THE OIL REVOLUTION’S 7 DEADLY SHOCKS.

As oil hit US$120 a barrel in 2012, the late Harvard oil expert Leonardo Maugeri produced a seminal paper titled Oil: The Next Revolution: The Unprecedented Upsurge of Oil Production Capacity and What it Means for the World. During a time filled with ominous predictions of a coming oil supply crisis, Maugeri ripped apart the conventional wisdom and outlined the foundation for a new oil revolution that would reshape global energy markets.

Most of Maugeri’s analysis and conclusions, arresting at the time, stand up today as the price of oil has followed the logical path of a commodity that is in abundant supply at near historically low prices. As the revolution spreads, he said, it will elevate China as a new energy protagonist and make the Western Hemisphere oil self-sufficient and “the new center of gravity of oil exploration and production.”

Other dramatic effects will hit corporations and governments, especially policy-makers fixated on climate.

While many repercussions flow from the evolving transition to a new world energy order, here is an outline of seven deadly oil shocks brought on by the new oil revolution.

The end of peak oil: The idea that the world would soon run out of oil has been revealed as at best a miscalculation and at worst a deliberate political distortion. “Oil is not in short supply. From a purely physical point of view, there are huge volumes of conventional and unconventional oils still to be developed, with no ‘peak-oil’ in sight,” wrote Maugeri.

In its annual outlook this week, the International Energy Agency forecasts a 10-per-cent increase in oil demand between now and 2025, with more increases to come thereafter. Even if 300 million electric cars are in place by 2040, the IEA says “petrochemicals, trucks, planes and ships still keep overall demand on a rising trend.”

The only risk to rising oil supply, says the IEA, is not peak oil. It’s government policies that fail to provide the regulatory environment for more oil production.

New oil powerhouse: Thanks to fracking and the shale oil and gas surge in the United States, the U.S. will “pull away” from the rest of the field as the world’s largest oil and gas producer. By 2025, under a moderate IEA scenario, “nearly every fifth barrel of oil and every fourth cubic meter of gas in the world will come from the United States.”

A new analysis from Daniel Yergin of IHS Markit says “U.S. production growth is now on track to make the country a net-exporter of petroleum for the first time since at least 1949.” The surge in oil and gas production in the U.S. has significantly lowered the country’s trade deficit.

As the shale technology developed in the United States is adopted around the world, fossil fuel product will continue to rise. The United Kingdom has recently approved shale projects and China is gearing up shale plans.

Canada’s risks: The U.S. and world oil production revolution poses a threat to Canada’s oil and gas industries on top of existing pipeline paralysis.

Oil prices in the range of US$50 pose a major long-term barrier to Canada’s relatively expensive and land-locked reserves.

Canada’s best hope may be major geopolitical shifts among the world powers, as Russia, the Middle East and China play economic war games with the United States, causing price surges and disruptions.

Markets dominate: In its recent report, the IEA seems to believe that the world’s energy markets can be controlled and regulated by government policies to force reductions in fossil fuel use.

The IEA says the world needs clean energy transitions to meet goals related to climate change, universal access and clean air. “None of these potential pathways is preordained; all are possible. The actions taken by governments will be decisive in determining which path we follow.”

What the new oil revolution has shown, however, is that despite attempts to control energy supply sources, market forces have tended to dominate and set the direction.

Paris Agreement: It should be unnecessary to point out that the United Nations’ Paris Agreement on climate change has been overtaken by the new oil revolution. Where once global environmentalists could perhaps count on the possibility of a peak in oil supply and the arrival of new technologies, the latest forecasts for energy use and carbon emissions suggest the Paris talks next month will be taking place in splendid isolation from the real world.

Global carbon reduction targets are unreachable by any measure, and few countries have bothered to install carbon emissions targets. Some of those that have, including Canada, cannot possibly meet their targets.

The only conclusion, in view of the continuing increase in fossil fuel use over the next two decades, is that the Paris Agreement has nowhere to go.

Carbon pricing: The Canadian price of gasoline is set to fall this week, with gasoline price GasBuddy Dan McTeague predicting prices will slide below $1 in Toronto, down from $1.30 earlier in the year. Similar slides will occur across the country.

Such major shifts in the pump price make a mockery of any government attempt to manipulate supply and demand with carbon taxes. The $20-a-tonne carbon tax to be imposed in the new year will raise the price of a litre of gasoline by about 4.5 cents, which may not even show up at the gas pump if the oil revolution continues to dominate.

And if Leonardo Maugeri’s forecasts prevail in the years ahead, the oil revolution is likely to help produce the Seventh Deadly Shock: The end of green.