Oil and the economy

The problem seems to be that the Saudis can outlast all of the other oil-producing companies by keeping supply up for a year or two and wait for our more expensive operations to shut down. It's got to be hugely expensive to keep shutting down and starting all over again when prices rise.

 

If this happens again once the U.S. becomes self-sufficient, all we have to do is just whisper an OPEC boycott. The Saudis will do a swan dive for the spigots.

 

It is not as expensive as you would think. Rigs move quite a bit in the Baaken basin and typically shut down for Spring thaw, move and set up again. As soon as the price goes up they will be right back at it.

The Oil Sands operations are in it for the long haul and while most companies are stopping new capital projects, the existing operation is not really slowing down.

New off shore exploration is probably off the table until the price of oil goes back up.

On a side note if someone would tell the president not to veto Keystone XL it would be appreciated . The oil is coming out of the ground anyway, might as well have easier access to it.

 

If the Canadians want the pipeline so bad, they can build it in their own country.

But, funny thing, the Canadians know it will be an environmental disaster, so they said hell no.

I was reading something yesterday that said that a Saudi royal, one of the princes, had $33 billion in cash, on hand.

That's just a staggering amount of money.

 

???

They can build a pipeline to US refineries and ports in their own country? How do they do that?

 

Canada has both refineries and ports. They have no particular need to use American facilities.

 

Canada has 19 refineries, we have 142.

Canada's refineries only have about 50% of the capacity need to refine all of the oil coming out of Canada, and they already refine more oil than needed for internal consumption.

Canada's refineries are mostly around Edmonton -- not a port city -- and in Ontario, Quebec, and the Maritime Provinces, which are not ideal for export to oil consuming nations in Latin America, the Carribean, North Africa, and Asia.

Since Canada hasn't built a refinery since 1984, the only other option might be a pipeline to British Columbia, where they could ship unrefined crude to Asia, where it would need to be refined.

The American refineries, with capacity, and access to well situated ports, owned by US oil companies that have relationships/investments/partnerships with Canadian oil companies make a lot of sense.

 

Canada also has an existing pipeline that runs to the Atlantic Ocean that currently runs natural gas but could be converted.

The efforts to do that have been blocked by the Canadian government over environmental concerns.

So, instead, lets have an international company seize the private property of American citizens to build a pipeline that creates only a few thousand temporary construction jobs and virtually no permanent jobs.

And, lets run that pipeline through prime farmland and near a major aquifer that, in the case of a spill, would have consequences that last a lifetime.

 

The pipeline that runs East carrying natural gas is being converted. It is supported by all the provincial governments and the federal government which is a feat in itself.

I think there has been a reroute of Keystone XL to avoid the aquifer in Nebraska.

The opposition to it is symbolic rather than practical. With the talk of energy security I am surprised that there is opposition to it. It is being protested because protesting Saudi or Venezuelan oil is a non starter but by protesting this pipeline people feel good about taking a stand against fossil fuels, however misguided that stand may be.

 

Yup... for the last 30 days, I've been borderline obsessed with Emerald Oil (EOX) - a company that speculates in North Dakota. Hit a bottom of about 74 cents a share (it was once trading at more than $100/share) and bounced up to $1.05 today.

 

Overnight gas jumped up to $1.99 at the usual places that jump first. Some places had fallen back to $1.79 before.