Those of us who live and work in Alberta know what the oil and natural gas industry means to the well-being of the province. Fossil fuels have provided for a good life for all.
So news that Ottawa has approved two of the three pipelines the industry has proposed is heartening.
The industry has suffered tremendously ever since Saudi Arabia launched its attempt to win back market share within OPEC, driving down prices for crude oil in the process.
When oil was trading at $105 per barrel, the industry was churning out money as quickly as it was producing oil. Everyone benefitted. Industry workers, Native bands, the service industry. There was work for everyone and good money to be made.
Governments benefitted as well. The oilsands produced billions and billions of dollars in tax revenue for Alberta and the federal government.
It’s a different story today. Hundreds of thousands of Albertans are out of work, businesses are dropping like flies and governments are racking up debt in the billions of dollars as they attempt to adjust to the losses.
In 2016, the country’s oil extraction industry is expected to post pre-tax losses in excess of $3 billion, according to the COnference Board of Canada. Losses were $7 billion in 2015.
A number of forecasts has the province and the industry turning the corner in 2017. Economists see the price of oil climbing to $65 a barrel by 2020. They forecast modest GDP growth in the New Year and some true optimists expect the province to lead the country in growth.
It’s doubtful oil prices will increase as much as expected. Countries have stockpiled cheap oil since the OPEC feud began and production remains high. Oil prices, as such, will remain depressed for years to come.
New discoveries of shale oil deposits in Texas, too, will serve to keep prices down for years, if not decades to come. Oil is not likely to climb above $50 a barrel for at least five years.
That is why the pipelines are so important to the industry and, by extension, to all Canadians. The lack of sufficient pipeline volume means that our oil sells at a discount — as much as $20 a barrel, because the cost of moving it to market (rail cars) is expensive.
Opponents of the oilsands development know that full well. That is why the protests have focused on pipeline building and tanker bans. If you can cut off access to markets or make it so expensive to ship oil, then you can kill off the industry.
That Ottawa approved two pipelines is good, but the more are needed. The Northern Gateway would have moved oilsands crude to prime Asian markets. It is still needed.
One hope is that once DOnald Trump is inaugurated president in the New Year, approval of the Keystone pipeline will be secured and the oilsands can continue to be developed.
The danger, of course, is that the government-imposed emission caps will stymie development and hobble the industry.
In other words, this is still a political battle that will require regime changes in Alberta and Ottawa. Albertans have a tough road ahead, but the socialist NDP government of Rachel Notley will be defeated and with some luck the Liberals too will go down to defeat as both levels of government rack up billions in debt with nothing to show for their spending.