Headlines within the oil gas industry often revolve around the two most fundamental questions in economics: How much is in demand, and how much is in supply. Millions of dollars worth of taxpayer and industry funds are dedicated to measuring, estimating and projecting these numbers, which show up in articles produced by the EIA, the IEA and OIES. As such, the demand curve for crude oil is so steep that small changes in excess demand or supply have a disproportionately large effect on prices. [Read more]
There’s a company drilling for oil 300 km Northeast of Regina
Regulatory uncertainty in Alberta's resource industry, strong conservative leadership by Saskatchewan premier Brad Wall and increased demand for low-cost conventional operations are sending oil and gas investors over provincial lines into Saskatchewan. Here red tape is less restrictive, the political environment inspires confidence in oil and gas operations, and the predominance of easier to produce light crude is attracting companies such as Teine energy, Raging River and Crescent Point. [Read more]
Wall leads charge on opposing Trudeau’s federal carbon tax
Friday's conclusion of the Council of the Federation Summer Meeting saw many politicians take to the microphone to voice opposition to Trudeau's desire for a federal carbon tax. Take Novia Scotia. Instead of going along with Trudeau's carbon tax plan, Premier Stephen McNeil highlighted the province's choice to impose its own tax through Nova Scotia's power grid to achieve emission targets. And Nova Scotia isn't alone in seeking a course of action different from Trudeau's. In the Yukon, [Read more]
Demystifying the crude oil pricing system
It is hard to capture in words just how important the price level of crude oil exactly is. From petroleum engineering students banking on a high enough price for a job to how fat government coffers may end up being; people's lives are changed everyday from a number placed on a barrel. Interestingly, the logical assumption that this number is derived simply from the physical aspects of the commodity; its consumption, production and trade, is insufficient to describe its price movements. In [Read more]
Three major trends influencing energy prices and GHG emissions
Given current economic realities, effectively reducing the ratio between energy consumption and the production of greenhouse gas emissions (GHG's) appears to require strong government regulation and time. Though renewables show promise, they do not come close to currently having the capability of replacing fossil fuels. Combating GHG emissions is one of societies largest challenges going forward, and it is important that our response remains well documented and grounded in reality. A recent [Read more]
Column: In Wall I trust
Given the State of California’s regulations pertaining to petroleum production, it seems ironic when Californian celebrities go out of their way to decry the environmental policies of Western Canada’s oil industry. Not only do we Canadians not see natural gas leaks equivalent to half a million cars worth of annual emissions go up in smoke, but also, unlike Canada, California has yet to enact regulations as far bearing as limiting drilling noise to ensure the safety of nesting birds. Moreover, [Read more]
How OPEC’s price collusion works against them
Recent claims that the US is now a swing producer have been cast aside by many industry commentators. The ability to ’swing’ prices, requires market share, and while averaging 9 million barrels a day is no small feat, total US crude production captures a mere 11% of the global market. OPEC production, on the other hand, captures roughly 43%. By canonical economic models, OPEC is much better poised to dictate where the price of crude oil will go than will US shale producers drilling in the [Read more]
Now’s the time for Alberta to take leadership in environmental reclamation
The International Monetary Fund, Energy Information Agency, and International Energy Agency all have one thing in common. Yes, they all have long names, but more importantly, each have recently published oil price forecasts between $40-50 going into 2017. These forecasts are complemented by March 2017 NYMEX futures contracts, currently priced at roughly $41 per barrel. What’s more, on February 24th, Alberta’s legislator revised its own crude price forecast downward to $45 from $50. With [Read more]
Economic sanctions involving globalized crude oil markets may do more harm than good
The practice of sanctioning economies has become a primary political tool in the arsenal of international politics. From the freezing of a countries’ assets, to export restrictions, sanctions, particularly on Iran, have become a recent focus in assessing the future price of crude oil. While justifications for such political action may be well grounded, its broader effects on globalized markets would be a worthwhile study. In January, the Iranian export sanctions ended in a quagmire of [Read more]
Abandoned well challenges addressed through government intervention could be the solution we’ve all been looking for
The amount of improperly capped oil wells has grown to a meteoric number, with millions estimated globally and over 25,000 in just Alberta alone As Canada struggles with even more abandoned wells caused by the recent plunge in crude prices, and as stories of major gas leaks in California sending people from their homes float the press, the economic and environmental costs associated with aging wells no longer producing is intensifying. Summarized in a report approved by the National [Read more]