American unconventional oil and the economic viability of the oil sands

November 19, 2012

in Canada, Economics, Politics, The environment

The Globe and Mail recently printed an interesting article on how the development of unconventional oil in the United States could undermine the business model of the oil sands: “a belief in unfettered access to an insatiably oil-hungry U.S. market has been a central underlying assumption of the great energy expansion under way in Alberta.” If the U.S. can satisfy domestic oil demand with their own unconventional sources, the huge investment that has been made in Canada’s oil sands may never produce a reasonable economic return.

This is one more risk that should be borne in mind when making energy investment decisions. Unfortunately, the climate system doesn’t care about the source of greenhouse gas emissions. America’s newfound bounty of unconventional oil and gas will probably make it even harder to avoid catastrophic climate change.

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