Quote:
Originally Posted by Alex Mackinnon
As far as production rates go, we already have a glut of available oil production which currently is outpacing our transportation abilities, driving the price of bitumen down locally and in the interior of the US.
|
Yeah, we aren't very bright expanding production without secured markets.
The Chinese are investing because they want to create a glut to drive prices down.
Quote:
Originally Posted by Alex Mackinnon
We also have an already very abundant resource, the oil sands has a several trillion barrel resource reserve which is several centuries at even the most optimistic extraction rates.
|
Only around 170 billion is exactable at current prices. Prices won't go much higher because the world economy tends to collapse at higher prices lessening the demand for oil.
Quote:
Originally Posted by Alex Mackinnon
Limiting the rate of transportation to what currently exists right now will obsolete any expansion of the current oil sands facilities. This is why it's such a hot topic, if you can't get enough of it out of Alberta then the vast bulk of the resource is pretty useless, and for centuries to come will be worth more as oily dirt than mined bitumen.
|
Too much reliance on any one industry is just a very bad idea economically. Even now it is killing other industries. Why on earth would we want to become even more of a petro state. Typically, things don't end well for petro states. There is also no correlation between petroleum extraction and economic success.
Quote:
Originally Posted by Alex Mackinnon
While you could continually extract oil at current rates for a very long period of time, money has a time value to it. A dollar today is worth more than a dollar tomorrow, the reinvestment of oil sands money should be the long term benefit associated with the resource, not just the employment coming from the extraction.
|
It would be an awesome idea to sock the money away for the future but that just isn't going to happen under a Harper government. They are using the oil revenue to cut taxes instead. It is pretty pathetic that both Alberta and Canada are running deficits as a result. When Alberta tried to raise royalty rates, the industry funding the Wildrose Party so the PC's backed down. They won't try that again soon.
Even if there was the political will, the cost structure of the oil sands likely makes it difficult for governments to skip off more money. When oil cost $3 a barrel to extract, everyone can take there bit. When it costs $60 and up, much more difficult.
Quote:
Originally Posted by Alex Mackinnon
Back on to the natural gas aspect, since prices of gas are so low, production prices in the oil patch are also lower than they would be otherwise, making it a relatively good time to cash in.
|
Not for much longer. The industry is starting to smarten up and cutting back on drilling. I would expect the really low prices won't last much longer at all.
I admire your optimism on this, but if you really take a look at the numbers and the political situation, none of this is really going to end well for BC and Canada.