Monday, October 22, 2007

This Time It's Permanent

If we can get it right, this boom could last forever.

In the past the Alberta oil and gas booms and busts have been tied to two pivotal details - access to markets and the world price of oil.

But things changed two years ago when the production of petroleum from the oil sands surpassed conventional production for the first time.

No longer is the oil industry in Alberta reliant on discovering oil and gas, fighting for a place in the market, and at the mercy of international oil prices.

Okay, that may be overstating the case, but the oil patch in Alberta is now a commodity like coal. We have an almost unlimited supply of petroleum in the oil sands and the international demand for oil is strong and getting stronger.

The Alberta government has the opportunity to create a stable and sustainable economic climate. Or at least there is more of a chance now than ever before.

The royalty rate issue, so dominant in the daily news, is actually just a temporary distraction.

The real question is much larger. Can Alberta manage the boom, this time, in a way that will create economic, social and environmental stability?

1 comment:

Anonymous said...

Hi David... Loved "Pumped"!

I have heard some information that suggests that the Oil companies themselves may be looking to cool things off.

I recently ran across an "Oil Company Insider" that told me that his oil company (and many others) have determined a "magic number" in $/barrel. Should the market reach that number, the oil company would throw cold water on things to cool them down. The reason for this would be that, given the high prices, the impact to the global economy and consumer backlash would be so great that it would actually hurt the industry. He said that this happened before in the 70's.

I personally can't understand what these companies could do to impact a rate that has gone too high?? (other than a group like Opec, releasing additional supply)

If you have any insights into this and/or understand the historical reference to what was done in the 70's, I would love to hear it!