Ok, so oil prices are complicated, first because although oil is fungible (its not really) it behaves a little like natural gas -- which has a more "local" pricing behaviour. In North America, virtually all oil goes via Cushing in Oklahoma -- for those not in the "know" Oklahoma is one of those squarish states, and it also has the largest concentration of oil storage facility; if all roads lead to Rome, then all oil pipeline lead to Cushing.
The problem is that there is (again) a shortage of storage capacity, it happens from time to time, mostly during the autumn as stocking rises to meet the winter demand. This year the storage shortfall is very early, which has lead to a wide differential in price between Brent Crude and Cushing WTI crude -- it was always around $10 to $15 a barrel, but has been increasing as WTI crude prices are dropping. The difference arises for several reasons; first, Brent is lighter and sweeter -- easier to refine, but also secondly, demand for petrol is dropping in North America (and has for several years), the result of higher prices is that as a whole people drive less (there are also more unemployed people so that too has an impact).
Now, the Canadian angle. First Canada is a big ass supplier of crude to Cushing there have been lots of pressure to build new pipeline to the South (Cushing actually -- XL) and to the West (so far that has been a total bust), but and this is the good bit, there are tons of willing buyers that are closer than Chinese or Japanese to buy cheap WTI, they are called Canadians. Most of Quebec's and part of Ontario's oil (two of Canada's largest provinces) are supplied from Europe with expensive (yet cheap to distille) Brent crude.
This is the best part the only thing that they need to get the Canadian oil is to reverse the flow of oil in the Trans Canada pipeline... there are environmental concerns apparently slowing the process, and the funny bit here is that the flow used to be in West to East (it was reverse many many years ago).
My favorit bit of Stupid Politics is that the current Quebec environmental minister is against the switching of the pipeline direction -- we don't have the sharpest tools in governments, still to protest that Canadian oil will generate more pollution that European (or middle Easter) oil is a bit rich.
The problem is that there is (again) a shortage of storage capacity, it happens from time to time, mostly during the autumn as stocking rises to meet the winter demand. This year the storage shortfall is very early, which has lead to a wide differential in price between Brent Crude and Cushing WTI crude -- it was always around $10 to $15 a barrel, but has been increasing as WTI crude prices are dropping. The difference arises for several reasons; first, Brent is lighter and sweeter -- easier to refine, but also secondly, demand for petrol is dropping in North America (and has for several years), the result of higher prices is that as a whole people drive less (there are also more unemployed people so that too has an impact).
Now, the Canadian angle. First Canada is a big ass supplier of crude to Cushing there have been lots of pressure to build new pipeline to the South (Cushing actually -- XL) and to the West (so far that has been a total bust), but and this is the good bit, there are tons of willing buyers that are closer than Chinese or Japanese to buy cheap WTI, they are called Canadians. Most of Quebec's and part of Ontario's oil (two of Canada's largest provinces) are supplied from Europe with expensive (yet cheap to distille) Brent crude.
This is the best part the only thing that they need to get the Canadian oil is to reverse the flow of oil in the Trans Canada pipeline... there are environmental concerns apparently slowing the process, and the funny bit here is that the flow used to be in West to East (it was reverse many many years ago).
My favorit bit of Stupid Politics is that the current Quebec environmental minister is against the switching of the pipeline direction -- we don't have the sharpest tools in governments, still to protest that Canadian oil will generate more pollution that European (or middle Easter) oil is a bit rich.
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