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I knew my friend Nigel was refined when he ordered the vintage chardonnay. Standing amid the cocktail crowd, his aristocratic British accent repeated the question that had already gone viral in the suit-filled room, without any help from Twitter. "It's all a conspiracy isn't it," he asked, "the Saudis are flooding the market with oil to pull down prices and prune America's shale business, right?"

I took the bait. "In fact it's more complicated than that," I explained without showing my sarcasm. "Yes, the Saudis are trying to put the American oil industry out of business. But the Americans are flooding the market too, because they are trying to bankrupt the Russians. And the Russians are also pumping as hard as they can, because they are sore at the Americans about sanctions."

I sensed the circular conspiracy theory was starting to compete with the chardonnay in Nigel's head. "So you see," I said tongue-in-cheek, "it is all a vicious spiral that's going to take the price of oil down to zero."

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Nigel was mentally trying to connect the dots, which inevitably led to the other low-oil-price question du jour: "So, this 20-per-cent price drop is really bad for Canada right?"

I purposely gave him a puzzled look, because the notion that the Canadian oil industry will be impacted by low prices more than other producers is nonsense.

"Let's think about this," I said as I carefully explained the following facts to my friend. Canada's oil and gas industry has had to live with the lowest oil and natural gas prices in the world for the past four years. At times we endured as low as $70 (U.S.) a barrel when most other producers in the world were getting up to $120. The average discount between 2010 and 2013 was $15 a barrel for light oil and $19 for the heavies. On top of massive price discounts, our industry had to adapt to a strong Canadian dollar between 2009 and 2013; regulatory tightening; and an endless barrage of public criticism that no other producing nation has had to endure. Despite these circumstances, Canada's oil production over the past five years has grown by 760,000 barrels a day in the oil sands and 210,000 barrels in the lighter grades. And consider that no oil companies in Canada, other than those with irresponsibly high debt, shut in their production immediately after the financial crisis when prices dropped below $40 a barrel. That is resilience.

Discounted prices and market constraints were, and still are mostly unique to Canada, although the situation has much improved. An innovative spirit that responded to low prices and amplified regulatory costs led progressive companies in the industry to dramatically improve process efficiencies, streamline logistics and instill a mindset of cost discipline that accompanied a tough business environment. "Name me one oil producing jurisdiction that has been bathing in $110 a barrel oil for the past four years that has had to be become as responsive to environmental and price pressure as Canadians?"

"We are battle hardened here in Canada, Nigel," I pointed out. "We've been undercutting world and American prices, boosting our output, expanding market access and improving profitability all at the same time. As a consequence of adapting to local circumstances, our oil output is likely on track to grow by another million barrels a day by 2020, regardless of this recent price drop. We now have access to a large number of U.S. refineries and are starting to export our oil to international markets through ports on three North American coasts."

"Now I'm starting to understand," Nigel said after an unusually long sip followed by five scratches behind his neck. His voice rising, he blurted: "It's you polite, but wily Canadians that are at the root of the conspiracy to push oil prices down. You are driving world prices down with your discounts, volume growth and exports!"

I smiled. Like a good spy movie with a twist, Nigel had caught onto the conspiracy theory that Canadians keep as much a secret as the canoe they hide in their basement. "Of course," he continued as he swirled his wine, "I get it now, YOU are driving prices down to punish Russia for Ukraine; to take market share from Venezuela, Mexico and Russia; and to punish the Americans for delaying Keystone XL."

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It was time to end this conversation. "Nigel my friend, now you are taking the silly conspiracy theories too far." I clinked his glass of wine with my beer as I started to walk away. "Think harder about what's important to Canadians: We are punishing the American oil industry, because Burger King bought Tim Horton's."

Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second and The End of Energy Obesity.

(Editor's note: An earlier online story incorrectly stated that Canada's oil production over the past five years has grown by 760 million barrels a day in the oil sands. In fact, the growth has been 760,000 barrels a day.)

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