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Thursday, November 22, 2018

SINGLING OTTAWA OUT FOR THE COLLAPSE IN WESTERN CANADA'S OIL INDUSTRY IS SIMPLY POLITICS..

It's no secret, was never treated as a secret, Trudeau came in understanding climate science and what stands before us, if we don't deal with the human causes of climate change.  He openly campaigned on it.  Is he on the record saying we need to "manage" the wind down of that industry? Yes.  He is also on the record saying that no country would sit on a resource and not sell it when there a market for it.


His is also not the only agenda at work.  That is true of Canada on our own, as well as agendas that are being pushed around the world.   Many by people with more clout over oil than the Canadian government.

OPEC has been seeing their interests pressured on two fronts.

1. Climate change and the work going on to reduce the dependency on carbon based fuels.

2. Massive new reservoirs located around North America  particularly in the United States.

They increased production to secured their market share, while at the same time targeting new production including North American suppliers whose operations are far more expensive to build and maintain.

There is fracking which cracks the shale and pumping water or steam to break the oil out of the shale.

In the case of Alberta's oil sands, massive mining operations feed massive plants to separate the oil from the sand and upgrade it so it can be piped out and refined.

Compare the processes in North America to the OPEC countries.  We saw at the end of Desert Storm, G.H.W Bush's Gulf War, to liberate Kuwait from Iraq, the wells in Kuwait spewing oil and fire under pressure.  These areas have to hold their oil in.  A production increase basically requires simply opening the valves a little wider.  This is clearly an oversimplification,  but the cost difference is impressive.

Photo credit Per Anders-Peterson (Getty Images)

The Americans have a massive oil industry again, mostly in shale formations.  It does require fracking, but is, for the most part refiner ready.  It doesn't require a plant in front of the refinery, to upgrade it, before it can be refined.

It is not false, to recognize that Trudeau is interested in bringing down Canada's CO2 emissions.   It is false to say he wants to shut down these industries before there is alternatives in place to operate our economy.  There are outside pressures over which there is little control.  That being said, the pipeline issue would put us back in a competitive position and for sure the lack of even mentioning these issues in the fiscal update is very unhelpful.  However, if the middle eastern OPEC members, decide the oil market is dying and want to rule the market, cashing in, until the end, there is little we can do to compete.

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