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Price Differential of Canadian Oil

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  • Brooks, AB
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    Lately, CBC News has been spending a lot of effort on the price differential between Canadian oil and the stated oil price in the world marketplace. Currently there is about a $30 barrel difference, and CBC is spinning this angle as something sinister.

    https://www.cbc.ca/news/business/canada-oil-price-1.4776207

    The article does seem to acknowledge that oil is not a commodity of consistent quality. However, the article makes light of this reason for this difference, going back to pipeline capacity.

    Western Texas Intermediate (WTI) oil has great qualities for refining. All other oils in North America are compared to WTI, and price discounts are applied based on that quality. Oil companies (sellers) and refineries (buyers) have employees in place to ensure both sides are getting a fair deal on the exchange. Many American oil companies do not get WTI price for their oil because it is not as good of quality as WTI.

    The oil coming from the Canadian Tar Sands is no where near the quality of WTI. It should not be getting a high price because it is harder to refine.

    Twenty years ago, the Alberta government set up a wild west scenario in that any oil company with a tar sand lease and lots of cash could set up a tar sand operation. At least 10 mega-projects were being constructed at the same time, which created a great labor shortage of skilled tradespeople. When all these projects were completed, there was an oversupply of tar sand plants. The government hastily improved a rail link from Fort McMurray to Edmonton to help move oil to the mainstream market.

    So will more Canadian pipelines help reduce the differential? I doubt it.

    With a significant proportion of the oil already being moved by rail, this oil can easier find more eager buyers if there are any.

    With the pipeline system in place, oil from Alberta (and the tar sands) has four directions it can travel:

    1) Stay near Edmonton where it can be refined for local markets.

    2) Move to Vancouver where it can be refined for local markets.

    3) Move to Central Canada where it can be refined for local markets.

    4) Move to Manitoba where it can be exported to the American market. When it leaves Manitoba, the oil can be delivered to many different refineries in the USA.

    Canadian oil sellers already have a sufficient number of oil buyers to barter their oil for the best possible price. Adding a new pipeline or two will allow more oil to be sold--or at least travel by the safer pipeline than by rail. But the fact still remains that most Canadian oil is still not the quality of West Texas Intermediate: it will continue to be deeply discounted.

    CBC is getting this story all wrong.

  • Liberal Democrat
    Democrat
    Kenosha, WI
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    A Bing search states that a barrel of oil is equal to 42 US gallons. How many gallons are equal to a Canadian barrel of oil?
  • Brooks, AB
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    Dockadams Wrote: A Bing search states that a barrel of oil is equal to 42 US gallons. How many gallons are equal to a Canadian barrel of oil?

    American barrels and Imperial barrels are the same: about 0.159 m^3. For some reason, the Americans decided to resize the gallon, circa 1800. One imperial gallon = 1.2 US gallons.

    Canada was stuck with both systems. Both gallons US and gallons IMP were used in commercial applications. THings got simpler with teh metric system.

  • Independent
    Ft.myers, FL
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    Dave Volek Wrote:
    Dockadams Wrote: A Bing search states that a barrel of oil is equal to 42 US gallons. How many gallons are equal to a Canadian barrel of oil?

    American barrels and Imperial barrels are the same: about 0.159 m^3. For some reason, the Americans decided to resize the gallon, circa 1800. One imperial gallon = 1.2 US gallons.

    Canada was stuck with both systems. Both gallons US and gallons IMP were used in commercial applications. THings got simpler with teh metric system.

    Yes Dave, another example of the stupid British system; they were the only arrogant country to make measurements and laws etc. complicated. Why "inches", withworth treads, gallons, pounds, ounces, if you can make it so much easier and divide everything by "10". Also tolerances are easier to make precise. So I have to have an toolbox wit both metric and US sizes ; for the older British cars you need an other set as well threading "taps", in other words "nuts".
  • Center Left
    Independent
    Central, FL
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    Bingo. Metric makes sense. Here - different equals bad.

    I have zero interest in Canadian oil prices.

  • Liberal Democrat
    Democrat
    Kenosha, WI
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    Ha. Some people will take interest and sit up and take notice when Amerikan gas pumps begin showing that we're paying $3.43 per litre for gasoline. /snarkysnark
  • Independent
    Ft.myers, FL
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    Dockadams Wrote: Ha. Some people will take interest and sit up and take notice when Amerikan gas pumps begin showing that we're paying $3.43 per litre for gasoline. /snarkysnark
    Sure; Trump would like that, so he can then built more "walls" (of which he gets the "kickbacks") Also as in Europe the pollution is less as well less cars and smaller cars means less traffic jambs. And the "idiot" thinks he can export Cadillac's to Europe. Forget it!
  • Liberal Democrat
    Democrat
    Kenosha, WI
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    I think only Americans drive gas guzzlers. Correct me if I'm wrong.

    I do recall the gas crisis of the 70's, long lines at the pumps, which prompted the construction of the oil pipeline in Alaska, I went to AK after the pipeline was built. Here's a photo I took when I was there.

    flickr.com/photos/66673048@N06/10717787...

    Nobody ever worries about what they drive until gas prices get to about #4.00 a gallon. When that happens, everyone want's an economy car to drive.

    flickr.com/photos/66673048@N06/82022661...

  • Brooks, AB
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    Dutch Wrote:
    Dave Volek Wrote:
    Dockadams Wrote: A Bing search states that a barrel of oil is equal to 42 US gallons. How many gallons are equal to a Canadian barrel of oil?

    American barrels and Imperial barrels are the same: about 0.159 m^3. For some reason, the Americans decided to resize the gallon, circa 1800. One imperial gallon = 1.2 US gallons.

    Canada was stuck with both systems. Both gallons US and gallons IMP were used in commercial applications. THings got simpler with teh metric system.

    Yes Dave, another example of the stupid British system; they were the only arrogant country to make measurements and laws etc. complicated. Why "inches", withworth treads, gallons, pounds, ounces, if you can make it so much easier and divide everything by "10". Also tolerances are easier to make precise. So I have to have an toolbox wit both metric and US sizes ; for the older British cars you need an other set as well threading "taps", in other words "nuts".

    Every country in Europe had its own system of measurements at the time. Even different parts of Germany or France had different systems. The Imperial system was the first to be considered an international system--as there were many British colonies-----and if one wanted to do business with the world economic leader at that time, it was best to talk their measurement language.

    If there is any silliness, it the Americans for refusing to let go of the "British gift." How ironic!

  • Brooks, AB
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    Dockadams Wrote:

    I think only Americans drive gas guzzlers. Correct me if I'm wrong.

    I do recall the gas crisis of the 70's, long lines at the pumps, which prompted the construction of the oil pipeline in Alaska, I went to AK after the pipeline was built. Here's a photo I took when I was there.

    flickr.com/photos/66673048@N06/10717787...

    Nobody ever worries about what they drive until gas prices get to about #4.00 a gallon. When that happens, everyone want's an economy car to drive.

    flickr.com/photos/66673048@N06/82022661...

    I recall reading economic studies that it takes about three years for people to significantly change their driving habits (fewer trips and most efficient cars) when the price rises quickly. In other words, the demand is the same even though the price goes up.

    What actually happens with higher gasoline prices is that people have less money to buy other things. Lawn gnome sales at Wallmart suffer greatly!

  • Independent
    Ft.myers, FL
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    Dave Volek Wrote:
    Dutch Wrote:
    Dave Volek Wrote:
    Dockadams Wrote: A Bing search states that a barrel of oil is equal to 42 US gallons. How many gallons are equal to a Canadian barrel of oil?

    American barrels and Imperial barrels are the same: about 0.159 m^3. For some reason, the Americans decided to resize the gallon, circa 1800. One imperial gallon = 1.2 US gallons.

    Canada was stuck with both systems. Both gallons US and gallons IMP were used in commercial applications. THings got simpler with teh metric system.

    Yes Dave, another example of the stupid British system; they were the only arrogant country to make measurements and laws etc. complicated. Why "inches", withworth treads, gallons, pounds, ounces, if you can make it so much easier and divide everything by "10". Also tolerances are easier to make precise. So I have to have an toolbox wit both metric and US sizes ; for the older British cars you need an other set as well threading "taps", in other words "nuts".

    Every country in Europe had its own system of measurements at the time. Even different parts of Germany or France had different systems. The Imperial system was the first to be considered an international system--as there were many British colonies-----and if one wanted to do business with the world economic leader at that time, it was best to talk their measurement language.

    If there is any silliness, it the Americans for refusing to let go of the "British gift." How ironic!

    Sorry, Europe had the same metric system since Napoleon; before his time it did not matter, because industrialization was not there yet.
  • Brooks, AB
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    Dutch Wrote:
    Sorry, Europe had the same metric system since Napoleon; before his time it did not matter, because industrialization was not there yet.

    France invented the metric system and quickly adopted it. But it took some time before the rest of Europe cast aside their old ways for the superior way. Portugal was the second country in 1815. Germany became metric circa 1856; Italy 1861.

    en.wikipedia.org/wiki/Metrication

    The differing systems caused a lot of confusion even before the industrial revolution as there was still trade between various nations of different systems. The IR may have been the catylist to get the countries to be more accepting of a universal system.

  • Liberal Democrat
    Democrat
    Kenosha, WI
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    Dave Volek Wrote:
    Dockadams Wrote:

    I think only Americans drive gas guzzlers. Correct me if I'm wrong.

    I do recall the gas crisis of the 70's, long lines at the pumps, which prompted the construction of the oil pipeline in Alaska, I went to AK after the pipeline was built. Here's a photo I took when I was there.

    flickr.com/photos/66673048@N06/10717787...

    Nobody ever worries about what they drive until gas prices get to about #4.00 a gallon. When that happens, everyone want's an economy car to drive.

    flickr.com/photos/66673048@N06/82022661...

    I recall reading economic studies that it takes about three years for people to significantly change their driving habits (fewer trips and most efficient cars) when the price rises quickly. In other words, the demand is the same even though the price goes up.

    What actually happens with higher gasoline prices is that people have less money to buy other things. Lawn gnome sales at Wallmart suffer greatly!

    Hey man, I'll tell you, my mom & pop lived in a hick town in southern Illinois for quite a few years back in the 70's. They'd drive to Vincennes Indiana to do monthly shopping, about 65 miles roundtrip, and if something wasn't on the shopping list, they were SOL. When you shop once a month for everything you think you'll need, you don't make mistakes in forgetting items. Even now, when me & wife shop, I write out a list of stuff we need on a full 8.5 x 11 sheet of paper and route the shopping trip, sometimes making as many as 6 stops per trip to economize and make the most out of each trip, no backtracking at all. No extra wear & tear and no wasting of gas running unnecessarily back to where we shopped at. We economize all the time, mainly buying on sale items or buying what is a good deal. No, we don't live in a hick town now, everything is mostly inconveniently located here, and you'd be surprised at how many miles you can rack up in my local area.

    When gas was 25 cents a gallon, we didn't care too much of where and how we drove. Gas around here is about $2.85 a gallon, and it gets expensive when you're careless.

  • Brooks, AB
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    Dockadams Wrote:
    Hey man, I'll tell you, my mom & pop lived in a hick town in southern Illinois for quite a few years back in the 70's. They'd drive to Vincennes Indiana to do monthly shopping, about 65 miles roundtrip, and if something wasn't on the shopping list, they were SOL. When you shop once a month for everything you think you'll need, you don't make mistakes in forgetting items. Even now, when me & wife shop, I write out a list of stuff we need on a full 8.5 x 11 sheet of paper and route the shopping trip, sometimes making as many as 6 stops per trip to economize and make the most out of each trip, no backtracking at all. No extra wear & tear and no wasting of gas running unnecessarily back to where we shopped at. We economize all the time, mainly buying on sale items or buying what is a good deal. No, we don't live in a hick town now, everything is mostly inconveniently located here, and you'd be surprised at how many miles you can rack up in my local area.

    When gas was 25 cents a gallon, we didn't care too much of where and how we drove. Gas around here is about $2.85 a gallon, and it gets expensive when you're careless.

    I grew up on a farm. My Mom and Dad tried to visit the "big town" only once a week. The day was quite full with lots of errands. Nowadays, the farmers drive to the big town just to buy a coffee.

    There is a different mindset. People don't really think about the true cost of getting that coffee--or making four trips a week to buy groceries.

    I'm off the farm, but still living in the big town. I see lots of people making trips to the city for silly reasons. They might consider the cost of gasoline when making the decision, but they don't really consider the full expense of running a vehicle.

  • Independent
    Ft.myers, FL
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    Dave Volek Wrote:
    Dutch Wrote:
    Sorry, Europe had the same metric system since Napoleon; before his time it did not matter, because industrialization was not there yet.

    France invented the metric system and quickly adopted it. But it took some time before the rest of Europe cast aside their old ways for the superior way. Portugal was the second country in 1815. Germany became metric circa 1856; Italy 1861.

    en.wikipedia.org/wiki/Metrication

    The differing systems caused a lot of confusion even before the industrial revolution as there was still trade between various nations of different systems. The IR may have been the catylist to get the countries to be more accepting of a universal system.

    Actually you are quoting me; except I did it in one line.