Could Falling Oil Prices Stall Oil Sands?

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Finally, some good news: The global economic slowdown might curb runaway carbon emissions in Northern Albertaโ€™s oil sandsโ€”at least temporarily.

Oil dipped below $50 a barrel this week for the first time since May 2005, and according to a report in Thursdayโ€™s New York Times,

โ€œsome analysts predict oil could fall to $30 to 40 a barrel as the world economy worsens.โ€

That $30 is a magic number for many energy economists, who for years have argued that Albertaโ€™s oil sands projects are only viable when petroleum is trading above it.

Taken together, the mining and processing megaprojects represent Canadaโ€™s leading source of the heat-trapping carbon emissions that cause global warming. According to Pembina Institute estimates, by year end the operations will have released around 46 million metric tonnes of equivalent carbon-dioxide into the atmosphere.

But there are already signs that the machinery may be slowing.

The Vancouver Sun notes that the ongoing market slide has placed a de facto โ€œmoratoriumโ€ on development in the oil sands.

Last week, Petro-Canada held off on deciding to proceed with a $24 million oil sands expansion project. The paper says the company

joins a growing list of key oilsands producers that have announced project delays in recent weeks, including Suncor, Canadian Natural Resources and Royal Dutch Shell.

Of course, even if oil does drop far enough to stand down some of Albertaโ€™s upgraders, they will not likely stay idle for long. The current dip in oil prices is a reflection of the market collapse, nothing more โ€“ exploration companies havenโ€™t suddenly discovered a vast new field of black gold off the coast of Texas. As the worldโ€™s easy-to-reach petroleum grows increasingly scarce, prices will rebound โ€” and Suncor and friends will go back to merrily cooking dumptrucks full of Alberta shale under an enormous blueย flame.

At least, until Canada puts a price on carbon โ€“ and implements a federal cap-and-trade program. Like, say, the one president-elect Obama is pursuing. (Hintย hint.)

(David Dodge Photo courtesy Oil Sands Watch)

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I work with Clean Energy Canada at Tides Canada to help accelerate Canadaโ€™s transition to an energy-efficient, ecologically responsible, and prosperous low-carbonย economy.

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