Tuesday, May 05, 2009

It's All About the Canadians

An article at Rigzone about the impact of Canadian oil in the pipelines of America. Take note, a new pipeline is going to go through Chicago (underground I am sure) from Canada to Oklahoma.

Read this article carefully and consider its implications; local small oil producers get crushed and America retains its dependence on foreign oil, albeit Canadian. I suppose because it's Canadian oil that's OK. They look like us and share our values. I mean really, who would you rather be dependent upon? The Canucks or the Arabs?

I ask this, not to be snarky (well OK, maybe a little) but to point out that the continuing claims of ending dependence on foreign oil are nothing more than hot air. The current situation in those pipelines is hurting some fellow Americans, and creating a situation where dependency on Canada is all but assured. Is Canadian oil foreign or domestic? I vote "foreign" since it isn't being produced in America. Therefore, we will never end our dependency, never. On top of that, life becomes hell for American producers, who cannot get access to the pipelines. I notice no one is gnashing their teeth over that. Yet. The article points out that it is a sensitive subject. Would it be less sensitive if the players were sitting in the Arab Peninsula? Well? Would it?


The North Coast said...

When you hear talk about "ending our dependence on foreign oil", the speaker is really talking in code about ending our dependence on oil, period..... which we'd better find a way to do very quickly.

Small producers are practically all we have any more in this country. We have not made a major find since Spindletop in Tex-OK, which is now mostly depleted. The Bakken doesn't really count since we have no way to recover most of it at this point; but can hope to pull out about 3 billion barrels at the most.

The Canadian sands are among our few withering hopes of keeping steadily supplied with the quantities we need. Our small producers are getting hammered now because of the temporary drop in prices, but very soon the demand will start to ramp back up and they will find it profitable to produce again. Our future supply problems are written in the low prices of the present- projects have been shut down because they are not profitable under $70 a barrel, so when demand increases, we are going to have the mother of supply crunches.

Kheris said...

An uptick in prices won't help if the oil can't get into the pipeline because the Canadians are hogging all of the capacity, which appears to be the current situation.

The North Coast said...

You are correct, and that brings to mind another issue that will make the decline worse, which is that oil producing nations are reserving more of their product for their own use, especially in the middle east. As we proceed down the slope of depletion, they will get very nationalistic indeed, and reserve ever larger portions of their production for themselves, which means that for our purposes, depletion will be much more rapid than the actual rate of depletion of supplies, and we will be find ourselves with less and less ability to project the military power that has enabled us to hog so much of the world's supply until now.