|
|
|
|
|
These are some of the major stories Report on Business followed this week. Get the top business stories on weekdays on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Peak oil debate dead?
An "unexpected boom" in oil supplies ends the debate on "peak oil," Bank of Montreal's chief economist believes.
Sherry Cooper took a look this week on the surge in production in the United States and Canada. And ironically, she says, many are looking at the negative hit to the economy from high prices while it's oil production that has been the biggest boon to economic growth and jobs.
"Two years ago it was believed that oil molecules were too large to extract from shale," she said. "But now, new fracking technologies and horizontal drilling has led to the biggest oil boom in many years."
There are bottlenecks in pipeline capacity, of course, which is why Canada needs to export beyond the United States.
"The boom in shale oil drilling is just what the struggling U.S. economy needed," Ms. Cooper said.
"This, along with cheap shale gas, is providing enormous stimulus to many sectors and regions. The Canadian oil and gas industry must export oil to China and the rest of Asia to offset the negative impact of reduced U.S. oil demand going forward. Canadian pipeline companies and oil service companies will continue to benefit from the U.S. boom, and so will other Canadian exporters to the U.S. market. This energy boom is creating jobs and boosting income, assuring the U.S. economy continues to recover."
After Russia, Ms. Cooper said, the United States is now the biggest non-OPEC oil country in the world. Canada comes next. And, she added, that's hurting Canadian companies somewhat because they "carry the burden" of the high-cost oil sands.
When all is said and done, though, "this unexpected boom in oil supply puts to rest the so-called 'peak oil' debate, where adherents to this theory argued that the supply of oil is fixed and dwindling as traditional oil wells dry up. They argue that this would lead to much higher oil prices and reduced travel and transport. Some even suggested it would spell the end to globalization."
