Oil sands

Interesting:

Factoring in the oil sands, Canada's proven oil reserves are reported to be nearly 180 billion barrels, second only to Saudi Arabia.

It's stuff like this that makes me skeptical about warnings that the world is on the verge of running out of oil or that high oil prices are destined to be a fact of life from here on out. Perhaps the most well-known school of energy doom-mongering is articulated in the book Hubbert's Peak: The Impending World Oil Shortage. Essentially the Hubbert's Peak theory holds that global oil production will soon peak, followed by a relatively rapid decline. Dwindling supplies combined with increasing demand with have grave economic consequences for the world economy.

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At first glance this makes sense. However, one must also consider a few factors. First, due to improving technology there are constant fuel-efficiency gains. Second, also due to improved technology oil extraction becomes easier and cheaper over time. Third, higher costs of oil raises the amount of reserves that are available for extraction -- oil that is unprofitable to drill for at $20 a barrel can suddenly make sense at $30 a barrel.

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Indeed, we can see these last two factors in effect in the Canada oil sands story:

Until a few years ago, such projects -- called "oil sands" or "tar sands" -- sputtered at the fringes of the oil industry. But since technological breakthroughs brought down costs and oil prices have soared, companies have been investing heavily here. Oil-sands production is now profitable when a barrel of oil sells in the low $20s, analysts said -- far below the recent $50 range.

I suppose if we're choosing virulently anti-American countries to purchase our energy supplies from that Canada is preferable to Saudi Arabia.