Could Falling Oil Prices Stall Oil Sands?

Sat, 2008-11-22 13:36James Glave
James Glave's picture

Could Falling Oil Prices Stall Oil Sands?

Finally, some good news: The global economic slowdown might curb runaway carbon emissions in Northern Alberta’s oil sands—at least temporarily.

Oil dipped below $50 a barrel this week for the first time since May 2005, and according to a report in Thursday’s New York Times,

“some analysts predict oil could fall to $30 to 40 a barrel as the world economy worsens.”

That $30 is a magic number for many energy economists, who for years have argued that Alberta’s oil sands projects are only viable when petroleum is trading above it.

Taken together, the mining and processing megaprojects represent Canada’s leading source of the heat-trapping carbon emissions that cause global warming. According to Pembina Institute estimates, by year end the operations will have released around 46 million metric tonnes of equivalent carbon-dioxide into the atmosphere.

But there are already signs that the machinery may be slowing.

The Vancouver Sun notes that the ongoing market slide has placed a de facto “moratorium” on development in the oil sands.

Last week, Petro-Canada held off on deciding to proceed with a $24 million oil sands expansion project. The paper says the company

joins a growing list of key oilsands producers that have announced project delays in recent weeks, including Suncor, Canadian Natural Resources and Royal Dutch Shell.

Of course, even if oil does drop far enough to stand down some of Alberta’s upgraders, they will not likely stay idle for long. The current dip in oil prices is a reflection of the market collapse, nothing more – exploration companies haven’t suddenly discovered a vast new field of black gold off the coast of Texas. As the world’s easy-to-reach petroleum grows increasingly scarce, prices will rebound — and Suncor and friends will go back to merrily cooking dumptrucks full of Alberta shale under an enormous blue flame.

At least, until Canada puts a price on carbon – and implements a federal cap-and-trade program. Like, say, the one president-elect Obama is pursuing. (Hint hint.)

(David Dodge Photo courtesy Oil Sands Watch)

Comments

Absolutley! after all the only reason it was going full bore was because the high price of oil made it feasible.

They are not mining the tar sands because of the high price back in the summer. They were mining the tar sands years ago when the price was lower than today. We are mining the tar sand because we have exhausted all other easy sources of oil. That is, and you AGW supporters need to understand this, we are at peak oil now. According to the IEA we need an additional 20mb/day of new output in the next 15 years just to keep up with depletion and growing demand. That supply does not exist anywhere on the planet. The IEA claim depletion is around 6.9% on average for all major fields. It’s actually much worse for the super fields (North Sea more than 15% decline, and Cantarel is near 20% decline, the 3rd largest source for US oil).

You AGW supporters are going to get your CO2 reduction when the world goes into terminal decline in oil production.

Ask the auto builders. No demand, no production. We will see reduction of CO2 emission when consumers say no thanks. What’s going on with the price of carbon today? We’re not buying. We don’t drive around for visits or pleasure anymore. We stay home and put on a sweater. Wait ‘till we subject carbon to full cost pricing and see what happens. No free lunch? How about no free water and no free air for tar sands oil producers and oil producers generally? You oil guys arn’t free market.  You’re an insult to free market.

That’s the plan isn’t it.  The whole point of the hundreds of billions being poured into the economy by the US is to return the economy to growth status and return the free market to a healthy condition.  Which will create jobs, and increase demend.  Expect that to come about 09-10.   Once that recovery is in place there won’t be a country anywhere that will impose something else to curb economic growth, so kiss your carbon costs goodbye.

It’s also very interesting that you leftists/socialists/anti-capitalists/econuts have to resort to insults aimed at anyone who disagrees with you.  Why is it that you cannot have a rational discussion?

JR Wakefield said: “that you leftists/socialist/anti-capitalists/econuts have to resort to insults aimed at anyone who disagrees with them”. Wow is that not an insult to every thinking person who reads this blog? You people are insulting science and scientists everytime you churn out your pathetic repeats of utter nonsense which have been shown to be wrong over and over again.

You should realize that repeating lies over and over again does not make them true, especially when corresponding with an intelligent audience.

Go back to your other favourite websites, they encourage that sort of behaviour.

When are you going to show me one item of skepticism that I’m wrong about?  Prove your point with evidence.

Oops, nothing to report.

If you had evidence you would present it, instead you reverted to the old tactic. Insult your opponent. You should realize by now that such tactics do not work on me, and in fact backfires.  That means you are just supporting my premise by this post.

No, I will not go through your noxious posts and identify everything that is wrong in them. I have better things to do with my time. As I have said before, the intelligent people who frequent this blog know exactly what I am referring to.

http://icecap.us/images/uploads/Time_to_review_the_Emissions_Trading_Scheme.pdf A statement by Viv Forbes, Chairman of the Carbon Sense Coalition. 20 November 2008 For Immediate Release. The Carbon Sense Coalition today called on the Queensland Government to follow the lead of New Zealand and initiate a complete review of the science and the cost-benefits of the proposals to levy a new tax on coal and petrol usage. ‘”All over the world, three factors are triggering a revolt against the lemming-like rush led by the Anglo-Saxons to commit carbon suicide via Emissions Trading Schemes.” “Firstly, the science behind the scare forecasts from IPCC computer models has been shown to be deficient by a growing band of independent scientists. “Secondly, the globe itself is sending a warning as daily reports of unseasonal frosts, snow and ice make a mockery of the global warming hysteria. We certainly have climate change, but it is natural global cooling, not man-made global warming. “Thirdly, the world financial collapse has forced alert politicians to focus on the immediate concerns of voters – real jobs, and the security of supply for food and power. “The revolt against new carbon rationing and taxes affecting New Zealand now encompasses much of the world including India, China, Indonesia, Brazil, Poland, Italy, Germany and the whole Ex-Soviet bloc. There is naturally no support for carbon rationing from the OPEC world, and falling support from Canada. There is also scant chance that the US Congress and Senate will embrace any expensive new Kyoto pact. “Soon the only true believers will be the blinkered political and Green zealots in UK and Australia, with cynical support from nuclear-powered France. “Queensland has more to lose from carbon taxes and rationing than any other place in the world. And there has been no unbiased assessment of the costs and benefits of such moves. Any government honestly representing the real long term interests of the carbon capital will lead the push to review where we are headed, why and at what cost?”

As we all know, gas prices had been going down, but have risen again to over $2 per gallon. The gas prices are again spiraling upwards, people’s celebration is over. We may expect that gas prices will rise of up to $4 per gallon  on summer. OPEC had responded to the drop in demand for gas by cutting production, which is now beginning to raise the price.  Looks like even somewhat economical models are going to require online payday loans just for the trip to Mom’s house again.