America is banking on a lot more Canadian bitumen exports to supply it with oil in the future. Already the single largest source of the US’s imported oil, the Alberta tar sands’ supply could soon comprise as much as almost a third of America’s total oil imports—apart from the fact that it’s far from clear whether or not the rest of the Canadian economy could afford the consequences.

Whether Canadians like it or not, their dollar has become a petro-currency. Currently trading near parity against the greenback, it wasn’t that long ago that the Canadian dollar was trading as low as 61 cents against its bigger cousin. But of course back then oil was trading at close to $20 per barrel, and at that price Alberta’s tar sands were a marginal energy resource.

At $80 per barrel, the oil industry is pumping one and a half million barrels per day, and the once-marginal Canadian resource has suddenly become second only to Saudi Arabia in proven reserves. At triple-digit prices, the tar sands will produce three to four million barrels per day. In turn, the tandem of soaring oil prices and soaring oil production will propel the Canadian dollar to heights it’s never seen.

A soaring currency may bring long-lost NHL franchises back to Winnipeg, Quebec City and maybe even Hamilton from Dixie and the desert, but that’s about all the Canadian economy can expect from its major trading partner. Other than Canadian bitumen exports, American consumers won’t be buying much from their northern neighbor.

That won’t pose much of a problem for Alberta, whose exports are almost all energy-based. Unfortunately the same can’t be said for the rest of the Canadian economy: shipments to the US market account for three quarters of the country’s total exports. Or at least they do—for now.

How long can Ontario remain the single largest producer of motor vehicles in North America if the Canadian dollar is trading at a double-digit premium to the greenback? For that matter, what segments of the Canadian manufacturing sector are likely to survive that exchange rate in the first place?

Will the morphing of the Canadian dollar into a petro-currency be Alberta’s revenge for the still-loathed National Energy Program? Back in the early 1980’s, Ottawa transferred billions of dollars of petro-wealth from Alberta to subsidize manufacturing in Ontario and Quebec by forcing domestic oil prices below world levels. Are the tables about to turn?

Will the price for more mega-projects in the tar sands spell the end of the manufacturing sector in Ontario and Quebec? If so, what will the political feedback be from a region of the country that still controls the majority of seats in Canada’s Parliament?

As more and more Canadian auto and steel plants are closed in the wake of a soaring currency, America may have to look elsewhere for its future oil supply.

  • Real Albertan

    Something to chew on….

  • Cyberclark

    The National Energy program harm was debunked years ago! At the time interest rates were allowed to go up to above 25%. At the same time the price of oil dropped to an equivalent of 20 dollars per barrel today's money.

    House mortgages were above 25%. Companies and individuals went bankrupt – not that different than right now.

    The NEP was agreed by Laugheed Premier of Alberta! The design was to increase Canadian ownerships of the resources which, it did. Canadian ownerships went from 15% to close to 30%/

    The Conservatives managed to spin off all the bad business breaks as being the product of the NEP.

    Two other Points:
    The Idea that this was a plot to rip of Alberta by the east is BS!
    There are still many of our backwoods Conservatives who believe as you do.

  • Rojelio

    Jeff, when do Americans see higher prices at the pump? I thought that you had mentioned somewhere that the tar sands translated into $7/gallon gasoline. However, right now we see approximately $3/gallon, quite a spread. And that we'd be looking at triple digit oil prices towards the end of 2010 (or was it 2011?).

    I would be very interested in hearing some of your revised forecasts, perhaps in an upcoming post? There's also alot of talk about natural gas as potential transition from fossil fuel to renewables. It certainly seems like some of the big oil companies are pursuing this. I was wondering if you'd comment on this sometime soon. Thanks

  • Nickonchuks

    What's your take on nuclear power Jeff? Based on what I've read I'm in support but interested to see a post from you on this topic.

  • JB

    Dear Jeff,

    Thank you for your most interesting comment.

    You are gradually finding out that the end of Canada is much closer than most people think… How long do you think Ontario will tolerate a yearly deficit of $25 billion? Its fiscal base is in free fall because its manufacturing sector is going down the drain; driven by the crisis and the “oil export turbocharged” $CAN exchange rate with the US? Ontario is now getting “transfer payments” from the Canadian Federal Government and has a higher unemployment rate than Quebec!

    When the Liberals “take over” sometime during the coming year with the “political help” of Ontario, a new National Energy Program is very likely to be “nationally proposed”. This will prompt Alberta to separate from Canada and to join the US as a new state. The government of Alberta has already said it would do so and that Quebec's separatists were “kids” compared to what will happen in Alberta if a new NAE is rammed up by a “centrally driven” Federal Government.

    Alberta leaving the Canadian federation will also be the end of Canada, period…

    The clock is ticking and a “New North American Order” is very likley about to be implemented.


  • Dhouston

    There are already rumours at Toyota and Honda that they will shift more production of their cars to the US. They only advantage now is the lower health care costs here and that may not be enough to justify production in canada when over 90 percent of the cars go to the US anyway. Lots of talk that our manufacturers can get leaner and buy more technology with the higher dollar. But lets face it those plants were here originally to benefit from our historically low Canadian dollar. Everything else was secondary.

  • Revelations

    Without a cent more increase in the $CDN Ontario is heading for a major clamity. When you implement the FIT program paying more than $.80 /Kw-hr for power by solar/wind while you cancel a major .10cent/kw-hr gas plant you know the crazies are in control. Small business will be crushed, as will the Ontario taxpayer. All this driven by the greenies in their hatred of oil/gas, because of fear of CO2 causing (non-existant) global warming. Everyone can see what happened to Spain – 2 jobs lost for every gov't sponsered green job created.

    When Quebec finds out it can no longer support its $5/day daycare program courtesy of Albertans dirty oil, the same energy that they have the audacity to criticize in front of an international audience (Copenhagen), the end will be at hand for sure.

  • isaac

    Even gas is too expensive and conventional production is flat or in decline – Screw gas/oil, Ontario should be burning coal to meet immediate/peak electricity demand!

    Energy illiterate greenies will be the death of the developed world!

  • isaac

    Even gas is too expensive and conventional production is flat or in decline – Screw gas/oil, Ontario should be burning coal to meet immediate/peak electricity demand!

    Energy illiterate greenies will be the death of the developed world!

  • isaac

    sorry for the double post, please delete.

  • Carbonman

    No patriotic Canadians ought to use the perjorative “tar sands” when they are refering to the Alberta oil sands. Tar sands is code for a greenie CO2 hating warmist pinko.

  • Revelations

    A Nice Revelation………..

    Unsustainable cow manure

    Sustainable, affordable, eco-friendly renewable energy, my eye

    Paul Driessen, 21 September 2010

    Seek a sustainable future! Wind, solar and biofuels will ensure an eco-friendly, climate-protecting, planetsaving,

    sustainable inheritance for our children. Or so we are told by activists and politicians intent on

    enacting new renewable energy standards, mandates and subsidies during a lame duck session. It may be

    useful to address some basic issues, before going further down the road to Renewable Utopia.

    First, when exactly is something not sustainable? When known deposits (proven reserves) may be

    depleted in ten years? 50? 100? What if looming depletion results from government policies that forbid

    access to lands that might contain new deposits – as with US onshore and offshore prospects for oil, gas,

    coal, uranium, rare earth minerals and other vital resources?

    Rising prices, new theories about mineral formation, and improved discovery and extraction technologies

    and techniques typically expand energy and mineral reserves – postponing depletion by years or decades,

    as in the case of oil and natural gas. But legislation, regulation, taxation and litigation prevent these

    processes from working properly, hasten depletion, and make “sustainability” an even more politicized,

    manipulated and meaningless concept.

    Second, should the quest for mandated “sustainable” technologies be based on real, immediate threats –

    or will imaginary or exaggerated crises suffice? Dangerous manmade global cooling morphed into

    dangerous manmade global warming, then into “global climate disruption” – driven by computer models

    and disaster scenarios, doctored temperature data, manipulated peer reviews, and bogus claims about

    melting glaciers and rising sea levels. Shouldn’t policies that replace reliable, affordable energy with

    expensive, intermittent, land-intensive, subsidized sources be based on solid, replicable science?

    Third, shouldn’t inconvenient sustainability issues be resolved before we proceed any further, by applying

    the same guidelines to renewable energy as courts, regulators and eco-activists apply to petroleum?

    Most oil, gas, coal and uranium operations impact limited acreage for limited times – and affected areas

    must be restored to natural conditions when production ends. Effects on air and water quality, habitats and

    protected species are addressed through regulations, lease restrictions and fines. The operations generate

    vast amounts of affordable, reliable energy from relatively small tracts of land, and substantial revenues.

    Wind turbines generate small amounts of expensive, unreliable electricity from gargantuan installations

    on thousands of acres. Turbines and their associated transmission lines dominate scenic vistas, disrupt

    habitats and migratory routes, affect water drainage patterns, impede crop dusting and other activities, and

    kill bats, raptors and other birds, including endangered species that would bring major fines if the

    corporate killers were oil or mining companies. And yet, wind operators receive exemptions from

    environmental review, biodiversity and endangered species laws that traditional energy companies must

    follow – on the ground that such rules would raise costs and delay construction of “eco-friendly” projects.

    Kentucky’s Cardinal coal mine alone produces 75% of the Btu energy generated by all the wind turbines

    and solar panels in the USA, Power Hungry author Robert Bryce calculates. Unspoiled vistas, rural and

    maritime tranquility, and bald eagles will all be endangered if 20% wind power mandates are enacted.

    The Palo Verde Nuclear Power Station near Phoenix generates nearly 900 times more electricity than

    Nevada’s Nellis Air Force Base photovoltaic panels, on less land, for 1/15 the cost per kWh – and does it

    90% of the time, versus 30% of the time for the Nellis array. Generating Palo Verde’s electrical output via

    Nellis technology would require solar arrays across an area ten times larger than Washington, DC.

    Building enough photovoltaic arrays to power Los Angeles would mean blanketing thousands of square

    miles of desert habitat. Once built, solar and wind systems will be there just this side of forever, since

    there will be no energy production if we let them decay, after shutting down whatever hydrocarbon

    operations aren’t needed to fuel backup generators that keep wind and solar facilities operational.

    Wind and solar power also mean there is a sudden demand for tons of rare earth elements that weren’t

    terribly important a decade ago. They exist in very low concentrations, require mining and milling

    massive amounts of rock and ore to get the needed minerals, and thus impose huge ecological impacts.

    If mountaintop removal to extract high quality coal at reduced risk to miners is unacceptable and

    unsustainable – how is it eco-friendly and sustainable to clear-cut mountain vistas for wind turbines?

    Blanket thousands of square miles with habitat-suffocating solar panels? Or remove mountains of rock to

    mine low-grade rare earth mineral deposits for solar panel films, hybrid batteries and turbine magnets?

    Since any undiscovered US rare earth deposits are likely locked up in wilderness and other restricted land

    use areas, virtually no exploration or development will take place here. We will thus be dependent on

    foreign suppliers, like China, which are using them in their own manufacturing operations – and selling

    us finished wind turbines, solar panels and hybrid car batteries. The United States will thus be dependent

    on foreign suppliers for renewable energy, just as we rely on foreign countries for oil and uranium.

    To claim any of this is ecologically or economically sustainable strains credulity.

    Green jobs will mostly be overseas, subsidized by US tax and energy dollars – other people’s money

    (OPM). Indeed, Americans have already spent over $20 billion in stimulus money on “green” energy

    projects. However, 80% of the funding for some of them went to China, India, South Korea and Spain,

    and three-fourth of the turbines for eleven US wind projects were made overseas. This is intolerable,

    indefensible and unsustainable. But it gets worse.

    Denver’s Nature and Science Museum used $720,000 in stimulus money to install photovoltaic panels

    and reduce its electricity bills by 20 percent. The panels may last 25 years, whereas it will take 110 years

    to save enough on those bills to pay for the panels – and by then four more sets of panels will be needed.

    As to biofuels, the US Navy recently waxed ecstatic over its success with camellia-based eco-fuel in

    fighter jets. But the PC biofuel costs $67.50 per gallon, versus $5.00 per gallon for commercial jet fuel.

    To meet the 36-billion-gallons-a-year-by-2022 federal ethanol diktat, we would have to grow corn on

    cropland and wildlife habitat the size of Georgia, to get 15 billion gallons of corn-based ethanol – plus

    switchgrass on farmlands and habitats the size of South Carolina, to produce 21 billion gallons of

    “advanced biofuel.” By contrast, we could produce 670 billion gallons of oil from frozen tundra equal to

    1/20 of Washington, DC, if the Arctic National Wildlife Refuge weren’t off limits.

    OPM-subsidized ethanol also means a few corn growers and ethanol refiners make hefty profits. But

    chicken and beef producers, manufacturers that need corn syrup, and families of all stripes get pounded

    by soaring costs, to generate a fuel that gets one-third less mileage per tank than gasoline.

    Hydrocarbons fueled the most amazing and sustained progress in human history. Rejecting further

    progress – in the name of sustainability or climate protection – requires solid evidence that we face

    catastrophes if we don’t switch to “sustainable” alternatives. Computer-generated disaster scenarios and

    bald assertions by Al Gore, Harry Reid, John Holdren and President Obama just don’t make the grade.

    We need to improve energy efficiency and conserve resources. Science and technology will continue the

    great strides we have made in that regard. Politically motivated mandates will impose huge costs for few

    benefits. Sustainability claims will simply redistribute smaller shares of a shrinking economic pie.

    “Renewable” energy subsidies may sustain the jobs of lobbyists, activists, politicians, bureaucrats and

    politically connected companies. But they will kill millions of other people’s jobs.

    Let’s be sure to remind our elected officials of this along their campaign trails – and on November 2.


    Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow and Congress of

    Racial Equality, and author of Eco-Imperialism: Green power – Black death

  • Ted

    perhaps industrial production in Central Canada should produce those products needed by the Alberta construction boom.Or better yet move to where the jobs are and share the blessings of producing what it is you are best at producing…

  • Ted

    agreed – too bad Mr . Rubins book is tainted in that way

  • Gab

    If there is any indication of Ontario and Quebec exerting political pressure to quell Alberta's growth,then my prediction of a vote for separation will be realized. It will be an easy sell to Albertans specifically and western Canada, that any movement to redirect the future of the oil sands will result in the positive vote i expected since the N.E.P.
    Ontario and Quebec have had their influence over western Canada since confederation. But, I suspect that the generation in charge, and particularly about to take charge, have no Nationalistic fervor for Canada's survival when they see a political expediency to reduce their economic standing and their future. To serve as Eastern Canada's whipping boy is not going to happen anymore.
    The oil sands can not be stopped now. The money is not Toronto money. It is New York, London, Tokyo, Hong Kong, money. Ontario and Quebec`s power over the West is gone.
    I would pay for a front row seat to watch the government of Canada try to extinguish Alberta`s financial might. Ontario and Quebec should look south to their bordering states to see the future that lies before them. The manipulation of the loonie was a pathetic trick by the Liberal party to buy their votes. The economic reality was that Canada`s wealth diminished as Chretien and Martin fattened Ontario and Quebec. With the oil sands play being engaged for the next 10 – 40 years, the wealth of Ontario and Quebec should diminish substantially.
    Bring on the N.E.P. and lets see where the fault lines of Canada really are.
    signed: satisfied Westerner

  • Richard

    Carbonman, who are you to say who is and who isn't a “Patriotic Canadian?” I'd like my grandchildren and their grandchildren to inherit this country as a greener and more pleasant land than the way it is heading right now.

    As for calling the area around Fort McMurray the Tar Sands, I always have and always will. From the 1930s, when the Tar Sands were first projected for economic development, they have been called the Tar Sands. Since the 1960s they have been referred to equally as the Tar Sands and the Oil Sands. More recently, “Oil Sands” has become the greenwashed term for Tar Sands.

    Don't believe me? Personally I don't give a rat's you know what whether you believe me or not. Janet Annesley, VP for Communications of the The Canadian Association of Petroleum Producers (CAPP) has personally labelled me as a terrorist (Google: Janet Annesley Unabomber) for drawing attention to some of their members' funding of the Tea Party. CAPP, and also the Alberta Enterprise Institute, were extremely uneasy about that revelation.

    However, being reasonably intelligent and always willing to give credit where it's due, here's a link I found on the CAPP website, accurately detailing the terms Tar Sands and Oil Sands.…