Green car enthusiast Matthew Klippenstein pulls his early model plug-in Prius into a Tim Hortons in Maple Ridge, B.C., to take my call.
As gas prices begin to soar again Klippenstein, an engineer who, among other things, writes about the latest developments in battery-powered vehicles for Green Car Reports, tries not to sound smug.
Even before Alberta’s threats to penalize British Columbia for blocking its planned oilsands pipeline expansion to the West Coast, B.C. pump prices were already high. But by the end of last week, a surge in global oil prices had pushed gasoline in the Lower Mainland to $1.50 a litre.
A nudge from soaring gas
Dan McTeague, a former member of Parliament and a gas price analyst, says there is worse to come for those who still drive gas guzzlers. He foresees prices rising as high as $2 by summer.
“I would say high gas prices would be adding to a resurgent wave,” he says, pointing out that higher fuel costs have the same effect as carbon taxes in influencing consumer behaviour.
U.S. coal exports increased by 61% in 2017 as exports to Asia more than doubled – Today in Energy – U.S. Energy Information Administration (EIA): <a href=”https://t.co/mZ6RW96FVe”>https://t.co/mZ6RW96FVe</a>
In fact, those who keep track of carbon output worry that a recent slowdown in greenhouse gas production in many parts of the world was a false dawn, better attributed to weakened economies that therefore used less energy of all kinds.
Previous data from The Global Carbon Project had offered optimistic evidence that atmospheric carbon had begun to plateau, but in its latest report the scientific monitoring group says, “the plateau of last year was not peak emissions after all.”
‘Snapping back’ to $70 a barrel
Considering how much money is at stake, it’s surprising how poor the oil and gas industry is at predicting demand and pricing. The success or failure of investments that will take a long time to pay off, such as Canada’s Kinder Morgan pipeline, depend on guessing right.
When oil prices crashed in 2014, one of Canada’s top resource economists foresaw oil prices “snapping back” to $70 US a barrel by 2015. More than three years later, even after last week’s surge, prices still have not hit that level.
Art Berman is a petroleum geologist who has learned from long experience that predicting the price of oil ain’t easy.
“Anything’s possible,” he quips. “We’re talking about oil price!”
Number of Bakken producing wells is at an all-time high (11,855) but production is 4% less than December 2014 peak when there were 25% fewer producing wells (8,948 vs 1,119).<a href=”https://twitter.com/hashtag/OOTT?src=hash&ref_src=twsrc%5Etfw”>#OOTT</a> <a href=”https://twitter.com/hashtag/oilandgas?src=hash&ref_src=twsrc%5Etfw”>#oilandgas</a> <a href=”https://twitter.com/hashtag/oil?src=hash&ref_src=twsrc%5Etfw”>#oil</a> <a href=”https://twitter.com/hashtag/WTI?src=hash&ref_src=twsrc%5Etfw”>#WTI</a> <a href=”https://twitter.com/hashtag/CrudeOil?src=hash&ref_src=twsrc%5Etfw”>#CrudeOil</a> <a href=”https://twitter.com/hashtag/fintwit?src=hash&ref_src=twsrc%5Etfw”>#fintwit</a> <a href=”https://twitter.com/hashtag/OPEC?src=hash&ref_src=twsrc%5Etfw”>#OPEC</a> <a href=”https://twitter.com/hashtag/shale?src=hash&ref_src=twsrc%5Etfw”>#shale</a> <a href=”https://t.co/w3T54bwNpQ”>pic.twitter.com/w3T54bwNpQ</a>
The data is not in yet, but Berman notes that rising gasoline prices are likely encouraging a U.S. trend toward driving less and burning less gas.
“Considering gasoline consumption is a very large percentage of every barrel of oil, if Americans are driving less, then that says, look out,” he says.
China and India are hungry
Nonetheless, Berman thinks prices will settle above $70 US. He notes that overall consumption of oil and gas in the United States is still rising — he points to diesel used for trucking and heating oil — and he says demand from industrializing countries such as China and India will continue to surge.
And it’s not just oil. A recent report from the U.S. Energy Information Administration shows that not only did U.S. coal exports rise by 61 per cent in the past year, exports to Asia doubled.
In the face of such figures you might imagine those who fear the effects of a warming planet are throwing up their hands in despair.
That’s certainly not the case for Kirsten Zickfeld, a climate change scientist and professor at B.C.’s Simon Fraser University.
“What we see very clearly is actually a decoupling between economic activity as measured by GDP and carbon emissions,” says Zickfeld. “Our economies are growing but they need much less carbon in order to actually do that.”
The middle class insists
While countries such as China and India continue to increase coal consumption, she insists they are strongly motivated to either invent or adopt lower-carbon methods developed elsewhere, especially as the cost of that technology falls.
Hot countries suffer more from more deadly heat waves, and the large and growing middle class in Asia’s biggest cities is insisting their governments cut the medical and social costs of air pollution.
She is convinced all those factors mean companies and economies hoping to profit from long-term growth in oil consumption will be disappointed.
“As long as the rest of the world moves toward decarbonizing the energy sector and other sectors, these countries and these provinces that bet on use of oil increasing will have a very hard time,” says Zickfeld.
“I think at some point the economics is not going to work out for them.”
Follow Don on Twitter @don_pittis