Conserve even cheap oil
The following editorial is excerpted from the Calgary Herald. Natural Resources Canada has issued its energy outlook for the four years to come, and forecasts oil will drop to $45 a barrel by 2010.
A much more likely scenario is that proposed last week by Don Drummond, chief economist with TD Bank Financial Group, that suggests oil will fall to $50 this autumn, rise to $55 next spring and return to $60 in 2008, despite predicted low growth in the U.S. The demand fundamentals are there.
But these analyses leave little room for the unforeseeable. For example former CIA director James Wolsey, speaking in Calgary three weeks ago, said the world would now be dealing with $200 oil, had February’s al-Qaida attack on Saudi Arabia’s massive Abqaiq oil complex been successful.
Anything can happen, and it doesn’t take a shortage to drive up prices, just the fear of one. Still, if the Natural Resources prediction is correct — and some industry pundits still echo its contention — it’s bad news for any government department trying to promote alternatives to gasoline as fuel for transportation.
If conservation, fuel cells, biodiesel, ethanol or electricity are to have any part in weaning North America away from its chronic vulnerability on imported oil, oil has to be expensive — very expensive. In fact, it probably needs to be more costly than we care to contemplate. A brief flirtation with $78 sparked neither great changes to people’s driving habits nor a widespread switch to hybrids.
Yet, the need to first contain, then reduce oil use on this continent is critical for reasons of national security. And, while the principal onus rests on the U.S., which imports roughly half of the 19 million barrels of oil it uses every day, Canada may as well get efficient, too. For the foreseeable future, there will be a highly profitable market for any product this country produces, but does not use.