Canada's Tar Sands Could Threaten OPEC's Dominance
Increased production from Alberta's sprawling tar sands could eventually blunt OPEC's power and help establish an "upper limit" on world oil prices, Congress' Joint Economic Committee says in a new report.
Canada's tar sand reserves are listed at over 170 billion barrels, making it second to Saudi Arabia. The tar sands' output is currently over 1 million barrels a day and could reach 3.6 million to 4.7 million barrels a day by 2020, the report says.
It could take a decade to stabilize the per-barrel cost of production while accelerating output, the report says. But if it happens, it would "cap the power of OPEC," the report says.
"OPEC will be unable to to push the market price higher by curtailing its oil output, because oil sands producers will hold sufficiently large reserves from which to make up the difference without increasing their cost," the report says.
The sands production will easily offset declines in conventional crude oil in Canada, the report says. Over the next decade, Canada can be expected to move from seventh to fifth place among world producers, the report states.
Canada is already the United States' largest foreign supplier of crude oil. "The oil sands will not solve the energy problem, but they will help undermine OPEC's power to increase energy prices and thereby enhance U.S. energy security," said Rep. Jim Saxton (R-N.J.), the committee chairman.
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