Former oil executive, Ross Belot, has a message of Canada's prime minister concerning the Tar Sands. The party's over.
The oilsands have become, politically, the gift that keeps on taking. Prime Minister Justin Trudeau’s brand has been badly tarnished by his pro-pipeline stance even as evidence mounts that new pipeline capacity isn’t needed. Alberta Premier Rachel Notley continues to pretend pipelines will bring back the glory days for the province’s energy sector — even as crude prices languish in the mid $40s due to cheaper U.S. shale oil, and even as OPEC and Russia hold back their own production to shore up prices.
Headlines like this one don’t bode well for future investment: ‘Suncor wins favour by ignoring core business of oil sands’. RBN Energy also reported recently that the differential for Western Canadian Select between Cushing and Edmonton isn’t enough even to pay for the pipeline tariff, indicating surplus capacity headed in that direction must be being sold at a discount. Yet we’re still seeing headlines talking about growing production being transported by rail in future, with no reference to what is actually going on today.
Want more proof? Look at this recent Wall Street Journal article: ‘A New Problem for Keystone XL: Oil Companies Don’t Want It’. The WSJ reports that Transcanada can’t generate enough interest from industry to take on the guarantees necessary to move the line ahead.
The party’s over. It was over some time ago and the only ones still reluctant to bin the leftovers and turn out the lights are politicians. Trudeau seems especially loathe to confront reality, but energy sector corporations are in the business of making money, not shaping perceptions; they know the world is changing and they have to change with it.
It's easy to understand why bitumen bounty is so enticing to Trudeau, Notley and Wall. It's low-hanging fruit. Issue a couple of licenses, a tax dodge or two here and there, and just wait as the royalties fill the federal and state treasuries. What's better is that the books are so easily cooked. Costly environmental consequences can be kicked down the road, left to future governments and future taxpayers. The hangover always comes after the Mardi Gras celebration. Besides he's already bought all those strings of beads. What's he going to do with them if he calls off the party?