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crude oil prices
There is a catechism of the fossil fuel industry, with oft-repeated claims that seem by repetition to escape examination. Peter MacKay's recent opinion piece on pipelines was a veritable greatest hits compilation of such claims. He writes that "pipelines are by far the safest means of transporting oil." The first muddying of facts is the notion that we are talking about shipping oil. All the current pipeline proposals, including Energy East, are primarily about shipping unprocessed bitumen. Bitumen is in a pre-crude state and can only be casually referenced as "oil" if one accepted the idea that grain should be referred to as "croissants" when discussing markets.
The business of piracy is no longer that profitable.
When TransCanada first announced its 4400km Energy East pipeline project from Alberta to Saint John, the spin was all about nation-building. This spin is dependent on the idea that Energy East will see crude produced in the Prairies replace so-called foreign imports to Atlantic Canada.
She gets that this is about more than just politics. Progress on energy projects isn't going to be achieved through grandstanding. If that were the case, we would have seen more success from the efforts of our previous provincial and federal governments.
Canada's energy sector service and equipment exporters are in for tough times, and cash flows for oil and gas exporters will tighten significantly. This is already beginning to spill red ink on Canada's trade and fiscal statistics. However, Canada's non-energy sector exporters should see a substantial boost.
The basic argument goes like this: A barrel of oil sands crude currently trades at a lower price than other global oil benchmarks. That price gap means Canadians are losing money on every barrel sold. Access to world markets will fetch higher prices, elevating our collective prosperity. It's a persuasive story, tickling the part of the brain associated with loss aversion. No one wants to bleed money day after day. At the same time it paints a picture of one nation, our fortunes rising and falling in unity. It's good politics. But the reality is more complex.
As almost everyone knows by now, Canada has some interesting challenges looming when it comes to transporting increasing oil production to markets both inside and outside of Canada. What many Canadians might not realize is how important oil exports are to Canada's economy, and how these exports may have become a crutch.
The U.S. military has targets picked out in Syria and President Obama is trying to convince Congress that America needs to intervene. If the U.S. does go ahead with tactical strikes against the Assad regime, oil markets will be caught in the middle. Any significant reduction in exports will be felt in the rest of the world.
