Are Prime Minister Harper’s dreams of Canada becoming an energy superpower going up in smoke? In the last decade, his Conservative government has done everything but roll out the red carpet for the energy sector. Whether it’s multi-million dollar advertising campaigns in the United States, gold-plated junkets to foreign energy markets, or muzzling opposition from domestic environmentalists, never before have we seen Ottawa shill so unabashedly for a single industry.

Such unbridled support is more than a little ironic. In theory, Harper’s brand of free market conservatism should have him recoiling at the thought of a government trying to pick winners. Either that or the rest of us just missed the chapter in the Wealth of Nations that made an exception for Big Oil. Ideology, I suppose, is great until it becomes inconvenient.

Unfortunately for Canadians, it’s becoming clear that despite the Prime Minister’s best attempts at economic intervention, their government is playing a losing hand. While everyone from poker players to fund managers can tell you that sometimes you need to cut bait on a bad position that’s not what’s happening here. Even as the rest of the world is realizing that it must wean itself off fossil fuels, the Harper government wants to double down on the resource.

Canadians have been force-fed the idea that the energy sector is the engine of economic growth for the nation. But take a look around. Whether it’s British Colombia’s hopes for Liquefied Natural Gas, Alberta’s for the oil sands or the country’s struggling coal mines, the news is hardly encouraging.

A newly minted gas accord between Russia and China has all but taken the wheels off B.C.’s plans to become a major LNG exporter. Natural gas from eastern Siberia will be supplied at a cost that’s 30 to 40 percent less than what Asia currently pays for LNG shipments.

Canadian coal producers are facing a similar story. As China continues to choke on its own emissions, the country is starting to pump the brakes on what was once considered an insatiable appetite for coal-fired power. The resulting plunge in coal prices has turned into hard times for global coal miners. Canadian mining giant Teck Resources, for instance, recently shelved plans to revive its Quintette coal mine, while Walter Energy decided to close its Wolverine mine near Tumbler Ridge, B.C.

The latest piece of bad news for the energy sector comes from the oil sands, the resource Harper touts as being the crown jewel of Canada’s natural resource assets.

The owners of the $11-billion Joslyn North oil sands mine are putting the project on ice indefinitely. Total E&P Canada, the Canadian arm of French oil giant Total SA, along with its partners—Suncor Energy, Occidental Petroleum and Japan’s Inpex—said they’ve been unable to find a formula under which the mega-project makes economic sense.
The cancellation of the Joslyn project, which was supposed to scoop out 100,000 barrels a day of bitumen, follows a decision by Royal Dutch Shell four months ago to halt work on its Pierre River mine. Shell said it doesn’t have any idea when it might revive plans for the 200,000 barrel-a-day project.

High cost projects, like those in the oil sands, are exactly the ones that are most at risk as global governments begin to get more serious about restraining carbon emissions.

Ottawa may consider climate change to be a hoax, but the rest of the world doesn’t. Economic giants such as the US and China are already moving to cut back on their combustion of fossil fuels. As demand from those countries goes lower, so too will prices.

It seems a safe bet that Total’s Joslyn North mine won’t be the last cancelled oil sands venture that we hear about. If such projects don’t make sense with today’s oil prices, how good can the economics possibly look once the world gets even more serious about carbon emissions down the road?

Maybe it’s time the Harper government started thinking about Plan B.

  • scissorpaws

    The Harper Government(c) doesn’t have a plan B

  • filterwrench

    How can oil prices go down when according to ‘JEFF” oil is quickly becoming scarce….?

  • Plimer

    Is JEFF being funded by BIG GREEN now?

  • kcobley

    Bloomberg Today: West Texas is at $102, Brent $109.20. I don’t see any Oil Prices going down in any market anywhere.
    Big brown is funded by “Big Oil” and “Big Coal” which has substantially more money than the fictitious “Big Green” (invented by the Murdochracy, paid for by the Koch’s of the world), Greens are dependent totally on public donations and receive no funding from Big Business groups, unlike “Big Fossil”
    We’ve also got the Murdochracy’s sock puppets running Australia and the “suppository of knowledge” Abbott as Prime Monster. Harper and Abbott are interchangeable identities.

  • Denny

    With China on track to purchase 24 million vehicles in 2014 and the United States chipping in at least another 16 million, it appears that addiction to oil as a transportation fuel will continue well into this century. Instead of discouraging this trend, China continues to aggressively pursue fossil fuels in areas such as the South China Sea, Sudan, and Iraq. In America, cheap car loans are supporting truck purchases despite gasoline prices that remain high. With central banks around the world determined to spur growth through stimulus and perpetually low interest rates, an emphasis growing the economy is helping keep many motoring along. Perhaps, if Tesla can produce an affordable electric car by 2017, the role of oil in transportation can finally be reduced. But has this process begun too late? Do world leaders have a Plan B to reliance on oil as the dominant transport fuel?

  • Plimer

    What about the $10million BP paid to Greenpeace before the BIG SPILL (which cleaned itself up in under one year)? The NGOs shake down legit businesses — that’s how they keep going. “Public donations” cod’s wallop!

  • Doug stewart

    Ya. The greens have big oil by the balls. Keep repeating that, loudly, to all who will listen. That’s the Murdoch formula.

  • Plimer

    Yep – It’s all BIG Oil, BIG Lumber, BIG Coal, BIG Fisheries. What about Obama’s BIG billionaire friends like BIG Tom Stayer, BIG Michael Bloomberg, BIG Rockefellers who have issued their “Risky Business: The Economic Risks of Climate Change in the United States” that actually risks sinking the issue long term as they promote disbelief leading to total indifference across the USA to their scary climate change scenario.

  • Bluefuss

    Typical…when you don’t know how to deal with the message, attack the messenger

  • Bluefuss

    You really must do more research before you report on issues otherwise you stand to be thought a fool. BP’s BIG SPILL has created the biggest dead zone on the planet, and it will be decades, if ever, before it returns to its pre-BIG SPILL condition. And this information isn’t exactly classified or questioned.

  • Doug

    I’ve wondered the same thing. The original theme of Jeff’s book about peak oil was that as the easy to produce oil got used up, production would shift to the more costly sources like Alberta bitumen, shale oil, and farther offshore oil rigs. Add to that increasing consumption in emerging markets the price of oil would climb gradually. That’s exactly what’s happening now.
    While power generation can be shifted to other energy sources rather than coal, it’s not so easy to find substitutes for liquid transportation fuels like petrol, diesel fuel, or jet fuel. Don’t expect fuel prices to drop anytime soon.
    Only if there is a serious attempt, with all countries of the world taking part to fight climate change, will there be a big enough drop in oil consumption to really affect price. It may come day, but not any time soon.