Updates
December 17, 2017: a reader sent the original post to a friend in Canada. The Canadian reader disagreed with me, saying that Justin Trudeau was in favor of "the Canadian oil sands pipeline." The reader had not heard of George Butts, but this would be like Hillary, had she been elected president, making Tom Steyer her "principal advisor." And this is the problem with folks who are unaware of the persistence of socialists: they are "taken in" by smooth talkers but are unaware of the inner circle advising their elected leaders.
Justin Trudeau can be "for anything he wants to be," depending upon which audience he is addressing, but it doesn't take a rocket scientist to know where his allegiances lie, see clip below.
Unfortunately this is a long clip but skip ahead to 2:05 to hear George Butts in his own words:
It will be interesting to see how "Canada" and Justin Trudeau respond to $30-oil.
Original Post
I didn't think that article was of particular interest -- to me it was just another political debacle for the Canadians. So I did not post it and had no plans to post it. Then something else just popped up -- again, another article from a reader, which we will look at farther below, but first:
This is not a rhetorical question. I am truly curious. US refineries are optimized for heavy oil; that's what the Keystone XL pipeline was all about -- bringing heavy oil from western Canada to US refineries along the Gulf coast. Of course that has not panned out.The article that caught my attention and changed my mind about posting that bit about George Butts follows.
Meanwhile, imports from Saudi Arabia have dropped significantly and heavy oil imports from Venezuela, I assume, are also dropping. So, where is heavy oil for US refineries coming from? Certainly not from Canada. (Most recent data is from September; it will be quite some time to see data for November/December, 2018.)
This article from oilprice.com was sent by another reader: Canadian oil prices plunge to $30/bbl. Data points:
- oil from Canada's oil sands is now selling at $27/bbl discount relative to WTI -- the sharpest difference in more than four years
- Western Canada Select (WCS): benchmark for oil from Alberta's oil sands, has plunged in December, falling to just $30 per barrel at the end of this past week
- reflects:
- different quality from lighter forms of oil
- extra transportation costs to move oil hundreds of miles out of Alberta
- but a discount is usually something like $10/bbl; not more than $25
- a price deterioration of this magnitude has not been seen in years
- reasons for increased transportation costs: CBR is imploding; perfect storm
- TransCanada's Keystone pipeline capacity was slowed in November while the company made repairs
- led to a glut of WCS; WCS was diverted into storage as the pipeline underwent repairs
- second, railroad companies were unable to accommodate the oil industry on short notice; equipment constraints and crew constraints (one wonders if such constraints are worse in a liberal-leaning/regulation-heavy country like Canada vis-a-vis the US)
- Canadian oil companies have been tied up trying to ship delayed oil cargoes; have not been able to accept oil shipments
My hunch: Justin Trudeau is receiving a lot of angry phone calls from Alberta but George Butts is more than happy with how things are turning out. Butts leads the "keep-fossil-fuel-in-the-ground" parade.
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Saudi Arabia Crude Oil
US Imports
Link:
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Venezuela Crude Oil
US Imports
Link:
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