It's like an inviolable law that's been embedded in the psyche of every oilman since the Model T made its debut a century ago: Car-crazy Americans will keep driving more and more every year, using more and more gasoline.
That assumption that's held true for so long is now reversing. Americans are starting to drive less, which means the demand for oil in the United States is waning. And it's not because of economic woes. Social and demographic changes are making people, especially the younger generation, think twice about getting behind the wheel. Perhaps instead of hiring more engineers, oil companies should consider a complement of sociologists to gauge the changes that will affect the demand for their product.
For Canada, the largest supplier of oil to the United States, the implications of a stagnant to declining continental market is profound. The need to globalize our oil trade beyond North America is now more about preserving the market, rather than growing it.
On Tuesday at noon (ET), The Globe and Mail's new energy columnist Peter Tertzakian joins us for a live discussion about the future of Canada's oil industry.
Peter is chief energy economist and managing director of ARC Financial Corp., and bestselling author of A Thousand Barrels a Second (2006) and The End of Energy Obesity (2009). He is also an Adjunct Professor at the University of Calgary's Haskayne School of Business.