In recent interviews, Jeff Rubin, author of “The Carbon Bubble” and former Chief Economist of CIBC World Markets, has characterized Canada’s oil sands as being “stranded assets”. The following 20 numbers appear to support his characterization of the oil sands - what are the arguments to the contrary?
[1] See: http://www.bankofcanada.ca/wp-content/uploads/2015/01/remarks-130115.pdf#chart9 As noted by Timothy Lane, Deputy Governor of the Bank of Canada, at the Madison International Trade Association on January 13, 2015: “oil from Canada’s oil sands costs closer to $60 to $100 a barrel”.
[2] See: http://www.washingtonpost.com/blogs...ces-go-welcome-to-the-oil-markets-old-normal/ As noted by Saudi Arabia’s oil minister Ali al-Naimi: “Production costs in Saudi Arabia are about $4 to $5 a barrel”.
[3] See: http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/, slide 4.
[4] See: http://blogs.platts.com/2014/04/17/fuel-oil-consumption-declines/.
[5] See: http://www.bloomberg.com/news/artic...falling-demand-for-oil-is-the-biggest-concern.
[6] See: http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/, slide 2.
[7] See: http://www.forbes.com/sites/timwors...if-fracked-shale-isnt-the-high-cost-producer/.
[8] See: http://www.bloomberg.com/news/artic...falling-demand-for-oil-is-the-biggest-concern.
[9] See: http://www.telegraph.co.uk/news/ukn...-predicts-price-crash-as-age-of-oil-ends.html. Reports that Saudi Arabia’s acquiescence in the recent dramatic declines in the price of oil reflect Saudi concerns that: “Demand will peak way ahead of supply” are consistent with the understanding expressed fifteen years ago by Sheikh Yamani. See: http://business.financialpost.com/n...hen-it-blindsided-oil-markets?__lsa=b8f5-b49b.
[10] See: http://en.wikipedia.org/wiki/Energy_in_the_United_States: “In 2010, 70.5% of petroleum consumption in the U.S. was for transportation. Approximately 2/3 of transportation consumption was gasoline.”
[11] See: http://energytransition.de/2015/05/the-solar-price-revolution/.
[12] See: http://en.wikipedia.org/wiki/Electric_car_use_by_country.
[13] See: http://pressroom.consumerreports.org/pressroom/2013/11/my-entry-2.html.
[14] See: http://cleantechnica.com/car-answers/ and http://en.wikipedia.org/wiki/List_of_electric_cars_currently_available.
[15] See: http://www.fool.com/investing/gener...rs-incs-gigafactory-may-be-more-revoluti.aspx.
[16] See: http://www.nationalobserver.com/2015/05/14/news/climate-number-changes-everything.
[17] See: http://www.scientificamerican.com/a...eystone-xl-pipeline-impact-on-global-warming/ and http://www.scientificamerican.com/a...ar-sands-could-mean-game-over-climate-change/.
[18] See: http://www.nature.com/nature/journal/v517/n7533/full/nature14016.html and http://www.theguardian.com/environm...stay-buried-prevent-climate-change-study-says.
[19] See: http://www.carbontracker.org/in-the...ands-projects-at-risk-from-eroding-oil-price/; and http://www.carbontracker.org/wp-content/uploads/2014/11/Oil-Sands-FactSheets-Designed.pdf
- 2000% - the typical cost disadvantage of oil sands production[1] (relative to the lower cost producers such as Saudi Arabia[2]). Overcoming this enormous cost disadvantage requires strong continuing growth in the demand for oil, and the absence of lower cost alternatives. Neither condition seems likely to be satisfied, in either the short term or the long term.
- 800 million barrels – the approximate reduction in annual US oil consumption over the past 10 years.[3] In recent years US demand for oil has remained flat despite continuing economic growth.
- 80% - the decline in the percentage of fuel oil being used to generate electricity, from 50% in 2002 to 10% in 2012.[4]
- 33% - the reduction in the percentage of the world’s energy supplied by oil from 1973 to 2012 (from 46% to 31%).[5]
- 80% – the approximate increase in US oil production over the past 10 years,[6] from approximately 5 million barrels per day to approximately 9 million barrels per day, principally from shale oil production.
- 1.1 billion barrels – the amount by which the projected US oil production in 2020 has increased between the 2013 and 2015 according to the US Energy Information Administration. Some commentators are suggesting that shale oil, which is plentiful in many countries around the world, will suppress the prices below those required for the profitable extraction and exploitation of bitumen.[7]
- US$109 billion - the amount that the Saudis have pledged to invest in renewable power by 2040.[8] This project is meant in part to free up more oil for export and reflects the fact that the use of oil to generate electricity no longer makes any economic sense.
- 2030 – the expected end of the oil age, according to the former Saudi Oil Minister, Sheikh Yamani, who fifteen years ago was quoted as saying:
- 70% - the approximate percentage of oil used in the US for car, trucks and other ground transportation.[10]
- US6 cents / kWh – the cost of electricity from solar parks being built today. The cost of solar generated electricity is expected to fall to US2-4 cents per kWh by 2050.[11]
- 20 cents per liter – the price that gasoline would have to sell for in order for gas cars to compete on energy costs with electric cars. Electric cars typically achieve approximately 5 km per kWh, or 2 cents per km (at 10 cents per kWh). Gasoline would have to sell for 20 cents per liter in order for a 10 l/100km gas car to achieve the same operating costs for energy.
- 90% - the average annual increase in worldwide electric car sales. Since 2011, when plug-in electric cars were first sold in significant volumes, annual sales have increased by an average of approximately 90% per year, and to the end of 2014 have totaled over 712,000 cars.[12]
- 4 – the number of consecutive years that plug-in electric cars have received the highest Consumer Reports customer satisfaction ratings[13] (the Chevy Volt winning in 2011 and 2012, and Tesla Model S winning in each of 2013 and 2014).
- 30 – the number of highway-capable plug-in electric cars offered for sale by major manufacturers.[14] The manufacturers currently offering electric vehicles include BMW, Mercedes, Audi, Porsche, VW, Volvo, Tesla, Cadillac, Nissan, Chevrolet, Honda, Ford, Toyota, Kia, Fiat, Mitsubishi, and Renault.
- US$100 / kWh – the electric car battery cost at which the purchase price of mass market electric cars will be fully competitive with that of gas cars (as well as being cheaper to operate). This cost is expected to be reached over the next few years (and by 2024 at the very latest).[15]
- 80% - the percentage of current economic fossil fuel reserves which must remain in the ground in order to avoid dangerous climate change.[16]
- 116 kg per barrel - the CO[SUB]2[/SUB] emissions released from extracting and refining oil from Canadian bitumen using in situ production (which is substantially more than twice the greenhouse gas emissions which result from conventional oil production).[17]
- 0% - the amount by which Canadian bitumen production and Arctic oil production can be increased, consistent with efforts to limit average global warming to 2 °C, according to a recent study published in Nature.[18]
- 90% - the percentage of oil sands reserves that the Carbon Tracker Initiative has warned investors are at risk from eroding oil prices.[19]
- 68% - the fall in price of the iShares Oil Sands Index Fund since its peak in June 2008.
[1] See: http://www.bankofcanada.ca/wp-content/uploads/2015/01/remarks-130115.pdf#chart9 As noted by Timothy Lane, Deputy Governor of the Bank of Canada, at the Madison International Trade Association on January 13, 2015: “oil from Canada’s oil sands costs closer to $60 to $100 a barrel”.
[2] See: http://www.washingtonpost.com/blogs...ces-go-welcome-to-the-oil-markets-old-normal/ As noted by Saudi Arabia’s oil minister Ali al-Naimi: “Production costs in Saudi Arabia are about $4 to $5 a barrel”.
[3] See: http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/, slide 4.
[4] See: http://blogs.platts.com/2014/04/17/fuel-oil-consumption-declines/.
[5] See: http://www.bloomberg.com/news/artic...falling-demand-for-oil-is-the-biggest-concern.
[6] See: http://www.bloomberg.com/graphics/2014-america-shakes-off-oil-addiction/, slide 2.
[7] See: http://www.forbes.com/sites/timwors...if-fracked-shale-isnt-the-high-cost-producer/.
[8] See: http://www.bloomberg.com/news/artic...falling-demand-for-oil-is-the-biggest-concern.
[9] See: http://www.telegraph.co.uk/news/ukn...-predicts-price-crash-as-age-of-oil-ends.html. Reports that Saudi Arabia’s acquiescence in the recent dramatic declines in the price of oil reflect Saudi concerns that: “Demand will peak way ahead of supply” are consistent with the understanding expressed fifteen years ago by Sheikh Yamani. See: http://business.financialpost.com/n...hen-it-blindsided-oil-markets?__lsa=b8f5-b49b.
[10] See: http://en.wikipedia.org/wiki/Energy_in_the_United_States: “In 2010, 70.5% of petroleum consumption in the U.S. was for transportation. Approximately 2/3 of transportation consumption was gasoline.”
[11] See: http://energytransition.de/2015/05/the-solar-price-revolution/.
[12] See: http://en.wikipedia.org/wiki/Electric_car_use_by_country.
[13] See: http://pressroom.consumerreports.org/pressroom/2013/11/my-entry-2.html.
[14] See: http://cleantechnica.com/car-answers/ and http://en.wikipedia.org/wiki/List_of_electric_cars_currently_available.
[15] See: http://www.fool.com/investing/gener...rs-incs-gigafactory-may-be-more-revoluti.aspx.
[16] See: http://www.nationalobserver.com/2015/05/14/news/climate-number-changes-everything.
[17] See: http://www.scientificamerican.com/a...eystone-xl-pipeline-impact-on-global-warming/ and http://www.scientificamerican.com/a...ar-sands-could-mean-game-over-climate-change/.
[18] See: http://www.nature.com/nature/journal/v517/n7533/full/nature14016.html and http://www.theguardian.com/environm...stay-buried-prevent-climate-change-study-says.
[19] See: http://www.carbontracker.org/in-the...ands-projects-at-risk-from-eroding-oil-price/; and http://www.carbontracker.org/wp-content/uploads/2014/11/Oil-Sands-FactSheets-Designed.pdf