CNN Fails To Mention How We Got Into This Bind, If, Indeed, It Becomes A Problem -- February 6, 2019

There is a relatively long article over at CNN explaining the problem that might develop due to loss of heavy oil from Venezuela. It's a pretty good article. The writer(s) fail(s) to mention that we would not be in this predicament had President Obama not killed the Keystone XL.

I'm not a bit worried. Refiners are going to have a problem but other than things will work out quite nicely. (RBN Energy comes to the very same conclusion.)

Charts are available are here.

First, Venezuela:

• we've been living with reduced supplies from Venezuela since August, 2017
• 15 million bbls/month = 500,000 bbls/day

Next, Canada:

• as far as I know, the pipeline situation out of Canada has not changed since at least 2014
• in 2014, the US imported 100 million bbls/month = 3.3 million bopd (from Canada
• most recently, same pipelines (maybe a bit more), the US imported 142 milliion bbls/month = 4.8 million bopd from Canada (yeah, CBR)
• by the way, look at the jump between September (121 million bbls) and November (142 million bbls)

So, without even getting any other country involved, it looks like we could lose the entire 500,000 bopd from Venezuela, and Canada could fill the gap (500,000 / 4.8 million = 10%,

Yeah, I think Canada could do that:

• remember: the Canadian government has imposed production caps on western Canadian oil due to depressed prices

Mexico is in about the same shape as Venezuela with regard to how much oil it can ship to the US.

Finally, Venezuela owes Russia a lot of money -- Russia will ensure that Venezuela's oil sector doesn't fail completely.

And even if Russia can't keep the Venezuelan oil sector from completely imploding, Russia and OPEC could easily make up the difference.

But we wouldn't even be here if President Obama had not killed the Keystone XL.