's ambassador to the United States, in a telephone interview. "President Obama, when he was a candidate, promised to wean the US off Middle Eastern oil and we are just pointing out the obvious."

But can oil be ethical, wherever it comes from?

The notion of ethical oil was popularized this past summer by Canadian Conservative pundit and author Ezra Levant in his book "Ethical Oil: The Case for Canada's Oil Sands." Using the parallel with conflict diamonds, Mr. Levant has dubbed oil from the Middle East, Africa, and Venezuela "conflict oil." He argues that as a Western democracy, Canada has a better track record in areas such as human rights, labor relations, and even environmental regulations, therefore the oil is more ethical.

"We will need oil in the foreseeable future and until that happy day comes when we don't, the choice is between conflict oil and ethical oil," Levant says in an interview here in Toronto.

For years, some socially responsible investment firms have invested in specific oil companies, arguing that they operate with higher-than-average industry standards. Boston-based Trillium Asset Management, for example, looks for companies with environment and safety records that are at least above industry average and with respectful relationships with neighboring communities.

"BP was the only major oil company we had been holding in our portfolio because we felt they had more forward-thinking policies," says Shelley Alpern, head of Trillium's environmental, social, governance research and advocacy team. But the firm sold its shares after BP's huge Gulf spill last year. Now Trillium holds only mid-size oil and gas companies and regularly encourages them to implement best practices.

"There are ways to make oil production more ethical, but it will never be an ethical industry," Ms. Alpern says. "It's an inherently dirty way of making money."