Whether the Tar Sands are worth it or not is a moot point. . . It's a lot further along then you realize.
I happen to know people who live and work in Fort Mac, and I'm plenty conversant with how far along it is, thanks. However, mining projects are known to fail, or to have false starts, no matter how many people have invested in them or how far along they get or how much propaganda is produced by the investors. If the tar sands become nonviable, the investment will shift elsewhere. That's ultimately how these things work. (EDIT: Not that I think absolute failure is likely. Oil is being shipped and money being made from the tar sands right now, and at some level that will continue to be true; the levels will vary along with the economy. But I can pretty much promise you that anyone who is telling you that the tar sands will produce "energy independence" or will eclipse mideast oil in the next decade is bullshitting you.)
The simple fact of the matter is that the economic viability of tar sands extraction is fragile in a way that traditional drilling and reserves are not. The smart bet is therefore that the traditional drilling and reserves will remain more important for a long time to come, and that tar sands are never likely to be the world's leading source of energy in any form.
Oil isn't the reasoning though for Palestine and Israel's conflict.
It is however the biggest reason that it's strategically important. Without Mid-East oil, Israel's right wing would not have a major superpower backing its most radical impulses come what may; the US does this because it believes Israel to be a crucial ally in a crucial region. (I don't think it gets much for its investment, but that's the logic.)
Those factors shape the resolution of colonial conflicts, and that's what Israel is (understanding as one might be about the motivations behind it). Without that unquestioning external backing, the whole project of political Zionism would quickly find its options narrowing, muc as happened in South Africa. With
that backing, it has little motivation to come to terms. That's why the conflict is likely to drag out... but it doesn't make the outcomes rosy for Israel, it just prolongs and worsens the divisions already created both in the Israeli populace and in world Judaism by the brutal spectacle of occupation, and increases the likelihood of one-state-democracy campaigning by the Palestinians that will be much harder to oppose credibly.
Of course in a cynical mood, one might say that no "two-state" reconciliation was ever really possible -- that both sides just used it as a transitional demand while allowing their so-called "extremists" take the blame for pushing the long-term agenda ("oh, those crazy settlers, what will we ever do with them" / "oh, those nasty suicide bombers, we really just want peace"). That's highly speculative, though.
(EDIT: At any rate, there is in fact much less to fear from "extremism" of governments in the region now than there historically has been. Iran is well past the peak of the extremes of the Islamic Revolution. Iraq had declined into senescence under Saddam, and since the disastrous invasion is now basically an Iranian client. Saudi Arabia, for all its support of Wahhabism, has never in the past fifty years been more concerned with anything than with oil profits. Egypt's stance of accommodation toward Israel remains intact, Muslim Brotherhood government or not. Israel is no longer even a unilateral nuclear threat in the region as it was for several decades before the early 21st century. There is no government in the region that's eager to renew the 1948 war -- if anything Iran is a bigger worry for most of the Arab world -- and other governments feel much less threatened by Israel ever since Hezbollah demonstrated in the recent "July War" that the Merkava tank could be stopped with the right tactics. Israel's real problem now is the blind alley its own intransigence has led it to.)
(Further edited to remove overuse of the word "ultimately.")