JEFF RUBIN
Why I’ve Divested From The Oil Sands
Jeff Rubin, one of the world’s most prominent experts on the future of “black gold,†explains why the end of cheap supply means the end of easy answers to renewing prosperity—and the end of globalization as we now know it. Rubin was the former Chief Economist at CIBC World Markets (for almost 20 years), is a frequent columnist for The Globe and Mail, and is the bestselling author of Why Your World Is About to Get a Whole Lot Smaller, and The End of Growth. In this new column in The Globe, Jeff writes about why he’s divested from the oil sands:
Adherents of index investing in Canada have had a rough month as falling oil prices have inflicted considerable pain on not just the energy sector but the entire Canadian market. After surveying the landscape I’ve finally thrown in the towel on the TSX and switched my investing allegiance south of the border to the less oily S&P 500.
Look back over the last few years and the biggest challenge facing oil sands producers would certainly seem to be the inability to get a major new pipeline project approved that would allow the industry to sell its ever expanding production to new markets. Now, however, falling oil prices are changing the conversation that Big Oil is having with the rest of the country about the need to build more pipeline infrastructure. At today’s oil prices, the expected doubling of oil sands production over the next decade just isn’t in the cards. If oil sands output isn’t going up then where exactly is the impetus to break ground on a new pipeline? Indeed, the more relevant issue facing oil sands investors at the moment isn’t about how production from northern Alberta might be expanded, but whether the industry’s current level of production is sustainable.