Enbridge, Crude-By-Rail, and "Price Collapse" -- The Bakken, North Dakota, USA

Updates

February 13, 2012: Bradaz has provided some nice data points for price of Bakken crude:

Month     EOG NET     NYMEX     DIFF
Jan 11     80.27             89.58           9.31
Feb 11     80.19            89.74           9.55
Mar 11     92.67          102.98        10.31
Apr 11    105.33          110.04         4.71
May 11    97.21           101.36        4.15
Jun 11     92.67             96.29         3.62
Jul 11      92.81             97.34         4.53
Aug 11    81.85             86.34         4.49
Sep 11    82.40              85.61         3.21
Oct 11     83.18             86.43         3.25
Nov 11    91.74             97.16         5.42
Dec 11    89.93              98.58        8.65

Original Post

Timing is everything.

It was about a month ago that I commented on why a pipeline company was initiating crude-by-rail.

Today, I see there is an interesting discussion thread talking about those very points.

As Hunter S Thompson would say, this is the nut of the argument:

The argument at the Clearwater MN price somehow represents all that  the oil drillers can get for their Bakken oil is lunacy. Unit trains  can go anywhere on the continent where the price is sufficient to  cover trhe transportation costs, and do. Some of the EOG trains have  been going all the way to the Louisiana coast, where oil can be  offloaded and shipped to Europe if necessary, to get the highest  price.  EOG (and the other companies too) employ. high-paid people to  decide where each bbl of Bakken oil hould go to net the highest price  to the operator (and mineral owner). THey are not somehow stuck selling it to Clearwater no matter what.

Maybe more to follow. 

Imagine: Gasoline at $5.00/gallon; oil at $125/bbl; and Bakken oil ending up in Europe.

Great companies are great because they realize what business they are in. The "aha" moment for Enbridge was when they realized they were not a "pipeline company."