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In Reply to: RE: Why wouldn't resulting gasoline be exported overseas where prices are much higher... posted by Steve O on April 15, 2014 at 06:31:31
that's due to excess refinery capacity being utilized for such. An influx of Canadian crude will mostly displace foreign crude as refinery feedstock. Whatever excess capacity there was prior to that won't change. It'll mean we just import less oil from outside of north America which is generally considered to be a good thing, as are exports of refined products. I'm not saying no Canadian oil will be exported in its raw, unrefined, form. That oil, like any source of oil, will seek out markets with the highest potential return.
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"I'd like to own a squadron of tanks"
Follow Ups:
...gasoline is exported because those importing it are willing to pay more for it than are certain elements of the domestic market. Getting more crude to the gulf coast will simply make gasoline less costly to export so more will go overseas. The net effect of reducing crude transportation barriers wiil be to allow the price of it to more perfectly reflect the worldwide market. Net effect for worldwide consumers will probably be stabilized or maybe reduced gasoline costs. Net effect for US consumers will probably be increased gasoline costs because current costs are lower than overall world market.
Doesn't seem to be a huge potential for WTI uplift. But, to agree with you on one point, of course the price will end up being higher in the mid continent region. Product is going to be moved away from those markets, where there's a relative overabundance of crude, to markets where this overabundance doesn't exist. This has been going on since time immemorial. In theory the effect will be beneficial to consumers in the gulf coast area.You state additional exports of gasoline will be beneficial to worldwide markets. I disagree.
There are only xxx bbls of refining capacity in gulf coast refineries. There are xxx bbls of domestic demand those refineries are filling. Excess capacity being used is currently exported. Oil from the Keystone Pipeline won't change that balance.
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"I'd like to own a squadron of tanks"
Edits: 04/15/14
Folks who are interested in the economics of the oil & gas industry should go to www.InsideAutomotive.com, then click on "News Sources". On that webpage, several oil industry sources are listed. You'll find more oil & gas news and statistics than you'll have time to read.RW: The spread today is about $5.50.
Checking the NYMEX, WTI is hovering around $104.50. Chevron is up nicely, Total is down a bit, Valero continues it's soaring streak, CNOOC is up but still down substantially from its high of around $220. Even Obama's oil pick from a few years ago, Petro Brasil, is up a few cents to $13.38, although still WAY down from the $40-$45 when he was talking about it.
:)
Edits: 04/16/14 04/16/14
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