Yinlock posted:

so what does alberta even think a pipeline does at this point

i keep occasionally checking in with that whole situation and they grow more and more worshipful of the pipeline and now it's at the point where they're praying to it for a good harvest

cougar cub posted:

Are you dumb? Have to ask because that is a dumb person question.

Export capacity is maxed out which means production facilities are scaling back and there limited investment in expansions / projects. The overproduction means the price for Albertan oil is much lower because there is a glut that can’t move.

A new pipeline means better oil prices and more investment in the industry.

cougar cub posted:

Are you dumb? Have to ask because that is a dumb person question.

Export capacity is maxed out which means production facilities are scaling back and there limited investment in expansions / projects. The overproduction means the price for Albertan oil is much lower because there is a glut that can’t move.

A new pipeline means better oil prices and more investment in the industry.

BGrifter posted:

White supremacist rally of about 20 people by the mall in Kelowna waving signs and shouting racist slurs at people stuck in traffic.

Merry Christmas CanPol.

Edit: Oh hey the cops are sitting half a block away ignoring it while harassing some skateboarders. This is like a Triple Word Score or something.

Helsing posted:

Coxswain Balls posted:

The RCMP is understaffed, so they're only going to be able to send officers to important, high risk crimes. Thankfully they're coming up with solutions for their manpower shortages.

https://www.cbc.ca/news/politics/rcmp-recruitment-gender-1.4954015

cougar cub posted:

Are you dumb? Have to ask because that is a dumb person question.

Export capacity is maxed out which means production facilities are scaling back and there limited investment in expansions / projects. The overproduction means the price for Albertan oil is much lower because there is a glut that can’t move.

A new pipeline means better oil prices and more investment in the industry.

Lars Blitzer posted:

If you want an answer from an Albertan:

U.S. isn't interested in our bitumen, so we need to get it to other markets. Pipelines can do it at volumes that dwarf what we can ship via rail, tanker truck, air, or water (and loving LOL at trying to make a go with the last 2 from Alberta.) We get access to foreign markets bypassing the U.S, and we can sell it for far more than what we've been getting so far, but still at a discount compared to what they've been buying it for. It's not quite a cargo cult, but it's getting there; the recent "spontaneous" convoy protest which blocked the Anthony Henday ring road all around Edmonton shows how desperate the average rig pig or worker in an industry that supports the oil patch is. They're willing to grasp at any straws at this point. For them, though, they're as tribal in their thinking as anyone south of the 49th Parallel. Mention any politician who isn't conservative and brace yourself for a rant. The common refrain is still "Lord, give us $80 a barrel again. I promise I won't piss it all away this time!"

It's fun being a lefty tradesperson in this town, I tell ya.

A Typical Goon posted:

Ah yes well known smart person economic theory, increasing supply causing a increase in prices.

Yinlock posted:

exporting more won't make the price magically increase, and a pipeline isn't going to magically create a windfall of jobs and investment(temporary ones sure, but they'll disappear and alberta conservatives will go back to shouting for another pipe because they can't see patterns)

quote:

yeah right - as if anyone in this thread is going to read something from the fraser institute

quote:

SUMMARY:
Although crude prices largely rise and fall together, there can be significant price differences between the different streams, depending on the type of crude (quality), supply and demand fundamentals (marketability) and costs to transport the crude to the final customer (logistics).
Quality is by far least important variable, particularly with respect to API gravity. Sulphur content and acidity are more important drivers of the quality discount.
About two-thirds of Canada's exports (3.5 million bbl/day) are shipped to the Midwest via Enbridge's Mainline. Having a single large buyer of Canadian crude, particularly heavy crude, reduces Alberta's ability to compete for higher prices.
Since Midwest refineries are largely at capacity, incremental heavy oil from the oil sands must find another buyer, or face deeper discounts.
The world's largest market for heavy, sour crude is the US Gulf Coast, which has very limited pipeline access from Western Canada. The region offers the best pricing for heavy crude, and also typically sets the price differentials.
Since Canada's export pipelines are at capacity, the incremental barrel of oil needs to be shipped by rail, which has a higher transportation cost and drives up pricing discounts.
The proposed Keystone XL pipeline to the Gulf Coast offers the best marketability, since the USGC is a very large market for heavy crude with a shortage of stable suppliers.
However, transportation discounts would be minimized by expanding capacity to BC's West Coast, either to Vancouver via the Trans Mountain Expansion, or to Kitimat, using Northern Gateway. Both offer the shortest distances to tidewater, minimizing pipeline tolls. Once seaborne, crude can be inexpensively shipped to Asia or California, two very large buyers of heavy, sour crude.

cowofwar posted:

Oil price down, discount for Alberta poo poo up, more export doesn’t mean more buyers - it means discount grows even more due to export glut of poo poo no one wants.

sitchensis posted:

Alberta: no, but see, we need to immediately export more oil because

cowofwar posted:

Global oil production continues to increase largely due to shale oil both domestically and abroad while many countries are beginning to shift a lot of oil to electric. In light of those two factors I can't see a market niche for heavy sour crude. It's just going to be Canada subsidizing production of tar sands oil to be sold at a loss as corporate welfare and a hand-out to Alberta. Eventually though I imagine the US will stop buying this oil and shut down its upgraders/refineries that handle heavy sour crudes which basically means that, same as asbestos, we will be selling trash to super poor nations.

cougar cub posted:

The ability to export more will reduce the WCS price differential. That means an increase in per barrel price. This really isn't a controversial.

Rime posted:

Good sweet goddamn, Georgian Bay Whitefish might be the tastiest fish thing I have ever eaten in my life. It was like fish, but didn't taste like fish, and had the consistency of chicken.

cougar cub posted:

https://www.fraserinstitute.org/sites/default/files/cost-of-pipeline-constraints-in-canada.pdf

https://www.oilsandsmagazine.com/market-insights/crude-oil-pricing-differentials-why-alberta-crude-sells-at-deep-discount-to-wti

cougar cub posted:

Are you dumb? Have to ask because that is a dumb person question.

Export capacity is maxed out which means production facilities are scaling back and there limited investment in expansions / projects. The overproduction means the price for Albertan oil is much lower because there is a glut that can’t move.

A new pipeline means better oil prices and more investment in the industry.

Yinlock posted:

thanks for the informative answer my total understanding of the situation was "conservatives pissed away all the oil money and now need to explain why money all gone"

cougar cub posted:

The ability to export more will reduce the WCS price differential. That means an increase in per barrel price. This really isn't a controversial.

Here's a few detailed explanations :

https://www.fraserinstitute.org/sites/default/files/cost-of-pipeline-constraints-in-canada.pdf

https://www.oilsandsmagazine.com/market-insights/crude-oil-pricing-differentials-why-alberta-crude-sells-at-deep-discount-to-wti



The discount for quality is something else altogether. If the current pipelines were empty you could say no one wants our oil - but that just isn't the case.

Yinlock posted:

extremely accurate oil facts from "oil sand magazine"

Yinlock posted:

that's not how anything works

JawKnee posted:

lol feeling the burn, poo poo head?

THC posted:

That tar is never leaving Alberta

Literal Hamster posted:

This thread has a problem.


That problem is not Doug Ford, or Justin Trudeau, or all of your racist in-laws. The problem is a lack of clarity. Again and again, I read despondent posts, miserable goons without hope.

"Canada is falling to right-wing reactionaries!" I hear you say.

"Nothing matters!" you shout.

"Nothing will ever get better!" you cry.

This is diseased thinking!


In truth, we are in the midst of the greatest global social change since the second world war, and the greatest opportunity for leftist thinking since the rise of Bolshevism. All across the planet, the traditional capitalist parties are dying. Look no further than the rise of Donald Trump, or the ascension of Jair Bolsonaro, and you will see the reality of the situation. Liberalism and Conservatism have failed. They have been strangled by the ailing of late capitalism. The old dog is on it's last legs, and the people smell blood in the air!

The weakness you sense in the Liberal party, the empty promises of Justin Trudeau, the chaotic fall to fascism we are witnessing in the Conservative party, all of this is merely the inevitable result of the waning years of a capitalist system that has exposed to all it's own inability to promulgate itself under the weight of it's contradictions.


"But what hope is there, even the NDP is decadent and useless!" I hear you reply.

True, the NDP has been corrupted by the cancer of the reformist Jack Layton and the traitor Bob Rae. But deep within the New Democratic Party the untarnished spirit of Tommy Douglas lies hidden, merely waiting to once again inflame the hearts and minds of the working class, who are now more than ever ready to embrace that message. The same powerful forces that have propelled the fascist Doug Ford to the premiership are equally capable of elevating a genuine socialist to the office of Prime Minister.


My friends, the precipice has come and gone, we have already begun to fall! The question is not if the old party strictures will be swept aside, the question is who will serve to sate the people's desire for meaningful change. The voters of Ontario were duped into believing that Doug Ford could provide that change, but as all of us in this thread know, Doug Ford is incapable of providing that change, as he serves the interests of the parasites exclusively. In time the people will see this. Indeed, the people have already begun to sense the truth.

So, we must ask ourselves: what is to be done? The answer is obvious! Revolution! But matters are not as simple as merely marching on Parliament and demanding social ownership of the means of production. No, the parasites are clever, and they will resist us at every turn, though they are incapable of learning the lessons of history and will ultimately prove unable to stem the tides of change.

We will begin by accumulating support among the lower classes. This is much easier than it sounds, even a simpleton like Donald Trump understands how this is to be done successfully. We will appeal to the poor by pointing to the disparity in income between themselves and the upper class. The factory workers who are made obsolete, the minimum wage earners who struggle each day to put food on the table, this is our rich seam that just waits to be mined. We will stoke the fires of class warfare among our eager audience. We will provide an alternative to the old capitalist system of exploitation that the working class has learned to hate.

Climate change is a blessing as well as a curse, and represents an enormous opportunity. Rising global temperatures will affect the poor the most, who will bear the costs of food shortages, severe weather damage and efforts to repair the biosphere. The extreme pressures of climate change will awaken the working class to the realities of unsustainable capitalist exploitation of the environment. Already we see young people who are energized by climate action, and within these people lies the seeds of revolutionary thought.


Keep the faith, the fascist forces in Canada are much weaker than they appear, and the bourgeois parasites are hopelessly blind, unable to see what is right in front of them or hear the warnings that their experts provide them with. We must stand united under the banner of economic justice and the glorious superiority of the socialist system!

We shall infect the NDP and subvert the reactionary forces which have gripped it, replacing a stunted and ineffectual message with our own superior message. Get involved, join your local branch of the NDP and participate in discussions. Volunteer for service in the party, and ensure that our message is heard and absorbed. Those of you who are able and inclined should run for office, further propagating our ideas. Victory is within our grasp, if only we have the courage and determination to seize it!

Stop posting your messages of despair! Stop spreading counter-revolutionary thoughts of surrender and capitulation! The class struggle has never been more important, and opportunities to seize power more abundant. Have heart, the ruling order always appears to be invincible, until it is not. Change often comes suddenly, and we must be ready to seize any opportunity we are given.

Toalpaz posted:

To be honest I think the idea is that they'll sell more volume isn't it? Rather than just being about low prices.

Like it's worth less so they're trying to sell more of it. Right?

Toalpaz posted:

To be honest I think the idea is that they'll sell more volume isn't it? Rather than just being about low prices.

Like it's worth less so they're trying to sell more of it. Right?

Pinterest Mom posted:

No, it's about the price. Right now, Alberta is producing too much compared to its pipeline capacity, and some of its customers have had to stop production, so they're flooding more oil into the limited markets they have (or selling future oil and putting it in storage, which also drives down prices and is costly), while the world price is much higher than the price that they're able to get for their own product.

Open new markets -> sell that oil closer to world price -> sell less oil to the markets you're currently flooding -> raise that price as well.

It actually is p classic supply and demand.

quote:

Trudeau, Notley and Trans Mountain Claims: A Tyee Fact Check
Pipeline politicians’ promises of riches rest on one Kinder Morgan consultant’s report challenged by critics.

By Andrew Nikiforuk 21 Mar 2018 | TheTyee.ca

Alberta’s Premier Rachel Notley and Prime Minister Justin Trudeau have repeatedly claimed that the controversial Trans Mountain pipeline expansion will secure higher prices for Canada’s heavy crude and therefore is in the national interest.

U.S.-based Kinder Morgan proposes to twin an existing 65-year-old pipeline from Alberta to the coast, tripling the volume of petroleum products it can carry.

Trudeau and Notley argue that a shortage of pipelines means oilsands crude reaches a limited market and that as a result prices are lower than for other oils, costing “Canadian governments and businesses billions of dollars in lost revenue.”

Notley’s government even ran full-page ads in B.C. newspapers saying that “Over the next 20 years, the Trans Mountain expansion is conservatively expected to generate $46.7 billion in government revenue.”

Trudeau has repeated the same claim. “We know that Canadian oil is discounted because we only have access to the U.S. market right now, and creating more access to overseas markets will actually get a better price for jobs, for workers, for the Canadian economy on our resources.”

But are these statements based on real facts? What’s the source for the claims?

A Tyee review found the numbers come from documents commissioned and paid for by Kinder Morgan.

An Alberta government website created to advocate for the pipeline acknowledges the $46.7 billion in government revenue cited by Notley comes from Kinder Morgan’s Trans Mountain’s website.

The Kinder Morgan website claims that “By increasing Canada’s capacity to get resources to market, producers will see $73.5 billion in increased revenues over 20 years.”

“A Conference Board of Canada report has determined the combined government revenue impact for construction and the first 20 years of expanded operations is $46.7 billion, including federal and provincial taxes that can be used for public services such as health care and education,” the company’s website says.

The Conference Board’s estimate of increased government revenues is based on the forecast $73.5 billion in increased industry revenues.

The website doesn’t provide a source for that sum, but it comes from the “Market Prospects and Benefits Analysis of the Trans Mountain Expansion Project for Trans Mountain Pipeline” report prepared by consultants Muse Stancil to support Kinder Morgan’s pipeline application to the National Energy Board.

The Conference Board of Canada used the Muse Stancil numbers as the basis for its forecast of government revenues in reports in 2016. The board did not challenge Muse Stancil’s economic assumptions.

But the numbers cited by Muse Stancil and the Conference Board of Canada — and pro-pipeline politicians — have been widely challenged as out of date or inaccurate.

Muse Stancil, a global energy consultancy, offers “a personalized consultancy service tailored to meet individual client needs solving specific problems,” according to its website. Company president Neil Earnest, who wrote the report, has a degree in chemical engineering and an MBA, but is not an economist.

Earnest’s report, rich in tables and numbers, states that the pipeline will generate $73.5 billion in additional revenues over 20 years by raising the price of western Canadian oil.

The new pipeline will lift oil prices via a 20-fold increase in diluted bitumen transportation from 25,000 barrels a day to 540,000 a day, the report says.

In total the new pipeline could increase the volume of petroleum products available for export via increased tanker traffic in Burrard Inlet from 300,000 barrels a day to 890,000 barrels a day.

The report claims that pipeline will raise the price of oil by an average of $2.50 a barrel by eliminating the need for high cost railway transport and increasing access to “the higher priced Pacific Basin markets.”

The $73.5 billion in increased industry revenue was derived by a proprietary mathematical model, meaning no one but Muse Stancil can check for it accuracy and reliability.

But a variety of economists and interested parties presented briefs to the NEB challenging the Muse Stancil numbers.

The City of Vancouver submission cited numerous “methodological inconsistencies and deficiencies in the Muse Stancil Report that result in erroneous and unreliable conclusions regarding the price lift benefits attributable to the TMEP [Trans Mountain Pipeline Expansion].” The report was “fatally flawed,” said the city’s submission.

“Economists who looked at the Muse Stancil report during the NEB hearing recognized so many failings that the report was without merit,” says economist Robyn Allan, former CEO of the Insurance Corporation of BC.

They were not alone. Minnesota’s Department of Commerce reached similar conclusions about Earnest’s market analysis used to support the building of Enbridge’s Line 3 in that state.

In a report released in February, the state’s department of commerce described Earnest’s testimony as unrealistic and unreliable.

Earnest’s analysis “didn’t allow for the possibility of changes to global refined product demand over time,” according to an independent review ordered by the state regulator. The analysis found the assumption was “unrealistic because it runs counter to a basic principle of crude oil market economics that demand for refined products drives refineries’ demand for crude oil.”

A Tyee fact check discovered that interveners in the NEB hearings on Trans Mountain raised similar criticisms of Earnest’s analysis.

1) Earnest’s model assumes that Canada’s low quality heavy crude will be sold for higher prices overseas and that will lead to a reduction in the current gap that sees heavy oil sold for lower prices in North America.

But Earnest grossly overestimates the impact of the light/heavy differential on Canadian heavy oil. He assumed, for example, that all heavy oil would be sold based on spot prices if the pipeline wasn’t built, at much lower value than for light oil.

But that’s not the way the oil market works in North America. Only about 15 per cent of heavy oil produced in Canada is currently subject to spot pricing or volatile differentials.

In addition oil companies protect themselves from heavy and light oil price differences, or what industry calls “the heavy oil discount,” by a variety of means including upgrading and refining bitumen or hedging.

Canadian heavy sour crude has always sold at a discount compared to light oil because of its low quality. As Imperial Oil notes “The market price for western Canadian heavy crude oil is typically lower than light and medium grades of oil principally due to the higher transportation and refining costs.”

It costs more to move by pipeline because it must be diluted with expensive condensate. As a result the discount between light and heavy oil can range between $15 and $25 per barrel. Big refiners of heavy oil, like the Koch Brothers, describe it as a “garbage crude” that serves as cheap feedstock for their refineries.

The light/heavy oil price discount can be volatile. Higher global oil prices can typically widen the price gap. So, too, can pipeline bottlenecks caused by shutdowns due to spills, leaks or regulatory orders.

Most Canadian oil producers plan for the discount. Some upgrade bitumen into synthetic crude, which can fetch premium prices compared to light oil. Others process low-valued bitumen in their own refineries where it is turned into high-value petroleum products such as gasoline. (A barrel of bitumen produces about 15 per cent of the gasoline of a barrel of light oil.)

Suncor, which produces about one-quarter of Canada’s heavy oil (800,000 barrels), says that 80 per cent of its bitumen production is not subject to the light/heavy oil differential because its marketing team “utilizes Suncor’s vast midstream and downstream optionality.” In other words Suncor upgrades bitumen.

Canadian Natural Resources, which also produces light and heavy oil, reduces production of heavy oil when the discount widens. “We look at the differentials all the time and our ability to start and stop our drilling program, based on what’s going on with the commodities,” said president Tim McKay this year.

Yet Earnest’s model assumes that 100 per cent of Canada’s heavy oil is subject to light/heavy oil differentials.

“Muse Stancil concocted a model that doesn’t reflect reality,” said economist Allan. She estimates that only 10 per cent of Canadian oil is subject to spot pricing and the light/heavy oil discount. The revenue gains projected by Muse Stancil aren’t based in reality.

Mexico’s exports of “Maya crude,” similar to Canada’s heavy oil, also contradict claims about potential price gains. Mexico has marketed Maya crude in Asia for several years. But it got lower prices, not higher ones, notes economist Jeff Rubin in a 2017 report. “Comparable grades of heavy oil, such as Mexican Maya crude, typically trade at more than US$8 a barrel less, not more, in Asian markets compared to the prices Gulf Coast refineries pay.”

And producers — including Imperial, Statoil and Suncor — did not tell the NEB that they supported the Trans Mountain pipeline because it would bring higher prices. They simply argued it would give their products access to more diversified markets.

Kinder Morgan did not initially stress Asian markets and higher prices in arguing for the pipeline. It initially hired IHS Global consultant Steven Kelly to prepare its economic benefits case. In 2013, evidence presented by Kelly claimed that California and not Asia would be bitumen’s next big market, and that it would take time to develop a market in Asia. “There is not a pot of gold at the end of this rainbow,” said Kelly then. “It’s not as simple as saying ‘if I bring my crude to Asia I will get this price.’”

After Kelly was named to the NEB in the fall of 2015, the agency ordered the Calgary petroleum consultant’s testimony to be struck from the record because his dual role as a witness and future board member “may raise concerns about the integrity of this hearing process,” said NEB spokesperson Tara O’Donovan.

Shortly afterwards Kinder Morgan hired Earnest. In his analysis California disappeared as market and Asia became the central destination for heavy sour Canadian crude.

Thomas Gunton, director of the resource and environmental planning program at Simon Fraser University, notes “The NEB panel did not really assess the report or accept its conclusions that KM pipeline would lead to higher prices for Canadian oil — they simply stated that diversifying markets would be beneficial.”

Gunton found that almost all the research “shows that oil prices are the same in tidewater locations and there is no advantage to shipping to the west coast or Asia.”

Interveners at the Trans Mountain hearing asked the NEB another pertinent question: if Trans Mountain did raise all Canadian oil prices, how would that be a good thing for Canadian consumers and refineries? Earnest’s model did not consider cost of higher crude oil prices to the Canadian economy. Nor did the NEB.

2) The higher prices under Earnest’s model are based on the assumption no other bitumen pipelines will built in the next 20 years.

But other pipelines are being built. They include the $7-billion Line 3 project from Alberta to Wisconsin and the Keystone XL from Alberta to the Gulf Coast. The two pipelines will add more than a million barrels of capacity. During the TransMountain hearings even the NEB recognized that increased transportation capacity will become available because oil will travel to where the demand is whether TMEP is built or not.

In a written argument the City of Vancouver said that “Mr. Earnest’s decision to exclude all other transportation capacity but the TMEP from his analysis raises serious doubt about the reliability of the other opinions and conclusions expressed in the Muse Stancil Report.”

Earnest’s analysis in support of the need for the Line 3 pipeline made the same assumption and argued that there would be no future pipeline expansions for 14 years. The Minnesota Department of Commerce found the assumption contrary to the historical record and “unrealistic.”

3) Earnest’s modelling on the economic benefits of the pipeline also contradicted itself on rail transport.

The consultant claimed that “in the initial years of TMEP’s operation, the need for more expensive rail transportation is largely eliminated, and the transportation savings flow back to the Canadian crude oil producers in the form of higher prices.”

But his report shows rail transportation dramatically increasing between 2020 and 2030 from 22,000 barrels a day to 480,000 barrels a day. There would be few if any transportation savings.

4) The Earnest model also assumed that Canadian dollar would be on par with the U.S. dollar from 2015 to 2038. (The dollar now trades at 78 cents U.S.).

That faulty assumption allowed the report to underestimate the costs of shipping bitumen from Canada by tanker. Those costs are set in U.S. dollars; a lower Canadian dollar means companies face bigger expenses for shipping. Canadian bitumen producers actually depend on a lower Canadian dollar as a buffer against low oil prices.

5) Earnest’s revenue benefits were predicated on oil prices of around $100 a barrel. But the price now hovers around $60. [and around $50 today, months after this article was written]

During NEB hearings on Enbridge’s now cancelled Northern Gateway pipeline, Earnest acknowledged the challenge in forecasting future prices. “If I could predict with confidence future oil prices, I wouldn’t be sitting here today, I’d be floating around in my yacht on the Riviera, I assure you.”

6) The Muse Stancil report also assumed the increased supply of bitumen in Asian markets will not result in lower prices.

Economics 101 says that when you increase supply of a low quality product, the price will drop. The Muse Stancil report assumes that bitumen sales in Asia will defy this principle.

Allan also notes the report doesn’t consider the effect of rising prices, if they occur, in prompting companies to invest in increased production, which would result in lower prices. “Mr. Earnest predicts that crude oil prices will increase for all producers in western Canada because of the project, but stops his assessment there giving a false picture of how the market works,” Allan notes. “Reinvestment increases supply and puts downward pressure on prices. It’s a pretty obvious, and expected, market adjustment.”

The Muse Stancil report makes no mention of China’s huge oilsands deposits or how they might impact Canadian exports.

In 2017 energy expert David Hughes, a geologist who worked for the federal government for 32 years, revisited the Muse Stancil report and found that it was inaccurate and out of date.

“The U.S. is not unfairly discounting Canada’s oil and no Asia price premium exists,” Hughes wrote. “The construction of the Line 3 expansion and Keystone XL pipelines with the Trump administration’s support will allow access to the highest prices available and provide surplus export pipeline capacity. Politicians knew this information, or should have known it, when Trans Mountain was approved in November 2016.”

Yet Notley and federal Environment Minister Catherine McKenna are still quoting flawed documents to justify the pipeline.

Allan said there are only two explanations.

“Either they haven’t read the original report or they do understand and are being wilfully deceptive.”

vyelkin posted:

Reminder that all the claims about how profitable the Trans Mountain Pipeline would be are based on one methodologically-flawed report commissioned by Kinder-Morgan. That includes the claims of increased revenue from both the Alberta and federal governments.