Why shale oil won’t save you at the pumps – by Jeff Rubin (Globe and Mail – November 23, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Jeff Rubin is the former chief economist of CIBC World Markets and the author of the award-winning Why Your World Is About To Get A Whole Lot Smaller. His recent best seller is The End of Growth.

Move over OPEC: North America is about to become a net exporter of oil. At least, that’s the word from the International Energy Agency’s latest outlook. According to the IEA, the drilling boom for shale oil in states like North Dakota is putting U.S. crude production on track to pass Saudi Arabia. North of the border, output from Alberta’s oil sands is expected to notch a similarly grand expansion.

But the agency’s rosy forecast isn’t all that it appears – and it certainly isn’t going to lead to a significant break at the pump for you.

Notions of energy independence, however farfetched they may seem today, play well to the IEA’s target audience, which is largely American. But regardless of the political rhetoric we endured from both presidential candidates, energy independence isn’t really the issue confronting the U.S. economy or North American motorists. The real issue is the cost of oil – not its country of origin.

It doesn’t really matter whether the U.S. drills for its own oil, gets it from Canada, or ships it in from Venezuela or the Middle East. Hostile or friendly, no foreign supplier has turned off the spigot since the last OPEC oil shock three decades ago. There’s plenty of oil. The problem isn’t the availability of the fuel but the price needed to get it out of the ground.

Unfortunately, that’s already more than we can afford.

That Brent oil, the de facto world oil price, is hovering near $110 (U.S.) a barrel is a clear signal of our growing dependence on the very unconventional sources of supply being championed in the IEA report. American energy independence isn’t going to change the reality of triple-digit oil prices. On the contrary, oil prices will have to climb much higher for the IEA’s forecast to come true. And if that’s the case, does energy independence actually have any value for oil consumers?

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/jeff-rubin-why-shale-oil-wont-save-you-at-the-pumps/article5566241/

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