selves as having no choice but to produce, wanting to avoid breaking contracts. As reported in The Toronto Star, Calgary analyst Peter Argiris explained, “The problem is these companies just can’t stop producing. They still need to produce, they need to pay their bills, and they need to ensure their bond covenants are not breached.”
The heavy hit to Canadian oil companies has also impacted Canada’s economy overall. Prime Minister Harper bet heavily on production from the tar sands, championing ever-increasing extraction throughout his six terms in office. The increased reliance on profits from the tar sands has translated into a bigger hit on the Canadian economy as oil prices plummet. The Bank of Canada has twice made surprise interest rate cuts since January to try to alleviate the economic impact; the spring budget was delayed; and the Canadian dollar has plunged more than 20 percent in two years.
The Environmental Impact
While Canadian oil producers are reeling, environmentalists are celebrating. Greenpeace cited the expansion of drilling in the Canadian tar sands as one of world’s biggest “carbon bombs.” It estimated that 420 million tons of carbon dioxide would be released by the expansion of tar sands oil extraction by 2020. Greenpeace further speculated that the combined impact of extracting oil from the tar sands, along with the other “carbon bombs” listed in its report, would propel the earth’s temperature above the warming limit of 2 degrees Celsius above pre-industrial levels, or roughly 61.6 degrees Fahrenheit. Scientists widely regard this limit as the threshold above which the impact on the environment would be catastrophic.
Climate scientist Professor James Hansen agreed that extracting oil from the tar sands would be disastrous for the environment, stating that it “doesn’t make sense for [most] of the people on the planet. We are getting close to the dangerous level of carbon in the atmosphere and if we add on to that unconventional fossil fuels, which have a tremendous amount of carbon, then the climate problem becomes unsolvable.” He continued that if tar sands were fully exploited, it would be “game over” for the climate.
As aptly summarized by Danielle Droitsch, senior policy analyst at the Natural National Resources Defense Council, “It’s bad for oil companies and the profit they were expecting from these projects, but from a climate perspective, it’s tremendous. . . . Any of that oil that’s not developed will help the climate.”