Yeah, right.

Sept. 2 (Bloomberg) -- Canada, the largest supplier of crude oil to the U.S., may increase output from Alberta's oil sands sixfold in the next 25 years as record oil prices spur investment in the province, a government energy adviser said.

Alberta may increase output from the oil sands to 6 million barrels a day in 2030 from about 1 million barrels a day at present, said Claude Drzymala, a senior energy adviser at the Canadian Department of Industry.

Never gonna happen. At least, not with existing technologies. Either we start building nuclear plants to start cooking the Tar Sands, or Alberta's oil sands production is going to collapse in the not-too-distant future.

The reason for this near-apocalyptic claim on my part? Simple - natural gas. I've said over and over (and over) that North American natural gas production is on the decline. Tar sands oil requires vast amounts of natural gas to heat the tar sands to the point where the bitumen can be extracted. In fact, we'd be far better off just burning the natural gas in our cars, rather than using natural gas to make oil. Using the clean, flexible, and efficient natural gas to make dirty and inefficient oil is like using prime rib to make hamburger.

But what about the new Natural Gas projects in the North? Well, the Mackenzie Valley project is projected to produce 1.2 billion cubic feet per day at it's peak - enough to make about 1.5 million barrels per day, according to this presentation. This brings our tar sands oil output to 2 million barrels per day. This also assumes that not a single cubic foot of natural gas makes it to retail users - presumably, people will sleep in their cars while their homes freeze.

So the other options are using worse forms of energy - coal, nuclear - to make the bitumen. But using coal to make oil from tar sands would almost certainly be less efficient than simply making the coal in to oil directly, using the Fischer-Tropsch process. Building nuclear capacity is a thorny question, obviously - do Albertans really want to build the next Three Mile Island so that Americans and the far more hated Torontonians can drive their cars?

In a related note, apparently half of Canada wants us to be more like the Saudis:

Montreal — Almost half of Canadians wanted to see their petroleum resources and their gas companies nationalized as fuel prices hit record levels, a new poll suggests.

The Leger Marketing telephone survey of 1,500 people was conducted between Aug. 24 and Aug. 31, the bulk being done before the devastating effects of hurricane Katrina were felt.

Obviously, the numbers are much lower in Alberta - but even there, 36% of respondents said they would favour nationalizing the oil industry. Surprising indeed. It would solve the whole "Alberta's gonna screw Ontario problem" we've been worrying about. But I don't think it would ever, ever happen - none of the provincial premiers is likely to support that precedent.

On the other hand, the main concern about Alberta's increasing wealth is that it will allow that province to eliminate it's corporate income tax - something that would essentially be a declaration of war on the other provinces. In that case, I would say the provinces should respond by federalizing corporate income taxes - they wouldn't like it, but it would be better than the alternatives. The Feds could collect all corporate incomes taxes and redistribute it like they do with so much else, and that would negate Alberta's actions.

In fact, I don't think either option is likely - I think Alberta's oil production is going to go in to decline as natural gas production declines - and it's going to be years before Mackenzie Valley is ready for production. Alberta's having a few glorious years now. But I wouldn't make plans to move just yet.