Things are wretched in Alberta. Unemployment is rising and real estate prices are sinking. Cheap oil has devastated the petro province. But, Mitchell Anderson writes, cheap oil could save the planet:
Most of the easily extracted oil deposits are long gone. What's left are high-cost, high-risk long-shots like the Alberta oil sands, deep water reservoirs off Brazil and drilling the high arctic. Companies hoping to profit from the last dregs of the petroleum age need to convince their investors to part with massive amounts of capital in hopes of competitive returns often decades down the road.
The wheels are now falling off that business case. Billions have already fled the Alberta oil sands in the last year as the global price of oil collapsed from over $100 per barrel to below $40. Shell recently announced it was writing off $4.1 billion on their failed arctic exploration program.
The planet gets thusly saved -- not at international confabs -- but in the boardrooms of fossil fuel companies increasingly unable to convince their investors to proceed with massively expensive and risky projects that might only be profitable dozens of financial quarters into the future.
And, as the price of oil falls, alternative energy sources become more economically viable:
And won't falling oil prices torpedo the nascent renewable energy sector? Perhaps in the past, but it's not so nascent anymore. Deutsche Bank recently released a study showing that solar generation costs will match or beat conventional fuels in 80 per cent of global markets in two years.
And because oil is primarily a transportation fuel, the bank believes ''oil prices do not have a material impact on solar demand.'' Their analyst Vishal Shah added, ''We believe the trend is clear: grid parity without subsidies is already here, increasing parity will occur, and solar penetration rates are set to ramp worldwide.''
For Alberta -- and Canada -- the conclusion is inescapable. We have spent the last decade putting all of our economic chips on oil. We have adopted Casino Capitalism. In a casino, you can win big for awhile. But, when you lose, you get taken to the cleaners.
If we don't change our economic model, we will be forced to change it.