Thursday, June 21, 2018

Trudeau's Tar Sands Gamble Worsening By the Day.

Bill McKibbin has some news - good news to some, bad news to others.  Fossil energy markets are falling apart. The environmental activist ( says energy stocks are suddenly weak.
Researchers at the Institute for Energy Economics and Financial Analysis minced no words: “In the past several years, oil industry financial statements have revealed significant signs of strain: Profits have dropped, cash flow is down, balance sheets are deteriorating and capital spending is falling. The stock market has recognized the sector’s overall weakness, punishing oil and gas shares over the past five years even as the market as a whole has soared.”

The IEEFA report labeled the industry “weaker than it has been in decades” and laid out its basic frailties, the first of which is paradoxical. Fracking has produced a sudden surge of gas and oil into the market, lowering prices – which means many older investments (Canada’s tar sands, for instance) no longer make economic sense. Fossil fuel has been transformed into a pure commodity business, and since the margins on fracking are narrow at best, its financial performance has been woeful. The IEEFA describes investors as “shell-shocked” by poor returns.
Two other developments McKibbin notes: the rapid transition to electric power and successful efforts being made by the environmental movement to undermine fossil fuel investment.
Tesla, sure – but Volkswagen, having come clean about the dirtiness of diesel, is going to spend $84bn on electric drivetrains. China seems bent on converting its entire bus fleet to electric power. Every week seems to bring a new record-low price for clean energy: the most recent being a Nevada solar plant clocking in at 2.3 cents per kilowatt hour, even with Trump’s tariffs on Chinese panels.
...the third problem for the fossil fuel industry? According to IEEFA, that would be the climate movement – a material financial risk to oil and gas companies. “In addition to traditional lobbying and direct-action campaigns, climate activists have joined with an increasingly diverse set of allies – particularly the indigenous-rights movement – to put financial pressure on oil and gas companies through divestment campaigns, corporate accountability efforts, and targeting of banks and financial institutions. These campaigns threaten not only to undercut financing for particular projects, but also to raise financing costs for oil and gas companies across the board.”
Sorry, Rachel. Sorry, Jason and you too, Justin, sorry but you're all arriving to the party 20-years too late. It's just bad luck that when Manitou was distributing energy resources around the world he gave Canada the shit end of the stick - bitumen.


Toby said...

There will come a day when Mother Nature takes revenge and people will ask, Why didn't someone warn us? Why didn't our leaders do something to prevent this? And where will they scream the loudest? Alberta, of course.

Mound, I think too many people believe in magic and want magical fixes.

The Mound of Sound said...

My greatest concern for Albertans is what happens when the carbon bubble bursts? When the oil companies split the province may face a massive bill for site remediation, especially the tailing ponds. The companies have only remitted a very small fraction of what that would cost. It's a common scam. You set up a shell company, transfer the assets (now all but worthless) into the shell and then the original company splits.

Deacon Jester said...

Alberta won't need to clean up anything. The rest of Canada will do it for them and Albertans will complain every step of the way that their sovereignty is under attack.

I say let the stupid fucks bathe in it.

Anonymous said...

Tonight on the business news they are talking how CDNA tar sands will become more popular with the forthcoming sanctions that china is putting on US. I assumed tying into justification for KM purchase. But probably to suppress release of the above, which won't hit the business chanel�� Just corporate propaganda I guess

Trailblazer said...

I remember 'peak oil' about fifteen years ago!
As a youth I remember the 'British Empire"
In 1939 it was to the the thousand year reich but it failed.
Nowadays it is the declining USA but stubborn as it it , it just refuses to go.

Perhaps we are accustomed to rapid change as with digital technology.
Humanity on the other hand, blods along at a frustratingly slow pace; that is depending upon your desires!


The Mound of Sound said...

Tomorrow OPEC will deal with the Saudi demand, backed by Russia, to re-open the oil taps. The main opponent is Iran. Once again the classic Sunni/Shia divide.

It seems counter-intuitive that China would levy tariffs on US energy products. What would they gain from that? Which is why they're targeting soya beans, cars, whiskey, etc. - stuff that won't harm their own economy.

Canadians always seem to overlook why world oil prices are at today's levels. That's not a free market price. It's because the Saudis drove last year's supply cuts. What they cut last year they can restore quickly enough this year and the Saudis know how Athabasca bitumen is vulnerable when they flood the market, driving down prices. Most of the ME produces high-value, sweet crude that is still very profitable at prices that cause bitumen markets to collapse.

We are forever in OPEC's crosshairs.

Jay Farquharson said...

China doesn't buy much US Oil, or Canadian for that matter.

Trailblazer said...

Blogger Deacon Jester said...
Alberta won't need to clean up anything. The rest of Canada will do it for them............

Too true.
The cleanup is always paid for by the national electorate not the provincial one.

Let's add..

This happens world wide.
The consumer seldom pays the direct cost ..
The shareholder laughs!!


Anonymous said...

China will target US oil. Then they will buy from Iran at a discount. That will make 2 fu’s at Trump.