Peak Oil is You
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Page added on March 30, 2006
Canadian Tar Sands: The Good, The Bad, And The Ugly
Peak Oil: A Shattered Myth?
The Wall Street Journal suggests that peak oil is not truly happening. “The surging interest in Canadian oil sands is stark evidence that the world isn’t about to run out ofoil. Instead, it is running low on readily accessible light, sweet crude — oil that flows like water, has few impurities and can be easily turned into gasoline. As the good stuff gets scarce, Big Oil is turning its attention and pouring money into extra-heavy crude, such as the giant deposits near Fort McMurray and another similar one in Venezuela.”
We were proponents of the same concept since we wrote “Successful Energy Sector Investing,” in 2001. But five years later, a great deal has happened that has led us to a new perspective, that of joining the camp that believes that oil is perhaps at the start of its final stage as the primary fuel on planet Earth.
According to the Journal: “heavy oil has big economic and environmental drawbacks. It costs more to produce and takes more energy to turn into gasoline than traditional light oil. Recovering and processing Fort McMurray’s heavy crude releases up to three times as much greenhouse gas as producing conventional crude. And upgrading it into refined products, such as gasoline or diesel, will require a gigantic investment to retool global refineries.”
The extraction process is so labor intensive and requires so much heat, in order to extract the oil from the tar sand that “Total briefly floated the idea of building a nuclear-power plant” in Fort Mc Murray.
In other words, just because new oil is likely to be more plentiful, processing costs will likely keep prices higher than in the past, and the toll on the environment won’t be fully known for years to decades.
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