Vice by Geoff Dembicki / Aug 14 2017, 7:18am
Alberta’s bitumen may be obsolete much sooner than you think.
According to the oil industry our society will keep burning oil for a long time. The low oil prices that have wreaked havoc in Alberta and other oil-producing jurisdictions for the past several years are just a temporary slump. Prices will soon rise. Global demand will grow. Canada’s oil sands will expand by 53 percent. Any talk of the industry soon collapsing is “greatly exaggerated,” argues the Canadian Association of Petroleum Producers.
But more and more evidence suggests sunny predictions such as these are dead wrong. The global oil industry could be on the brink of a rapid and irreversible decline. If and when it begins, Canada’s oil sands would be one of the first major casualties.
This is a scenario that few people in Alberta want to acknowledge. Just the mere mention of it causes defensiveness and outrage. “We’re not going anywhere,” said Alberta Premier Rachel Notley after Prime Minister Justin Trudeau raised the prospect of an oil sands phase-out earlier this year.
“If Mr. Trudeau wants to shut down Alberta’s oil sands, and my hometown, let him be warned: he’ll have to go through me and four million Albertans first,” warned the Wildrose Party’s last leader Brian Jean.
Yet VICE spoke with two prominent economists—one in the US and one in Canada—who think we should take the prospect of an oil sands collapse very seriously. They think it could happen within the next decade. And there is little that anyone in Alberta, or Canada for that matter, can do to stop it.
They think the collapse could be set in motion by electric cars, self-driving technology, new business models for transportation and the international fight against climate change. They believe global oil demand will peak within the next few years. Oil prices will crash. High-cost sectors like the oil sands will shrivel while companies like Suncor and Exxon struggle to survive.
This will be financially devastating to the province of Alberta—as well as any other place on the planet that relies heavily on oil revenues. Alberta will lose a key source of income at the same time that it becomes liable for billions of dollars in ecological cleanup costs. Yet overall the Canadian economy will be fine. Oil is a small enough part of Canada’s GDP that the country as a whole won’t suffer catastrophic losses.
If you accept this scenario is a likely possibility—and there are compelling reasons to do so—then we should be doing all we can to help places like Alberta transition off oil. Because in the end, building more oil pipelines while denying the looming threats on the horizon will only screw us further.
Most people imagine societal change as a slow and linear process. But in reality, change can often be the result of sudden and unforeseen disruptions. Tony Seba is fascinated by these disruptions. He’s spent years studying them. And the Stanford University futurist and economist regularly tries to predict when and how they’ll occur. Seba’s most recent prediction is a doozy. He argued in a report this spring that gasoline and diesel-powered vehicles will effectively vanish from American roads by the year 2030. Large fleets of self-driving electric vehicles will replace them. “It’s going to make no economic sense to own a car—ever,” Seba argued.
Here’s how he thinks this scenario will unfold: Though electric vehicles make up a tiny percentage of vehicle sales, there is clear evidence that this is changing. Volvo will only build electric and hybrid models starting in 2019. Large European cities are moving to ban combustion engines. Tesla has a higher market valuation than General Motors. China is eager to get into the market. It’s not hard to see where all this leads. “The cost of electric vehicles is coming down substantially,” Seba said.
That’s only part of the story though. The model of car ownership is also changing. Only a decade ago, the idea that you would pay for access to a fleet of vehicles via a powerful computer in your pocket was unthinkable. But Uber is now valued at $68 billion and Car2Go has over two million members. Companies like these are making it culturally acceptable to think of vehicles as a service instead of a consumer good. And they are building a vast digital infrastructure for ride-sharing in the process.