Alberta will never double its oil production

National Observer

10-07-2025

An independent Alberta would be able to eliminate personal income taxes, massively reduce corporate taxes, reduce the cost of post-secondary university and eliminate it entirely for pharmacare and dental care for millions of people. At least, that's the fiction that the Alberta Prosperity Project is trying to sell Albertans right now. With all of these lofty (and supposedly 'conservative') projections, it's a minor miracle they didn't promise everyone a free pony.
At the heart of their child-like vision is the near-religious belief that Alberta can, and should, massively increase its production of oil and gas. On this, as on far too many things in their cockeyed report (immigration, for example), the supposedly anti-separation premier of Alberta is essentially on the same page. Sure, the separatist manifesto bases its rosy economic picture on an assumption that oil production will increase from 4.2 million barrels per day to 9.5 million barrels per day by 2045, while the premier merely expects it to double from current levels. But both figures are wildly aggressive and utterly at odds with an emerging economic reality that neither the separatists nor Smith dares to address.
Why? Because, first and foremost, they can't blame Ottawa or the woke Liberal government for it. This reality is being driven — pun intended — by China and the rapid, almost breathtaking progress of its industrial electrification strategy. That's most visible in the growing fleet of electric vehicles coming out of its factories, ones that are both more technologically impressive and less expensive than anything being made in North America and are dominating global EV markets as a result.
Just ask the CEO of Ford, Jim Farley, who has reportedly visited China seven times over the last year and even taken possession of a Xiaomi SU7 to test it. As he told author Walter Isaacson during the recent Aspen Ideas Festival, "it's the most humbling thing I have ever seen. … Their cost, their quality of their vehicles is far superior to what I see in the West.'
Those EVs, and the broader push towards economy-wide electrification they represent, are already bending the curve on global oil demand. According to the latest International Energy Agency estimates, China's total oil consumption will peak in 2027, while Sinopec, the country's largest refiner, thinks that domestic demand for gasoline and diesel has already reached its zenith. All told, the IEA thinks global oil demand will top out at 105.6 million barrels per day by 2029 (a scant increase over the 103.8 million barrels per day consumed in 2024) while global production capacity soars to 114.7 million barrels per day.
Even if you don't trust the IEA's data (and you should), they are hardly a lone voice in the wilderness here. László Varró, Shell's head of scenario planning, said recently, 'there is very little doubt that peak oil demand is coming.' Paul Gooden, the head of natural resources at asset manager Ninety One, said 'there is no doubt that in the grand scheme of things, this is a sunset industry.' And Bloomberg's David Fickling, who has been covering the oil and gas industry for years, wrote recently, 'the oil industry is already past its peak. The decades to come will only be worse.'
That's because the push for economy-wide electrification won't just happen in China. All the other developing markets in Asia oil and gas enthusiasts are counting on for future demand growth are watching what China is doing very closely — and how it's insulating it from the effects of Donald Trump's trade war. Tim Buckley, director of Clean Energy Finance, told the Financial Times that 'countries around the world are going to be thinking very much the same way [as China]. … Obviously, China is very well positioned to aid them in that, and come out of this geopolitical shitshow with a strategic trade weapon: collaborating with anyone that wants to work on energy security and decarbonisation.'
Danielle Smith wants to see Alberta double its oil production. The separatists she keeps catering to want to see it increase even higher. They're both delusional — and deliberately avoiding the China-shaped elephant in the room.
And then, of course, there's OPEC. The cartel that spent the last few years propping up global oil prices with voluntary production cuts has apparently tired of putting money in the pockets of its rivals. As a trio of Bloomberg reporters noted in a recent story, 'the wider OPEC+ coalition has stunned oil traders in recent months with a pivot from defending crude prices to opening the taps, agreeing to revive production in May, June and July at three times the initially-scheduled pace.' By September, it will have returned 2.47 million barrels per day to the market, or 2.5 per cent of global supplies.
None of this is good news for Alberta's apparent ambition to double (or more) its oil production. Indeed, it's the real roadblock standing in the way of new oil pipelines to tidewater: not the federal regulatory framework or irksome environmentalists but the cold economic realities of supply and demand. Oil and gas companies may genuflect to Danielle Smith's optimistic forecasts in public, but in private they understand that they're ultimately accountable to their shareholders — and required to focus on profits, not production. Are they really going to make the sort of multi-decade commitment required to keep these new pipelines filled when the long-term picture is so heavily clouded with uncertainty — and where the cost of growing their production so aggressively may outstrip the price they receive in returns?
The separatists can't be stopped from engaging in their self-serving fantasies, of course. But the premier of Alberta has a responsibility to live in closer proximity to reality. Rather than travelling around the province trying to milk people's grievances toward Ottawa, she ought to be directing their attention to the future and the real challenges that lie ahead. Alberta can prosper in this rapidly evolving global economy, whether that's by aggressively lowering the emissions of its existing oil and gas production or finding new and innovative ways to turn its massive bitumen deposits into advanced materials.
But this potential future prosperity depends on the province's willingness to acknowledge and accept the reality in front of it rather than pretending it can pursue a different one. And that, in turn, demands the sort of leadership and political courage that is conspicuously absent from the provincial political scene. Catering or cowering to separatists and their fossil-fuelled fantasies might help avoid a schism within the United Conservative Party. However, it won't prevent the economic reality hurtling towards Alberta from having the last word.