Canada’s bet on fossil fuels has been put in jeopardy by the plunging price of oil. Faced with declining demands, the Saudis decided to continue producing oil at then- current levels. In very little time the supply was far greater than world market demand, and the international price of oil fell sharply.
The result is a mixed blessing for the Canadian economy. Government revenues from the fossil fuel industry have and will be much reduced. Fossil fuels companies have cut their capital expenses budgets, which in the near future will means large job losses in the tar sands.
On the other hand our dollar has fallen to its lowest price in recent years. The lower dollar benefits our manufacturing sector and exports in general.
One conclusion seems clear: Energy super powers control markets. A high cost producer of fossil fuels (Canada) doesn’t.
It is interesting to speculate if the Saudi decision to continue pumping was a sensible commercial reaction to another near-record year for renewable energy.
An article in The Manchester Guardian highlighted the progress of renewable energy over 2014. Ed Davey, the UK’s energy and climate change secretary said:
“Renewables are proving they can be cost competitive, which is why they are playing a key role in powering the economic recovery. We are transforming our electricity market [and] that’s why the UK is a leading destination for renewables and is number one for offshore wind. Since 2010, renewable electricity generation has almost trebled and renewable electricity investment has more than doubled.”
The Guardian also quoted Richard Black, director of the Energy and Climate Intelligence Unit;
“The figures show that renewable energy is increasingly cost-competitive, with solar in particular rapidly approaching parity with fossil-fuel generation. They suggest also that investors are growing weary of increasingly volatile fossil fuel markets.”
Given the sharp decline in fall oil prices, perhaps the moment when renewable energy is truly competitive is yet to come. But the smart money says it will come! . . . as global warming demands renewable energy solutions.
(See commentary at http://cleanenergycanada.org/bright-side-falling-oil-prices-part-two/)