A piece by contributing writer kwd, in response to a business article contained in the Montreal Gazette... quote from below. 

 

Great opportunities for

     Canada as the price of

    oil rises

By L. IAN MACDONALD, Freelance February 28, 2011

 Read more:

 http://www.montrealgazette.com/business/Great+opportunities+Canada

The price of oil tested $100 last week, and the Canadian dollar rose with it, to two cents above exchange rate parity with the U.S. dollar.

It's no mystery - the turmoil in oil producing and transporting countries in North Africa and the Middle East is responsible for the $10 surge in oil prices in the last two weeks. And the loonie, as a petro currency, has risen along with it to $1.02 U.S.

This is all good for the Canadian oil industry,  

“Oil price means opportunities for Canada”, TC Mar 1.

Recent events in North Africa and the Middle East may be good news for the Canadian oil industry, however, political unrest is a minor factor behind oil’s recent price surge.

The truth is, aside from increasing demand, the escalating 

price of oil is a direct function of three factors: The decline 

in production from known reserves; the increase in production 

from newly discovered reserves is less than the rate of decline; 

and the energy costs in producing a barrel of oil from 

unconventional sources, such as the tar sands, are considerably 

higher than the energy costs in producing a barrel of conventional

crude.

It is this latter point that is not well understood by oil-

addicted consumers. The energy costs in conventional production 

are approximately one fifth the energy costs in tarsands 

production. So, while Canada’s proven reserves may be 175 billion 

barrels, the tarsands are not a bottomless well of cheap oil. Far 

from it. And when social and environmental costs of the tarsands 

are factored in, it is easy to why oil costs are rising.

The oilwells supplying us with cheap crude are drying up, and so 

should the inkwells supplying cheap excuses; particularly those 

that blame raving lunatics and autocrats for the high cost of oil.

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