Last week’s decision by Malaysia’s state-owned oil and gas company, Petronas, to pull out from a $36 billion investment in B.C.’s Pacific-Northwest LNG project was not entirely surprising.

The telltale signs had been lingering for a while — a complicated five-year approval process that had cost Petronas $10 billion, unresolved environmental concerns, and protests from First Nations communities that the LNG project would infringe on their ancestral lands.

But the deal breaker, it seemed to be, was natural gas prices. For Petronas, it just did not make financial sense to weather the bureaucratic hurdles imposed by both the provincial and federal governments, while at the same time attempting to address the grievances of a host of other non-state actors. The monetary payoff just wasn’t there.

The last time natural gas prices peaked, was early 2014 — they were US$6 per million British thermal units. Since then, they’ve been on the decline, in sync with the trajectory of oil prices. On Monday, natural gas prices had their worst day since February, falling to US$2.79/million British thermal units.

But Petronas has not been the only foreign investor to flee Canadian shores. Just this year, Houston-based oil and gas company ConocoPhillips dumped some of its oil sands assets on Alberta’s Cenovus Energy. In March, the oil extraction behemoth, Royal Dutch Shell sold most of its stake in Alberta’s oil sands, saying it was “no longer a strategic fit.” And in February, ExxonMobil announced that it could no longer “profitably develop” 3.6 billion barrels of its oil sands reserves.

For a country whose energy sector accounts for almost eight percent of GDP, the plunge in oil and gas prices that began mid-2014 clearly hasn’t been working out too well. Fleeing foreigners is just one part of the story — the global slump has actually wiped out tens of thousands of jobs, primarily in Alberta and Saskatchewan.

The Petronas-Pacific Northwest partnership would have mitigated these jobs losses to some extent — the project was seeking to hire close to 5,000 construction and long-term operations personnel.

But the fact of the matter is, the oil and gas glut is here to stay. Our dependence on oil, especially in North America, is tapering off (some say it’s inversely correlated to the rise of electric cars).

In the last three years, global oil consumption has only grown by less than 1 percent, a sharp deviation from the 1.8 percent norm over the previous 10 years. That begs the question — what exactly is Canada’s back-up plan?

Much Ado About Nothing

We don’t really need one for the next decade at least, argues Veritas Investment’s oil and gas analyst Nima Billou.

“People worry most during the period of low oil prices. The demand we will see from the emergent middle class in China and India for affordable vehicles is going to offset any penetration of electric cars in North America.”

Indeed, sales of electric cars make up just one percent of overall vehicle sales, according to BMO Chief Economist Douglas Porter. “Overall global oil demand is still rising,” he told VICE Money.

“Sure, in 20-30 years, maybe gasoline will go the way of the dodo bird,” says Billou. “But companies will adapt really quickly – in Canada more so than other places because we have had a multi-decade history in this country of managing boom-bust cycles.”

The Future Is Bleak

But Jeff Rubin, Canadian energy economist and author of The End of Growth: Oil and the No-Growth Economy has seen no indication that Canadian oil producers are adapting to changing economic times.

“The only people buying oil sands reserves are Canadian operators,” says Rubin. “Foreigners are saying look, this doesn’t make sense today. If there is a future for this industry, it’s about digging up as much bitumen as possible and sending it refined.”

Rubin argues that not only are Canadian oil sands producers losing out from low oil prices overall, overseas markets typically pay less for bitumen and other forms of heavy oil than they do for refined oil from the U.S. Gulf Coast.

“We will capture a lot of added economic value if we export our product refined, instead of in the form of tar. That’s more opportunity for local companies like say, Cenovus to do more with their product,” he says.

That’s just a short-term solution. “A return to anywhere close to the triple-digit prices that spurred the development of the oil sands, as well as shale and other high-cost supply sources, seems less and less likely in a world increasingly governed by international commitments to reduce carbon emissions,” wrote Rubin in a November 2016 Globe and Mail op-ed.

The oil sands account for about 0.13 percent of global greenhouse gas emissions. Sure, that might seem negligible, but in order to meet the International Energy Agency’s 450 scenario (limiting global increase in temperature to 2 degrees Celsius) global oil consumption will need to peak by the end of this decade, and fall by nearly 25 percent over the next two decades.

That, according to Rubin, would mean reducing oil sands output by more than 600,000 barrels a day (current output stands at roughly 2.75 million barrels a day). An unsustainable scenario indeed.

The recent carbon tax plan announced by the federal government in October has added even more uncertainty to the future of the oil sands. The impact of the carbon tax will largely depend on the price of oil.

According to a report from TD Economics, if oil prices are roughly US$60 per barrel or higher, the carbon tax will be unlikely to make or break an investment decision. As of Wednesday evening, crude oil prices have been hovering around the US$51 mark.

“We are probably at the bottom of this cycle now, but the industry is efficient. A year and a half, to two years, we’ll easily be in the US$60 range,” says Billou.