Oil refining is a risky business with extremely thin profit margins

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This is part of Fort McMoney, an interactive documentary game that lets you decide the future of the Alberta oil sands, and shape the city at its centre. Joining the fray – and sharing their views along the way – are Globe columnist Margaret Wente and business reporter Eric Reguly. Read the introductory columns written by Mr. Reguly and Ms. Wente.

This week they debate the question: Should Canada refine our own oil? Read Mr. Reguly's view.

It's an old argument. In spite of our vast natural resources, there's no future for Canada if all we are is hewers of wood and drawers of water. We have to move up the value chain. Why should we export our raw materials to foreigners and let them add the value, create the processing jobs, and reap the profits? Why not upgrade the stuff ourselves?

That's what NDP leader Thomas Mulcair has in mind. He wants to create a great nation-building project that would ship oil from the west to the east and process it domestically.

Nice idea, but oil refining is a risky business with extremely thin profit margins. That's why oil companies aren't building them here. Refineries also don't create very many jobs. Canada's oil refining industry employs a grand total of 19,000 people. Double or triple that number, and you won't even make a blip in employment.

But governments just can't resist. Despite a long, unhappy history with mega-projects, Alberta has jumped into the game with $5.8-billion to upgrade bitumen, which is being built by North West Upgrading.They've barely put the shovel in the ground, and already the project is facing a whopping $2.8-billion cost overrun. The project is expected to create all of 500 permanent jobs. Taxpayers are on the hook big time, with no guarantee that this is all going to work out.

The moral of the story: The only thing riskier than drilling for oil is backing dreamy mega-projects with public money.