What’s the real price of the Canadian oil boom?
By THE STAR FILE PHOTO | APRIL 20, 2018 10:51:23A recent report by the International Energy Agency (IEA) reveals Canada’s oil sands production is on the rise, and that its producers are increasingly producing on a larger scale.
The report, which examined oil sands output from 2010 to 2019, found that from 2010 onward, the country added more than 1,200 megatonnes of capacity, a significant increase from the 1,100 megatonne figure in 2010.
The report also found that production from Canada’s Bakken oil sands increased by more than 300 megatonns between 2010 and 2019.
In a statement, the IEA said Canada’s “continued boom in shale oil and gas production” and the expansion of domestic supply “has led to an increasing share of the global energy mix.”
The agency said its analysis “is consistent with the view that global energy demand is expanding at an unprecedented rate.”
The report also shows that Canada’s total energy use increased by 4,000 megatonnnes between 2010 to 2020, compared with a decrease of 1,000 Megatonnes in the same period last year.
“The increase in global energy consumption in the past decade is driven by rapid technological innovation and increased use of renewable energy,” the report says.
“More than 80 per cent of the new electricity produced worldwide is renewable energy.”
The IEA says Canada’s energy consumption will reach 7.3 per cent by 2030, or around 6 billion megatonnts.
“With increasing demand, we need to increase production to meet this growing demand,” the agency says.
Canada’s oil-sands boom has been a boon for Canada’s economy, with oil and natural gas accounting for nearly 70 per cent to 80 per of Canada’s GDP in 2019, the latest year for which figures are available.
Canada was the first country in the world to have an oil-based economy in the early 1900s.
By the late 1960s, its economy was growing by 5 per cent a year.
By 2006, the Canadian economy was expected to grow by 3.5 per cent.
By 2020, oil production had doubled and Canada’s gross domestic product (GDP) had grown by almost 8 per cent in the decade that followed.
The country was now expected to become the world’s biggest oil producer in 2022, overtaking Saudi Arabia.
In an interview with the Globe and Mail, Dr. Mike Phelan, a senior fellow at the Peterson Institute for International Economics, said the oil sands are the “natural catalyst” for the recent oil boom.
He said the growth in Canada’s exports has been “absolutely remarkable,” adding that the country has been able to “run the world economy” with its oil sands assets.
“What we are seeing is the natural catalyst that’s going to make a real difference to our economy and we’re going to be able to continue that trajectory,” he said.
“We’ve had a lot of success with our unconventional oil development and this has enabled us to build a much bigger, much stronger, much more diverse economy,” he added.
Phelan said the rise in Canada has been driven by “global energy demand growth” and not a direct result of the country’s oil.
He pointed to the growth of China’s coal-based manufacturing sector and the rapid expansion of renewables as a direct explanation.
Canada has become a major energy producer because of the success of the oil and oil sands, he said, citing the economic impact that these assets have had on Canadian jobs and businesses.
Phelps, the former deputy chief economist of the U.S. National Economic Council, said Canada has benefited from the energy revolution in the U,S., the world, and elsewhere.
“If we can’t do this for ourselves, for our country, then what are we going to do?” he said in an interview.
“And it’s really about energy.
And that’s the reason why Canada has such an economic success story.
It’s the only country that has been successful in all of these different areas.”