by Jim Warren
There is a good chance climate activists smugly celebrating the collapse of conventional energy production within a generation are wildly mistaken. It is just as plausible that the time between today and ‘sunset’ for petroleum will run several decades beyond ‘net zero day’ in 2050. Actually, both predictions are suspect. History has shown people are rarely able to foresee conditions three or more decades into the future with any great precision.
Yet it seems sections of the investment community and the legacy news media assume our geopolitical future will be governed by the race to achieve net zero. They see the green transition as inevitable as death and taxes and presume oil will be sidelined accordingly.
A CBC news item that aired on March 16 boldly led with the prediction that the recently completed Trans Mountain pipeline is “likely the last new oil export pipeline the country will ever need.” The reporter was clearly caught up in a chicken and egg conundrum. He mused that due to declining production over the next decade we wouldn’t need any new pipelines. Here’s a thought, if increases in production do indeed taper off it will likely be because we can’t get enough pipelines built. Of course some CBC reporters and their fellow travellers in the climate alarmist camp never let logic get in the way of writing jubilant obituaries for the fossil fuel industries. One of the problems for conventional energy producers is that lots of people, including potential investors, have been drinking the same Kool-Aid as the media.
If the climate alarmists really have won the day, the window of opportunity is closing or has already closed on significant oil sands plant expansions, new pipelines to tidewater and any future boom in conventional oil production. After all, who wants to invest in infrastructure projects that will take a decade or more to be approved, could later be cancelled, or taxed into insolvency well before the end of their productive life spans?
No matter how long the window for viable investments remains open, one thing is clear—the Justin Trudeau government has already shortened it by a decade or more. During the eight year oil price depression that began in late 2014, new pipelines to tidewater were the one glimmer of hope for an improvement in the prices received by Canadian exporters. With more than 90,000 jobs lost in oil and gas production, manufacturing and construction by 2017, there were a lot of unemployed people in the producing provinces looking for a break. Northern Gateway, Energy East and Trans Mountain would of course allow Canadian producers to avoid the steep discounts they were subject to in the US for a significant proportion of their exports. The Trudeau Liberals cancelled any hope for that modestly brighter future.
Trans Mountain was the exception. It was the consolation prize to make up for the cancellations of Northern Gateway, Energy East and the Keystone XL. And yes, amazingly, the federal government finally got it built. It was touch and go. We were always just one bird nest away from another lengthy delay.
But wait, take heart. There is mounting evidence to suggest the hand wringing climate activists and cautious investors could have it all wrong. The goals of the green transition will probably take many more decades to achieve than they imagine.