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Page added on February 14, 2018

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Oil is a Scarce Resource


Building a country or a region’s economy on the extraction of a resource is fool hardy. A resource extracted is gone! It is no longer there! Inevitably payday will come, maybe not within our lifetime, maybe not within our children’s lifetime, but it will come. True, by the time that resource is extracted, there may be new technology that reduces our need for that particular resource, but those who believe that have an extraordinary amount of faith in human ingenuity. Surely it is better to avoid building an economy on resource extraction if at all possible.

I’ve been thinking about this a lot these days as I have been monitoring Alberta’s current dispute with BC. As I see it, here is the basic dispute: Alberta has this vast under-exploited resource of oil sands. In order to benefit from this resource, it needs to be sold, and in order to be saleable it needs to be delivered to an ocean port. This oil sand-derived bitumen is already being delivered to oil tanker terminals in BC, but apparently not fast enough. Albertans want to exhaust their oil resource at a faster rate.

BC, on the other hand, says whenever oil moved, spills occur, and the more oil we move, the more likely these spills are. When [not if, they say] that spill occurs, we are the ones who will lose – not Albertans. The benefit is just not worth the risk..

Boom and bust is a part of a resource economy. Consider Lynn Lake here in Manitoba. When mining in Lynn Lake was at its peak, that town had 3,500 residents. Today there are 675. Thompson, not far away, is well aware of its dependence on its nickel mine, and is consciously working to diversify. The prosperity of Alberta does not need to be dependent on oil, but an oil focused development policy will create that dependence.

What set Alberta off in the development of its oil potential was the discovery of an oil well in the Turner Valley southwest of Calgary. That was in 1914. At that time it took about a barrel of oil to extract, process, refine, ship and deliver 100 barrels of oil. Now, conventional oil production worldwide pays off at about a 20-to-1 ratio. And in Alberta, where the oil now comes from tar sands, it’s closer to 5-to-1. In the early 20th century, no one would have considered extracting oil from the oil sands. Today it is the oil sand potential that is driving the Trans-mountain Pipeline expansion. Furthermore you can be sure the oil now being extracted is the most accessible. Extracting and processing will become increasingly more expensive, and as it becomes more expensive, the industry becomes more vulnerable to other economic shocks.

Norway was not considered a resource rich country until the 1960s when oil was discovered off the coast of Norway. Nevertheless, when Norway began to pump that oil, that country decided, rather than to allow the country to evolve [or devolve] into oil dependency, it would use its oil revenue to develop other sectors of the economy. Norway instead chose to invest the revenue from the oil in a development fund. On the World Economic Forum’s inclusive development index, Norway now tops the list, in no small part because to this decision.

Let’s face it. When a country or a region views itself as resource rich, and ties its well-being to the extraction and sale of that resource, it is impoverishing itself. It is shooting itself in the foot. There is no long term future in that.

12 Comments on "Oil is a Scarce Resource"

  1. DMyers on Wed, 14th Feb 2018 7:19 pm 

    A sane and sensible statement. To turn it another way, our actions can be directed by either long term or short term interests.

    “It has often been said that, if the human species fails to make a go of it here on Earth, some other species will take over the running. In the sense of developing high intelligence this is not correct. We have, or soon will have, exhausted the necessary physical prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them there will be one chance, and one chance only. (Hoyle, 1964; emphasis added)” from , Richard C. Duncan quoting Sir Fred Hoyle.

    We’re using up our one chance.

  2. rockman on Thu, 15th Feb 2018 11:11 am 

    Same silly point: it’s as if an area has multiple STRONG resources to grow its economy and improve the lives of its people. So the Saudi people should have not developed its oil resources? And then what…sell sand to grow its economy? LOL. So the folks in the US Midwest should not have focused on agriculture… and did what with those millions of acres of fertile land?

    London has multiple centers of economy not directly related to coal mining. But would it even exist in it current form without England long ago developing its now nearly extinct coal industry? Texas has one of the healthiest economies and largest sovereign funds IN THE WORLD. And while it is no longer as heavily focused on fossil fuels as it once was would it be in its current condition had it once not been heavily focused on oil/NG?

    Being focused on one’s best resource is not an option but typically a regions only choice. The mistake comes from not using that strength to develop other opportunities especially when that strength comes from a depleting resource. And that resource need not be a natural one. Consider the powerhouse Detroit once was due to the auto industry. But foreign competition took that away. And Detroit, having done little to expand beyond auto production, has suffered greatly.

  3. Anonymouse1 on Thu, 15th Feb 2018 11:56 am 

    Exactly narrativeman, why go through all the trouble of stealing all that land in the uS mid-west from the natives in the first place, if you weren’t planning on doing anything with it? That’d been dumb eh? Those indians, buffalo whatnot weren’t using it, and didn’t need it anymore, making it ripe for development. But Archer-daniels midlands, Monsanto, and tyson farms, I mean, Gawd, would never have forgiven you amerikans if you had let all that land go undeveloped. No worries narrativeman, gawd or yahweh, if you prefer, are really really happy with amerika. And with you too.

    As usual, your keen intellect has brought much needed clarity and simplicity, to complex issues. You totally demolished that dope-smoking hippie communist nonsense with your compassionate, pro-resource, pro-development message. With you in the room narrativeman, he didn’t stand a chance. I bet that hypocritical commie probably….drives, and owns a computer too. Was that commie even thinking of the children, the way you so often do narrativeman? Of course not. He’s too busy smoking legalized canadian dope, cashing his welfare cheque, and spreading his hateful, anti development nonsense.

    Drill baby drill, (or pave, strip mine, or saturation bomb with agro-chems,) whatever toxic industry you’re shilling for. Good for amerika, good for gawd, good for the children.

  4. Davy on Thu, 15th Feb 2018 1:22 pm 


  5. jawagord on Thu, 15th Feb 2018 5:27 pm 

    Silly article. Since the days of the fur trade, resource extraction has built Canada and will continue to build Canada. No Canadian Province relies solely on resource extraction, it’s just the nature of Canada being a large Northern land mass with small population that we have a higher percentage of our economy involved in resource extraction.

  6. Shortend on Fri, 16th Feb 2018 8:22 am 

    Yes, oil is a very scarce, one time gift, resource and if you watch the movie, There Will Be Blood, with Daniel Day Lewis, one realizes how difficult it is to get to market, never mind to be put to work.

  7. dooma on Sat, 17th Feb 2018 1:52 am 

    Nice Anonymouse1.

    The US takes what it wants. Cares not for nature. Buries it’s toxic legacy in the form of radioactive waste far from it’s shores.

    It has built it’s empire on the blood, torture and deaths of millions of soldiers and civilians alike.

    And it thinks a sky God looks down and loves it for it’s atrocities.

  8. Davy on Sat, 17th Feb 2018 5:02 am 

    dooma, WTF, does your nation do? What does Canada do? They are invested in the US. You guys manufacture killing weapons. Anglo-hypocrisy and the corresponding anti-American hate is the most intense of any nation I know of. I would much rather have Russians as our neighbors. I tell everyone I know how much hate Canadians have for the US.

  9. Cloggie on Sat, 17th Feb 2018 5:31 am 

    Oil is a Scarce Resource

    Coal isn’t, there is enough for thousands of years planetary consumption (after which you can write off said planet completely):

    And renewable energy is, well, renewable.

  10. Davy on Sat, 17th Feb 2018 5:40 am 

    “Coal isn’t, there is enough for thousands of years planetary consumption”

    BS, we are running out of economic coal and that is what matters. You will be running out of economic renewables eventually too. You just are in the sweet part where your fantasies can fly.

  11. Cloggie on Sat, 17th Feb 2018 5:45 am 

    BS, we are running out of economic coal and that is what matters. You will be running out of economic renewables eventually too. You just are in the sweet part where your fantasies can fly.

    Davy and technology, a marriage made in hell.

    And don’t get met started on Davy as a prophet.


  12. Davy on Sat, 17th Feb 2018 5:58 am 

    the neder nazi is always talking about technology like the preacher that holds up the book as if it has magical powers. Technology is only so good and it is a double edge sword killing us as it tries to save us. You are too stupid to see that.

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