Is Petroleum Sucking the Life out of the Planet?

It was either a Freudian slip or a moment of rare political candour when Alberta’s Municipal Affairs Minister related to an audience on the other side of the country that oil and gas wealth is sucking the life out of everything else in Alberta.

In defence of his pronouncement he told the legislature in which he sits he was using Alberta as an example to make a larger point that any economy that puts all its eggs in one basket is asking for trouble.

Douglas Porter the Chief Economist for BMO Capital Markets punctuated this axiom on a countrywide scale in a paper Trade Trends: One Big Winner, Lots of Little Losers, wherein he pointed to the latest Canadian merchandise trade figures that show while energy, which in Canada equates to oil and increasingly more narrowly Alberta’s unconventional oil, is doing fine, everything else is doing anything but fine.

By way of the following diagram he showed how since 2002 the countries non-energy merchandise trade has declined, and since 2007 has been in deficit, whereas the trend line for energy goods has remained upward.

Unfortunately the decline in non-energy merchandise has outstripped the increase in energy with the result the country has been running a current account deficit since 2009.

In a world seeking to move away from fossil fuels it remains to be seen how long it will be before even the country’s energy exports start to go into decline.

The fundamentals aren’t good.

There is currently a glut of oil in the U.S. market that has been Canada’s primary energy market to date, which combined with questions related to the Keystone XL pipeline and the discount Canadian producers are taking relative to global oil prices have caused Canada to look to Asia, particularly China, as an alternative market for Alberta’s 170-billion barrels of recoverable oil, which is increasingly being seen as the bedrock of the Canadian economy.

The South China Morning Post however is reporting on how China’s oil sands bet has gone sour in Canada. After investing billions in North America, Chinese firms are licking their wounds as prices fall and production targets are missed with the result Chinese investment of US$19.3 billion last year has declined to less than $1 billion this year.

And it isn’t just in Canada where the cost of oil dependency is high. The Institute for the Analysis of Global Security points to a U.S. Department of Energy study that shows U.S. dependency on oil from countries that are either politically unstable or at odds with America have subjected the country’s economy to supply disruptions, price hikes, and loss of wealth totaling $7 trillion over the last 30 years; more than the cumulative cost of all of the wars fought by the U.S. since the Revolutionary War. This $7 trillion represents about 40 percent of the current U.S National Debt, the servicing of which is a drain on everything else.

Richard Smalley, the 1996 Nobel Prize winner and world’s foremost energy evangelist, lectured before his untimely death from cancer that the greatest challenge facing the world is the need for new sources of abundant, clean, cheap energy. “To give all 10 billion people on the planet the level of energy prosperity we in the developed world are used to, a couple of kilowatt-hours per person,” he said, “we would need to generate 60 terawatts around the planet— the equivalent of 900 million barrels of oil per day.”

Total current production according to the U.S. Energy Information Administration is about 1/10^th of that, which is another reason for not putting all of our eggs in the petroleum basket since to do so is to overlook ninety percent of the market.

Were this market to be fully serviced with oil, which currently accounts for about 1/3^rd of the world’s total primary energy production, then BP’s 52.9 years of proven reserves would be reduced to about 5 years and in that short a span we would consume half of the carbon allowed to keep us within the 2 degrees agreed upon at Copenhagen.

In the course of his lectures Dr. Smalley pointed to a list of the top 10 problems the world faces ranging from energy at the top to population at the bottom and hypothesized that energy was the key to solving the other nine.

In fixating on petroleum therefore, which cannot meet the needs of the majority of the planet; we are permitting the most significant of the world’s problems to fester and paying short shrift to their solutions.

But then energy is the largest enterprise on the planet and petroleum accounts for the lion’s share and with scarcity comes higher value and greater profits.

And then there is the question of whether or not fossil fuels are literally sucking the life out of the planet? My original post in this forum suggests that may in fact be the case, considering ocean warming is interfering with phytoplankton production that in turn is the origin of half of the atmospheric oxygen we breath.

A few years back the Jamaica Observer posed the question, The world runs on oil. Or is it run by oil? Their view, which is hard to refute, was the latter is the reality, which is a shame and not conducive to the wellbeing of the planet.

Energy Collective

8 Comments on "Is Petroleum Sucking the Life out of the Planet?"

DC on Sun, 29th Dec 2013 12:15 am 



Much dis-infomation here. Its is not Albertas’ tar-sands operation, it is the United snakes and Shells tar-sand operation. Alberta just happens to be where that operation is located. Nor is the tar-sands anything like the ‘bedrock’ of Canadas economy, nor will it ever be. The tar-sands, collectively is 2% of Canada’s economy or about. It will never support much more than it is now. And since the Harper regime kicks in a billion + a year to subsidize US tar-sand operators AND alberta charges royalties that are barely worthy of the name(about as low as you get to royalty-free), I wonder just who is supporting who here.

As for amerika, well, whatever energy problems they have, they are pretty much all self-inflicted. ‘Unstable’ oil-producing countries, that is to say, countries amerika is actively de-stabilizing, really dont factor into it much. All the countries amerika IS buying oil from are fairly stable, at least thanks to amerikas military and intelligence support to its GCC satraps.

I wonder though, what ‘unstable’ nations is EC referring to here? Libya and Iraq are unstable, thanks to the US, Iran isnt, nor is Russia. The uS buys little oil from those folks. So who is it that is causing SUV driving amerikan soccer moms so much grief at the pumps?

Makati1 on Sun, 29th Dec 2013 12:49 am 



Canada is the 51st state of the Empire in all but name. The web uniting the North American Union is getting stronger all the time. Mexico is the 52nd. Wait and see.

rockman on Sun, 29th Dec 2013 12:57 am 



So Canada would be better off if they weren’t exporting oil? In that case it might be worthwhile shutting in all their production and then they can ship $billion to foreign countries for their energy. Yeah…yeah…that’s the ticket. Then they might be more like a US state. LOL.

RICHARD RALPH ROEHL on Sun, 29th Dec 2013 1:47 am 



No big deal here. Canada won’t exist by 2050 or 2060. And humanity as a whole (and ass-a-hole) will most likely be extinct by the end of the 21st century. The sun will still shine… and the Earth will still orbit the Sun star, but humanity (a.k.a.: ewe-man-unkind) will be gone Extinct!

Meanwhile… in faster poo-food Amerika, the willfully ignorant corn syrup sheeple attend $ports events… and shout: “Hooray! Hooray! We’re number one! We’re number one! We’re exceptional! Hooray!

Meld on Sun, 29th Dec 2013 9:01 am 



I very much doubt the human race will be extinct by the 21st century. Why would you think that. Peak oil and climate change are nowhere near bad enough to wipe out such an adaptable species. The human race probably has a few more million years left in it, albeit it at pre industrial revolution population levels

rollin on Sun, 29th Dec 2013 5:09 pm 



Attempting to keep the status quo, as far as power needs, will mean a vast effort and tremendous invention and innovation. To power the whole world would take everything we have and more.

GregT on Mon, 30th Dec 2013 12:16 am 



It is looking far more likely that the human experience will be over during this century, than not. Ocean acidification alone, has the potential to wipe out half of all oxygen production on the planet. Arctic amplification, and methane clathrate releases will be more than enough to take care of the other half.

Pretty hard to adapt, if you can’t breath.

GregT on Mon, 30th Dec 2013 12:24 am 



On second thought, we could colonize the Moon. At least the climate THERE, will be stable.