November 06, 2017

“End of Oil” is a relic of the past

It really wasn’t all that long ago that energy industry analysis and observers stopped heralding the impending “end of oil.” 

A photo of two abandoned and rusted out gasoline pumps along with the headline “The end of The Oil Age” graced The October 2003 issue of The Economist. A year later, American journalist Paul Roberts published “The End of Oil,” a book which predicted the world would exhaust oil supplies inside of 30 years.

There is now mounting evidence to suggest global oil demand is going nowhere but up and it may well be decades before we actually start using less of it. A year ago, the International Energy Agency adjusted its forecast to predict oil demand won’t peak before 2040. 

According to the International Energy Agency - despite the myriad technological and geopolitical factors working against it - oil demand will hit 103.5 million barrels a day by 2040, up 12% from 2015 levels. 

This poses a significant question about our shared economic future that merits serious and immediate consideration:

Are we stuck in the past and believing there is not a future in oil and gas? Or are we listening to the experts and positioning our country for a future where the world needs more fossil fuels? And if the world wants and needs our oil, is Canada willing to provide it?

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The answer should be clear. We are home to the third-largest recoverable oil reserves on the planet, behind only Saudi Arabia and Venezuela. Our environmental laws and regulations are the toughest on the planet. Oil and gas produced the Canadian way is the right way, and energy development helps pay for public education, health care, infrastructure, and a range of other social programs we rely on every day. 

If we cede this development capacity to our competitors, not only will we miss out on sorely needed jobs and tax revenue, we will, by omission, help enrich corrupt and oppressive oil-producing regimes all over the world.

So are we going to continue believing in theories from more than a decade ago, or are we going to build on what experts are saying today? Canada has the opportunity to build the next generation of energy infrastructure, and that includes multi-billion dollar projects that will create jobs for generations. These projects, like Pacific Northwest LNG, the Trans Mountain Pipeline, are funded entirely by the private sector with capital that could just move to other countries. We need to keep Canada open and competitive, but more than anything we’ve got to make sure we as a country want to position ourselves towards the future. 

Canadian_oil_1.jpgUnited States isn’t about to let this opportunity elude them. Last week, American energy exports reached an all-time high of 2.13 million barrels a day, up from only 500,000 barrels a day in January. This aggressive export ramp up has been made possible by a concerted and aggressive energy development policies adopted at the highest levels of government.

Leaving future generations of Canadians with a disadvantage to our southern neighbours is a legacy we should aggressively avoid. We can start that today. 

Let’s embrace the future. If the world needs more oil and gas, let’s make sure Canada’s market share doesn’t shrink while countries like the United States, Venezuala, Saudi Arabia and Nigeria attract capital that otherwise could have gone to Canada.  

All we’re really missing is the will to do it.