The national energy strategy just mapped out by Canada’s premiers contemplates, among other things, how to speed up the approval process for interprovincial pipelines. Even as the agreement was being hashed out, however, attention was already turning to a burst pipeline at Nexen’s Long Lake oil sands site that spilled 31,000 barrels of bitumen, sand and salty water into the surrounding muskeg.

Talk about a symbolically bad omen.

A major new pipeline project, as last week’s spill on a much smaller line illustrates, carries any number of risks to the environment. As for an already glutted world oil market, the price of crude would seem to be talking loudly enough for even the most tone deaf of oil companies to hear. Investing in new oil sands projects to feed the slate of proposed pipeline projects makes little sense when market prices, particularly those for Western Canadian Select, are well below the amount needed to cover the costs of new projects let alone that of existing production.

The premiers of Canada’s oil producing provinces might not get it yet, but investors sure do. They continue to bail out of oil sands stocks, which are down by 70 percent in the last seven years. Indeed, the latest down draft for the sector has now taken its value back below the lows reached during the Great Recession.

For its part, the Bank of Canada has now cut interest rates twice in the last six months. Governor Stephen Poloz may be diplomatically terming the first half of the year — which has seen back-to-back quarters of an oil-inspired decline in GDP — a contraction, but that’s just semantics. By its actions, the central bank shows it clearly understands the pressing role a devalued loonie will have to play in boosting non-energy exports, as contributions from the oil economy continue to fade in the coming years.

Canada’s premiers, however, are one group that appears to have missed the memo. It’s time for them to let go of their provinces’ carbon-etched pasts in favour of preparing for a greener economic future. They need to understand that lower oil prices aren’t a temporary market glitch, but rather a harbinger of what’s to come.

Oversupplied global crude markets certainly aren’t clearing up anytime soon. Iran alone has a million barrels currently embargoed by sanctions just waiting to come on to the market. After that the country’s daily production is set to double and perhaps even triple in relatively short order. As for demand, global economic growth is running at roughly half of where it was a decade ago. And even that meager rate is beginning to look suspect given the cracks that are starting to appear in China’s faltering economy.

If such bearish supply and demand conditions aren’t daunting enough consider what else is in store. A global awareness of climate change and the recognition that the endless combustion of fossil fuels is unsustainable is changing the game for the oil industry. If the planet is to avert the worst scenarios for climate change, the optimistic long-run forecasts for oil demand growth put forward by energy giants such as Exxon can be thrown out the window.

What will be left? Quite simply, the world will be burning less oil, less coal, and maybe even less natural gas.

In that coming reality, new Alberta premier Rachel Notley, as well as the province’s taxpayers, should be more concerned about who will pick up the tab for cleaning up abandoned wells and decommissioned oil sands mines, as opposed to trying to get new pipelines built.

Canada does need a national energy strategy, but not one that’s focused on fast-tracking pipelines. The next time the premiers huddle together they should start talking about how to wean our economy off its overreliance on high-cost carbon fuels that the rest of the world has little need for today and will need even less of tomorrow.

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  • John Drake

    “…to wean our economy off its overreliance on high-cost carbon fuels…”
    And how do you propose to do this with fossil fuels representing more than 80% of the energy budget ?

    John

  • Tom Lampman

    Not to sound like a broken record, but the only sustainable investment we should be considering is in our forests. As I understand, forests have a natural growth rate of somewhere between 2.1 and 2.6 %. It varies with fire, insect damage, erosion, etc. Forest fires don’t completely consume the trees, but, in most cases, return the cellulose to the ground as bio-char and decomposing matter. If we continue to focus on renewables and human based energy (walking, biking, insulation, passive heating and hand tools), we can gradually replace our reliance on fossil based fuel. Ya, our lifestyle will change drastically, but not to the point that we can’t survive. The electric BMW’s and microwaves may become obsolete as we adapt, fortunately. We have a choice: agonize over the lost of an energy obese society or embrace a low energy, subsistence lifestyle that has worked for most of humans over the centuries. Conflict won’t disappear, but we have an example of something that can be achieved if we want it. Pipeline investments do look somewhat silly in comparison.

  • Carol987

    It makes no sense that the provinces would deliberately circumvent Ottawa to produce a policy that is essentially a thumbs-up to pipelines and a bunch of rhetoric about environmental protection or any real goals for reducing our reliance on carbon fuels. What did this accomplish? We already have Harper touting pipelines. So what was the point of the premiers pretending they were actually going to do anything worthwhile by ignoring Ottawa when all they did was to set an agenda that looks exactly like what Ottawa wants. Dumb.

  • HIKEANDSKI

    Jeff:

    I heard a re-broadcast of an interview you did with the Communist Broadcasting Corporation the other night. I was SHOCKED when I heard you espousing the UN IPCC theory as a proven fact. About the only thing I have found proven is that some of the IPCC “researchers” are charlatans, crooks, or cheats. If you had read some of the IPCC reports (+/- 1500 pages) and the resulting decision summaries (+/-150 pages) you would realize the extreme one sided bias in the summaries. Even their last report bemoans the FACT that with no warming for over 18 years their climate models are worse than useless. Even the Australian government (which ran on the last election of cancelling the carbon tax imposed by the previous socialist government;and they won) have just cancelled all government funding of solar and wind power generation. They are on to the fraud.

    I am not a rich man. For over 8 years I have been so convinced that the IPCC theory is not proven I have offered to sponsor a debate on its proof. I have contacted over 50 supporters of the theory in Canada, the USA, the UK and Australia to see if they will debate a skeptical climate scientist. They all refuse, even though I offer $100,000 to the winner and $10,000 to the loser. I also offer to work hard so as to get additional sponsors so as to raise the prize money by a factor of 10 to 100. Many skeptical climate scientists will agree to debate, but not one supporter. I believe it is because of the one major rule (full, true and plain disclosure; same as officers of publicly listed corporations) with appropriate similar penalties (huge fines, long jail terms and prohibition from ever getting any funds from any public entity, even indirectly). I believe the supporters refuse to debate because they know when liars will be severely punished.

    Perhaps as a supporter of truth in climate science you would be prepared to add your name as a sponsor? How much can I put you down for?

    I have heard you speak in Calgary many times and enjoyed your presentations. I cannot say I enjoyed the interview with CBC. I thought you based your opinions on facts, as I and other professionals do. So sad.

    Yours for truth in climate science,