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By Maureen McCall
PART ONE – Geopolitical & Energy Predictions with Amazing Prescience
The Fairmont Banff Springs hotel, a “Castle in the Rockies” is a breathtaking heritage building and lofty destination from which to contemplate the bigger questions of the future directions of Canadian energy, global energy trends and the insights of Doomburg, a publication known for its entertaining, and provocative analysis and podcasts on energy, finance, and geopolitics, built by a small team of entrepreneurs with deep experience in heavy industry, private equity, and hard finances.
Brainstorming Around Things That Might be True
Of course, the highlights included Doomburg’s accurate predictions, such as the 2024 prediction that Mark Carney would replace Justin Trudeau and win the 2025 Federal election and cause a subsequent shift in Canadian energy policy from their December 2024 article titled “Alberta Clipper – A storm is brewing in the energy-rich Canadian province”.
Doomberg got the discussion underway with an explanation of the lateral thinking methods they use to brainstorm around axioms, and how every once in a while, an axiom explains the world in a way that allows them to make predictions. He elaborated that they have a few mental models under development that are somewhere between axioms and mental models. The first one is the axiom that Canada’s energy has never been more important to the world, and the potential to get big things done has never been higher.
Oil Sands? Branding Gone Bad…
But…what’s in a name? Apparently everything when it comes to branding. Doomberg added that when it comes to Canada’s oil sands – the fact they are referred to as oil sands is bad branding. He says the term oil sands is only slightly better than the derogatory term used by anti-oil groups to demonize them, namely “the tar sands”. He advocated for referring to them as “energy sands” due to all the other energy products extracted from oil sands. Doomberg also pointed out that despite WCS being “amongst the most coveted grades,” it was selling at a discount of as much as $15 at times because Canada has limited pathways to market and needs new pathways.
A Mental Model – The Decline of the U.S. Hegemony
Doomberg suggested that one of their mental models suggests that there is a very real decline of the U.S. hegemony and that decline is a substantial opportunity for Canada. If this model proves to be true, and the U.S. is in “the death throes of an empire” then the equilibrium that has existed in Canada during the past seven years is about to be disrupted. However, he predicts that Canada would be left in a position of significant opportunity, since the world needs Canadian products. He noted that currently the U.S. is enjoying the benefit of the imbalance in the customer-supplier relationship with Canada.
Midstream Assets are Immortal – So Build Them
The last mental model Doomberg described was uniquely Canadian and is well represented across industry – the idea that mainstream assets are immortal.
“Nobody cares about what the 401 (highway) cost to build,” Doomberg said. “Nobody cares about what the fleet of CANDU reactors in Ontario cost to build. Does anybody talk about the cost overruns in a pipeline anymore? Major assets are immortal. Build them. It doesn’t get more simple than that. So when we hear about the Pathways project, do what you have to do to get the pipelines built. The key is to get the immortal assets built when you can.”
“When China Comes into the Room, Profits Walk Out”
In Doomberg’s analysis of oil pricing mechanisms, they found interesting aspects to China’s energy profile. They found very little crude oil in their grid and see crude as their big weakness. However, they also view the CCP as very strategic and focused on this issue.
“Anybody who’s done business in China knows that they’re actually quite an effective government,” Doomberg said. “ When they set a national priority and objective, (like oil supply) they nail it. When China sets its mind to an industry, you know the old phrase is ‘When China comes in the room, profits walk out’.”
Indeed, Doomberg stated that oil is no longer as inelastic in its demand profile as once had been thought before the war and closure of the Strait of Hormuz. It is a fundamental shift in the mental model.
Oil Price Predictions – Short Bet on Human Ingenuity
The long-term, real price of commodities is generally always lower according to Doomberg. As proof, he advises a plot of the Bloomberg inflation-adjusted price of oil over the last 40 years. (Although he mentions this method may undershoot inflation). But even if it might be an optimistic assessment of the price changes in the U.S. over the past 40 years, pricing is still lower.
In light of the recent breakdown of the tariff discussions between the U.S. and Canadian leaders, Doomberg’s answer to a last audience question about relations between the two countries is inspiring and comes from a deep understanding of both:
“Nothing frustrates me more than anti-Americanism in Canada and ignorance of Canada in the U.S. There is a synergistic opportunity between these two wonderful countries. And I think the World Cup changed people’s perspective of what ‘the real America’ is. I’ve spent a lot of time in both countries. At their core, they’re filled with great people who want to provide for themselves and their families, leave a minimal impact on the environment and help out their neighbours. If you want to see what the vision of a unified Canada and U.S., just watch Tom Brokaw’s wonderful, touching, beautiful documentary about Gander, Newfoundland after 9/11. It’s amazing that the politicians have gotten us to the point where there’s any friction between these two wonderful countries. I know a lot of Americans. I know a lot of Canadians. They tend to get along. I suppose you know this runs counter to the whole sovereignty discussion. But really, I care about U.S. sovereignty and Canadian sovereignty more than sovereignty around the world.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.
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