So we’re all weeping and moaning (or celebrating) about the fact that the price of oil is only lately in the $50 range. At that price, we’ll never make a buck! Right?
Except for the fact that for most of the last century, oil was priced way below $50. Have a look at the graph below.
Now quit bellyaching. ‘Cause if we had only invested our oil wealth like Peter Lougheed advised us to (and like Norway actually did), we’d be in fine shape now.
But it seems that now we can’t even make a decent living (never mind that pie-in-the-sky stuff about saving a bit for a rainy day). So what gives? Certainly we should still be making out like King Midas, right?
OK, have a look at another graph, and then put 2 and 2 together.
Were you able to figure that out? Let me help: conventional oil is easy to pull out of the ground. Bitumen (ie, oilsands or tar sands) is not easy to pull out of the ground. And it’s also harder to refine into something useful. That’s why we’re not pulling in the money like we used to. That’s why the stupid people in society are looking around for scapegoats.
The concept EROI (energy return on investment) explains it all. Essentially, it states what I just told you: conventional oil is easy to pull out of the ground. Bitumen is not easy to pull out of the ground.
What do we do now? Well, the first step is admitting that we have a problem. The second step is filling our brain with useful information, not useless information (so quit spending all your time on facebook!). Here’s some useful information: The Future of the Canadian Oil Sands