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Saturday, March 05, 2011

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:

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
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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