With oil trading in the $60s, most investors are focusing on how that price is affecting u.s. shale drillers.

Indeed, the industry is struggling. North Dakota, for example, is producing less oil now than it did in December when production peaked at 1.23 million barrels per day (bpd).

That's no small consequence, but the aftershocks of lower oil prices have been felt much more dramatically by our neighbors to the north, Canada, and its oil sands industry.

You see, Canada is the world's fifth-largest producer of oil, and only Saudi Arabia and Venezuela have more reserves. Most of these reserves, and thus the oil production, come from the country's huge oil sands deposits. Alberta's oil sands alone hold about 167 billion barrels of oil.

But it takes a lot to get that oil out.

Two methods are used. The “in situ” method injects steam into wells to heat up a thick, gooey version of a type of oil called bitumen. The other method is basically a strip mining-type operation. Both require more energy and water than conventional methods. And oil sands operations produce more carbon emissions than drilling methods, which doesn't please environmentalists.

More importantly for our discussion, getting oil from oil sands is a high-cost operation, making it much more susceptible to the machinations of Saudi Arabia.

Projects still on the drawing board are particularly affected. According to Rystad Energy, new oil sands projects need oil to average $100 per barrel just to break even.

Canadian Cutbacks

Right now, Canada's energy industry is feeling the full effects of the Saudis' market-flooding strategy. The Canadian oil benchmark – Western Canada Select – was at $86 per barrel just a year ago. Now it's trading below $30 per barrel.

That drop is dripping down to the energy companies, too. Canada's energy industry cash flow is expected to fall this year to levels not seen since the late 1990s. RBC Capital Markets forecast cash flow to shrink by a whopping $140 billion, or 32%.