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Jeff Rubin: Oil Sands Are ‘Hemorrhaging Red Ink,’ Doomed to Shutter
Jeff Rubin: Oil Sands Are ‘Hemorrhaging Red Ink,’ Doomed to Shutter
Former CIBC chief economist outlines latest predictions at ‘Carbon Talks.’
Former CIBC world markets economist Jeff Rubin at SFU’s ‘Carbon Talks’ panel. On the right is Vancity’s mutual fund manager Dermot Foley. Photo by Mychaylo Prystupa.
Those were the takeaways from a trio of experts who spoke in Vancouver Wednesday at a “Carbon Talks” event hosted by Simon Fraser University with the David Suzuki Foundation and the Centre for International Governance.
And the reasons for them have a lot less to do with vocal activist opposition or the Trudeau government’s climate commitments than they do with the brute forces of the global marketplace for oil.
It was Jeff Rubin — former CIBC World Markets chief economist and now energy futurist — who declared some of Canada’s largest oil sands operations doomed to be shuttered.
“Hanging over the oil sands industry like the Sword of Damocles,” Rubin said, “is the fact that they are hemorrhaging red ink. At today’s prices, the oil sands are not commercially viable.”
The problem, he said, isn’t that the industry “has been targeted by sanctions or by environmental groups. The problem has been that oil imports in the United States have been halved over the last five years.”
…click on the above link to read the rest of the article…
Peak Oil Ass-Backwards (part 1): PeakOil, Meet Fractional-Reserve Banking
Peak Oil Ass-Backwards (part 1): PeakOil, Meet Fractional-Reserve Banking
(image by Viktor Hertz)
If the ongoing crash of oil prices over the past year – and now the stock market crashes of last week – have continuously taught me one thing, that would be that I’ve got very little clue regarding the economic implications ofpeak oil. To explain this I’ll have to take a circuitous, roundabout route here, but if you’ve been as afflicted as I’ve been then you might find the following a bit illuminating.
For starters, even though I learned about peak oil in 2005, fractional-reserve banking in 2006, and pretty much instantly proceeded to put two and two together, I still ended up falling for what I might unfairly call the “peak oil orthodoxy.” I’m not sure where I first came across this “orthodoxy” I speak of, but an example as good as any – and maybe even better than any – would be that of author and a former Chief Economist at CIBC (one of Canada’s Big Five banks), Jeff Rubin.
As Rubin explained it in his first of two peak oil books, because peak oil implies a curtailment on the supply of oil, and since the demand end of a growing economy is by definition increasing, the notion of supply and demand imply that prices will head upwards if supply is limited. Because of this, upon oil’s peak its price will eventually rise to such ungodly high levels that it’ll become unaffordable by many. Following that, its demand will therefore peter out, and so thanks to the new glut in supply the price will crash to equally ungodly low levels. Once things settle down and the consumer can once again afford the now lower-priced oil, the process will repeat itself since the new (and increasing) demand will once again bump up against the limits imposed by peaking oil supplies. As a result, another crash will occur. On and on the process repeats itself, but with the higher price spikes followed by higher troughs.
…click on the above link to read the rest of the article…
The Easy Oil Is Gone So Where Do We Look Now?
The Easy Oil Is Gone So Where Do We Look Now?
In 2008, Canadian economist Jeff Rubin stunned the oil market with a bold prediction: With the world economy growing at 5 percent a year, oil demand would grow with it, outpacing supply, thus lifting the oil price from $147 to over $200 a barrel.
The former chief economist at CIBC World Markets was so convinced of his thesis, he wrote a book about it. “Why the World is About to Get a Whole Lot Smaller” forecast a sea change in the global economy, all driven by unsustainably high oil prices, where domestic manufacturing is reinvigorated at the expense of seaborne trade and people’s choices become driven by the ever-increasing prices of fossil fuels.
In the book, Rubin dedicates an entire chapter to the changing oil supply picture, with his main argument being that oil companies “have their hands between the cushions” looking for new oil, since all the easily recoverable oil is either gone or continues to be depleted – at the rate of around 6.7% a year (IEA figures). “Even if the depletion rate stops rising, we must find nearly 20 million barrels a day of new production over the next five years simply to keep global production at its current level,” Rubin wrote, adding that the new oil will match the same level of consumption in 2015, as five years earlier in 2010. In other words, new oil supplies can’t keep up with demand.
…click on the above link to read the rest of the article…
