"Shock waves of anxiety" over Shell's tar sands move

Sometime Greenpeace tar sands expert Lorne writes on priceofoil.org in reaction the announcement that Shell are scaling down their tar sands plans...

Remarks made by Shell CEO,Peter Voser to the Financial Times energy editor that his company has "clearly scaled down" its plans for a massive expansion of tar sands production should send waves of anxiety through the Canadian oil industry and a serious rethink among energy security hawks in Washington.

Since the middle of last year I have been writing about the vulnerability of the tar sands industry to a slow down in the growth rate of oil demand. With some of the most expensive cost structures in the oil industry, the future growth of tar sands production requires oil prices to stay high over the long term.

But high oil prices exert a deflating effect on the economy and in turn reduce demand and prices. Compounding this effect is the fact that high oil prices have made large economies that are increasingly dependent on oil imports, such as the USA and China, painfully aware of their economies' vulnerability to the rising cost of oil.

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