700,000 Barrels Of Oil Per Day Will Be Coming Our Way Thanks To Our Canadian Neighbors!

First off, 700,000 barrels of oil per day may seem like a lot, but Americans are currently using upward of around 20 million barrels per day. So Keystone XL would be bringing in 700,000/20,000,000 = 0.035 or 3½ % of the oil the country demands. While that’s nothing to turn your nose up at, it is certainly not enough to sever U.S. dependence on Middle Eastern oil, which is one of the main arguments in favor of the oil sands pipeline. Not to mention, since oil is traded as a global commodity, it’s not likely the pipeline will actually drive down prices at the pump, because those prices are based on futures speculation these days.

Secondly, the Canadian oil company TransCanada, which is spear-heading the project, has a pretty bad reputation when it comes to its pipeline safety record. The first constructed phase of the pipeline, which currently travels through North and South Dakota, Nebraska, Kansas and Oklahoma, spilled 12 times in 2010 in just its first year of operation. Over 30,000 gallons of crude were released. Since oil sands crude is actually just diluted bitumen, you’re dealing with oil that is far more acidic, thick and sulfuric than conventional crude oil. This means a higher likelihood of pipeline corrosion.

But the pipeline is going to be built regardless. There is too much money and political lobbying behind it to stop it. The United States of America will settle into its new sense of energy security cozying up to its friendly neighbor to the north. Gasoline prices may fall a few cents at the pump for a couple of days after the big announcement as speculation runs wild, and rainbows and butterflies will fill the sky.

At the end of the day, executives and major shareholders in TransCanada will be incredibly wealthier, America will still be bankrupt, have a few more domestic oil spills to tack on to its record, and will still be utterly dependent on foreign countries to meet its energy needs.

Pipe Dreams: Will Keystone XL Really Save America?, energydigital, October 2011 *
  • Note: Click on magazine cover at upper right of first page to read same article in digital reader format, which includes a map of existing and proposed pipelines as well as more pics.

The world’s oil supply ranges from very cheap to produce (Saudi Arabia) to very expensive depending on the thickness of the oil, the size of the reservoirs, and the remoteness of the location.

There is not nearly enough light, sweet crude in the world to supply the needs, so heavy oils as found in Califorina, Mexico, Venezuela, Canada and other countries have to make up the difference. Furthermore the reserves of light crude are decreasing, while every year more and more heavy oil deposits are found, making the average crude produced progressively heavier. The heavy oil produced in California is very sticky and needs additional energy to turn it into light for further refining, a fact conveniently overlooked by Arnold Schwartzenegger when he tried to ban Canadian heavy oil from his state.

The world crude price is normally determined by market demand, but the floor price would be the production cost of the most difficult oils, for obvious reasons. That is presently about $60 per barrel to ensure an ongoing supply. It might surprise you that Saudi light crude can be produce for about $1 per barrel, and shipped to the US for an additional $1!!!, sold for $79!! at the port of Houston. So the Saudis are really raking it in and spending the money not too wisely. Since almost nothing is manufactured there, and very little food is grown, the oil money keeps the country running and also paying for 4 million!! guest workers who do all the heavy lifting. It’s probably the first country in the world where the average citizen regards working as an optional lifestyle.

Heavy oil from Canada is normally discounted $15 or so per barrel from the world price to acccount for the additional processing required. So in that respect it is cheaper, but that won’t reflect in the pump price for gasoline.

Other countries, such as Mexico, need oil income to balance their books since agriculture (legal) and manufacturing do not provide enough jobs and income. Mexico’s production costs per barrel are considerably higher than those in the Middle East, and most fields do not have the high production per well.

Like mining, oil production needs cheap and expensive deposits to meet total market demand. The US and Australia produce some of the cheapest coal in the world for both power generation and steel making. I visited a power station in Wales, once the world’s largest exporter of coal. It now imports coal from Viginia to power its electric plants, since all the local mines are very high cost now and Margaret Thatcher shut them down most of them when she was prime minister of Britain.

In summary, don’t look for cheap oil anytime in the future; the production cost of the most difficult deposits will set the floor price and the market fears and speculation will set the ceiling. That can be as high as $140 per barrel when the recession ends. Moving “off oil” any time soon is a pipe dream no matter what the politicians and Al Gore say.

“700,000 Barrels Of Oil Per Day Will Be Coming Our Way Thanks To Our Canadian Neighbors !”

That’s $56 million dollars a DAY heading north into Canada…Not to mention a vast swath of real-estate is being laid to waste by the Alberta Tar Sands mining and extracting process…

Actually, it is more like $45 million since it sells for $15 less per barrel that light, sweet crude. Still, it is a lot of money. Until you consider that $1.6 billion is spent for oil daily here. That works out to $584 billion annually. Now that’s some serious money.

Also, That Real Estate Is Worthless For Practically Anything But A Pipeline ! It’s Great It Can Be Utilized !

CSA

Okay, I’m coming around. I’m almost convinced.

Whitey, Are You OK ? You Look Kind Of Pale.

:wink:
CSA

Remember, “liberal” used to mean “open-minded” before it was turned into a dirty word. :slight_smile:

Caddyman; the total 2-way trade between Canada and the US is over a trillion a year, the largest between any two countries. The US takes in $1 billion per year in surplus revenue from Canadian tourists alone, that’s 2.7 million per day more than Americans spend in Canada. The total goods trade balance used to be $34 billion a year in Canada’s favor when the auto industry was thriving; now it’s considerably less, even with the increased oil exports. Trade in goods and serveices between Canada and the US is roughly balanced, while trade with China shows a hugh deficit by the US.

I bought 3 Dell computers over the last 10 years; the first one was made in Austin, TX, the second one in Malaysia, and the last one in China.

As pointed out by jtsanders, the total US oil imports are over 50% of total consumption of $586 billion, or $293 billion per year. Those come from Canada, Mexico, Venezuela, Saudi Arabia, Nigeria, and a few other countries.

If you are worried by serious money outflows, Walmart imports nearly everything (non-food) they sell from China. But international trade drives increases in living standards for everyone.

These imports from Canada will replace other imports, and won’t add to the deficit. The US’s oil production is now expected to increase for the next several year, meaning overall imports will level off, maybe even decline:

And 90% of the controversy about the oil pipeline from Canada is a effort to slow/block the oilsands development, not because of actual pipeline issues. The US is cris-crossed by tens of thousands of miles of oil and gas pipelines. Why don’t we hear about them? Because problems are extremely rare.

"But international trade drives increases in living standards for everyone. "

No it doesn’t…International trade drives wages down to the common denominator, about $1 a day while making a small percentage of people very rich…Americans maintained their standard of living by using credit to inflate their incomes…That all came to a screeching halt in 2007. The number of foreclosed homes on the market and waiting to go on the market stands as a sad testimony to our declining standard of living…

The Canadian Dollar is now worth more than ours on the strength of its oil, timber and electrical power (hydro) exports…

"The Canadian Dollar is now worth more than ours… "

That was correct a short while ago. But today, one US dollar brings $1.04 CA. A couple of years ago, it was $1 US = $1.25 CA. But the trend over the last 10 years is to approximately equal value.

Currencies float up and down depending on the strength of the respective economies. When I did a tour of Europe in 1960!!, the Canadian dollar was worth $1.04US because of the mining boom in Canada. Even the Swiss Franc was worth only 25 centsCAN. The Swiss are now trying to devalue thie currency, since it is too high. The last time I was in Geneva airport, I has a burger and fries for $25!!

In general, any country that lives within its means (Goverment budgets) and can balance imports and exports will have a strong currency. Before the Euro, the Dutch Guilder and Swedish Krona were strong currencies, because these countries were responsible fiscally. Today, Germany is one of the few fiscally responsib;e countries in the Eurozone.

There are two views of world trade; the unions are against it (“race to the bottom”) and most people are for it. I own a Tilley hat, a sailing and hiking hat made in North America. It costs $50 and has a lifetime warranty. I also own a “Misty Mountain” hiking hat that cost $12 and is made in Thailand. Both are the same quality.

I all the stuff Caddyman buys was made in the US by unionized labor, he would only be able to afford one half or less the things he owns. Cheap manufactured goods from abroad raises US living standards, while providing those countries with a better living standard.

In economics the “Law of Comparative Advantage” applies. Those countries that are capable will make those things with the highest value added per manhour, and speicialize in those. They will import things with low value added per manhoiur. That’s how Germany, the country with the world’s highest wages, also became the world’s largest exporter!! Braun, the elctronics and appliance maker, now owned by Gilette, makes only high end razors and kitchen appliances. However, many are now made in Mexico or Spain, which have lower wages. Braun still designs and controls the quality. German machine tools, cars, trucks, power generation and aerospace equipment account for the major high value-added exports.

Switzerland focuses on watches, many of the high end, expensive industrial machinery, tourism, expensive chocolat and cheese, banking, and a few other niche activities. They have zero population growth, and are doing just fine. Their fiscal behavior is impeccable.

Countries that have high tech industries, like the US, Sweden, Germany, Switzerland, etc. will always have a high living standard, as long as they keep innovating and exporting. The death of Steven Jobs of Apple was mourned around the world.

US strength has always been in innovation, agricultural products, entertainment industries, and until recently, mass-producing quality goods at low prices. The lattter is where devolping countries such as China are gradually taking over.

Why not move or build the refining facilities in the northwest instead of 1700m of pipeline ?
I’m sure those guys would like the jobs just as much.

The other major issue with oil sand production is the strip mining style of accessing it which can be addressed with a comprehensive reclamation program.

Refineries are hugely expensive, and with the increasing CAFE standards we have more than enough refining capacity, so running a pipeline to hook into the existing pipeline network makes more sense, I guess.

texases

<font color=“blue” face="times>And 90% of the controversy about the oil pipeline from Canada is a effort to slow/block the oilsands development, not because of actual pipeline issues. The US is cris-crossed by tens of thousands of miles of oil and gas pipelines. Why don’t we hear about them? Because problems are extremely rare.
"Environmental groups say the study [by the Canadian Pipeline company] underplays both the emissions impact of the new pipeline and the danger posed by a spill of crude from oil sands, called diluted bitumen, a hard-to-remediate mixture. An accident at a pipeline owned by Enbridge Energy in July 2010 dumped 843,000 gallons of such oil near Marshall, Mich.

"A 35-mile stretch of the Kalamazoo River remains closed and cleanup has proved extremely difficult, running over budget and past deadlines set by the E.P.A. Estimates of cleanup costs have run well over $500 million. The E.P.A.’s regional administrator said her office had never seen a river system affected by so much submerged oil.

"But the impact report for the Keystone XL project says that “response to a spill from the proposed pipeline would not require unique clean up procedures.” [Yeah, sure, we all believe that!]

Pipeline Review Is Faced With Question of Conflict, NY Times, October 7, 2011

texases
<font color=“blue” face="times>Refineries are hugely expensive, and with the increasing CAFE standards we have more than enough refining capacity, so running a pipeline to hook into the existing pipeline network makes more sense, I guess.
The Keystone XL pipeline will be transporting diluted tar sands, not crude oil.

This is another case of private profits and public losses. If there are large spills, taxpayers will pay for the clean-up. Does anyone think those companies will be self-insured for catastrophic spills? No insurance company or consortium of insurance companies would cover them.

The pipeline will be transporting ‘dilbit’, short for ‘diluted bitumen’, which is a mixture of crude oil and tar, very little different than crude. No sand is in the dilbit, that’s where it comes from, but all the extraction occurs in Canada. Crude oil is commonly transported by pipelines. The controversy is an effor to stifle tarsands development, and there are reasons to be concerned by the mining process. But the pipeline issues are far overblown, pipelines can be carefully monitored and inspected.

As for spills, the company, not taxpayers, will pay for the cleanup, plus sizeable penalties and fines. The are required to be insured, and it is not difficult to do that on such a low-risk enterprise.

Again, pipelines are a common, low-risk means to transport crude.

An accident at a pipeline owned by Enbridge Energy in July 2010 dumped 843,000 gallons of such oil [diluted bitumen] near Marshall, Mich. A 35-mile stretch of the Kalamazoo River remains closed and cleanup has proved extremely difficult, running over budget and past deadlines set by the E.P.A. Estimates of cleanup costs have run well over $500 million. The E.P.A.’s regional administrator said her office had never seen a river system affected by so much submerged oil.

That is happening right now, 2011, from an a diluted bitumen oil spill in Michigan that occurred in July, 2010.

Did you see the picture on the front page of the NY Times? You can’t talk your way around that.

We Need Oil. The Country Runs On It. There Have Been Accidents And There Will Be More Accidents. People Panic And Think It’s The End Of The World.

You would think that accidents like Exxon Valdez and the latest Gulf spill were the end of the world and our environment would be damaged forever, but Mother Nature cleans these things up fairly quickly.

They make for good evening news and I’m not saying they are a good thing. They are terrible if you live or work in or near the spill area. They should be kept to a minimum. There will be more spills, but we need energy !

We can completely stop these accidents by stopping our use of oil / gasoline.
You go first.

CSA

Here’s what the EPA said in August: “EPA has incurred $29.1 million in cleanup costs, which Enbridge will be required to reimburse.” I didn’t see a $500 million number. And EPA reported it was crude, not dilbit. Still a very bad spill, of course. Looks like about 90% of the crude has been recovered so far.