Jim Hamilton at Econbrowser talks about Alberta's oil sands:
One of the reasons for interest in oil sands is the potential magnitudes involved. The Alberta Energy and Utilities Board estimates the ultimate volume of Canadian bitumen in-place at 2.5 trillion barrels, which if it could somehow all be extracted would be enough to satisfy by itself the entire world petroleum demand at current rates for 80 years. Even if only a tiny fraction of this proves ultimately to be developed, this would be a very important resource indeed.
Nor is the exploitation of this resource merely a theoretical possibility. Almost 40% of Canada's current crude oil production of 2.6 million barrels per day is derived from oil sands. About 1/3 of current production is from in situ methods, in which the oil sands are heated while still underground, and 2/3 from open-pit mining and above-ground processing.
He notes that there are several obstacles before all this becomes a reality, most notably the massive capital investment that will be required.
North of the border, of course, we've been talking about the oil sands for quite a while, but generally with such qualifiers as 'may possibly' and 'in the not-too-distant future.' It's only recently that discussions of their effect on world markets have started to have policy implications for the here and now.
For example, we're even starting to think about the bargaining power they may provide during trade disputes. Take the never-ending saga of the softwood lumber dispute, for example: despite numerous NAFTA rulings in favour of Canada's position, the US govt doesn't seem to be in any hurry to conform to its treaty obligations. So it shouldn't be too surprising to see news items like this:
On the weekend, NDP leader Jack Layton proposed a neighbourly warning that Canada is prepared to impose export duties on oil and gas exports to the United States if they don’t agree to respect NAFTA and refund duties.
As things stand, this is more than a bit silly: we don't have the market power to move oil prices on our own.
Update: The US has announced it is reducing duties on softwood lumber imports. I'm sure it's just a coincidence...