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(SacBee)   Researchers who obviously have no idea how oil pricing works claim Keystone XL pipeline would lower oil prices by $3.00 per barrel   (sacbee.com ) divider line
    More: Unlikely  
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1380 clicks; posted to Politics » on 10 Aug 2014 at 7:15 PM (2 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-08-10 05:16:34 PM  
Lowing US oil prices by exporting the stuff out of the US would be a pretty neat trick.  But it doesn't work that way.
 
2014-08-10 05:31:45 PM  

Marcus Aurelius: Lowing US oil prices by exporting the stuff out of the US would be a pretty neat trick.  But it doesn't work that way.


This. Also: farking refineries, how do they work?
 
2014-08-10 05:40:40 PM  
Uh, not pressing the "I believe" button here, but if Keystone XL increases the amount of oil that makes it to the world market from Canada, then the price of oil would fall, even by exporting stuff out of the US.

That the price per barrel fell does not mean that refineries would magically be able to make more. So the supply of gasoline would not a priori change.

However, when the price of an input changes, that can have an impact on the price of the output - although supply and demand might overwhelm that savings to the consumer.
 
2014-08-10 06:28:14 PM  
"Independent energy economist Judith Dwarkin in Calgary, Alberta, Canada, dismissed the study, faulting the idea that added oil production will lower the price and boost demand. Usually, she said, it's consumption that spurs price and then oil production."

Okay, done with that then.
 
2014-08-10 06:46:29 PM  
One of two things will happen:

OPEC cuts production and the amount of gas on the market remains the same. OPEC makes a higher profit for longer with their oil.

Or

Barrel prices do drop but US gasoline prices don't because reasons.
 
2014-08-10 07:15:45 PM  
Trying to sell XL with claims of cheaper domestic gas?

Yeah. No. Doesn't work like that.

Not that that is gonna stop the industry from going to this particular well again and again, of course.

Because that line does work on certain types of people.
 
2014-08-10 07:18:43 PM  
It's not true, but it  feels like it should be true.
 
2014-08-10 07:19:38 PM  
It's also true that if I get a beej from a supermodel every night, it will lower prices a further $4.00 per barrel.
 
2014-08-10 07:22:05 PM  

enry: One of two things will happen:

OPEC cuts production and the amount of gas on the market remains the same. OPEC makes a higher profit for longer with their oil.

Or

Barrel prices do drop but US gasoline prices don't because reasons.


I remember arguing with my step dad about the myth of energy independence. I provided an example of Canada, who is a net exporter of oil yet their gas prices are nearly identical to ours. He's pretty conservative and claimed that businesses would want to sell oil to the US at a better price instead of selling somewhere else because we are such good people, have lots of money, etc. I gave up trying to explain that MARKETS DONT WORK THAT WAY. And yes, he's a loyal Fox News watcher/listener.
 
2014-08-10 07:23:01 PM  
Such a theory would only make sense if you believe there was a tsunami of oil in Canada held back from swamping over the world solely by the fact that this one pipeline has not been built.  Which means you think that petroleum companies haven't bothered to come up with another way to bring their product to the world market.

Now, Keystone XL may make it cheaper or easier for them to get oil to refineries, but if you think that using a pipe instead of trains or trucks to move something from this one field to those one set of refineries would drop the entire world price by ... quick check ... about 3%, well then you need to check your math again.
 
2014-08-10 07:23:15 PM  
This shouldn't be surprising to anyone. We already know that cutting taxes reduces the deficit.

This is basically the same thing, reducing the supply will lower the cost.
 
2014-08-10 07:25:27 PM  
Yes, they clearly do not know how oil pricing works.

Oil pricing works like this: the price goes up.

That is all.
 
2014-08-10 07:26:39 PM  
Oil is real and it was put there by God for us to use every last drop of.

Dinosaurs are a lie and they were put there by the Devil to test your faith in God.

Marijuana is also a trick by the Devil. God never intended it for humans to use.
 
2014-08-10 07:27:21 PM  

Karac: Such a theory would only make sense if you believe there was a tsunami of oil in Canada held back from swamping over the world solely by the fact that this one pipeline has not been built.  Which means you think that petroleum companies haven't bothered to come up with another way to bring their product to the world market.

Now, Keystone XL may make it cheaper or easier for them to get oil to refineries, but if you think that using a pipe instead of trains or trucks to move something from this one field to those one set of refineries would drop the entire world price by ... quick check ... about 3%, well then you need to check your math again.


IIRC, the tar sands blah blah that Keystone XL is supposed to provide requires a pretty high price per barrel before it becomes profitable.  It's not like you dig a well and wait for it to erupt.   If oil ever drops below that value, they'll shut Keystone down before you can say "wait, what?"
 
2014-08-10 07:28:20 PM  
The only thing predictable about oil prices is that if somebody in the Middle East catches a cold, the price will go up by $10 a barrel 10 minutes after word gets out.
 
2014-08-10 07:29:15 PM  
At least they acknowledged that Keystone XL is a pipeline for overseas export.
 
2014-08-10 07:30:11 PM  
Wow, $3.00/barrel!!!  That would translate to like three cents a gallon for gas, right?
 
2014-08-10 07:35:21 PM  
Man, people on fark really don't read the articles do they? The article wasn't trying to sell Keystone based on it lowering oil prices. That assumption was from a group who released a study saying the administration's estimates of its impact on global warming were too low and in fact consumption would go up because of the presumed $3/brl reduction in oil price. Whether they're right or not on that point, they are demonstrating that this is a bad thing, not a good one. The industry group, however, rightly pointed out that the study is irrelevant because the tar sands will be developed regardless of the te ansportation method.
 
2014-08-10 07:36:42 PM  
I should say consumption and subsuequent CO2 release would go up more than anticipated, having a detrimental effect on global warming.
 
2014-08-10 07:39:10 PM  
According to the Republicans I work with, every time Obama is p issued off he raises the gas prices.

I'm not kidding.
 
2014-08-10 07:46:37 PM  

Karac: Such a theory would only make sense if you believe there was a tsunami of oil in Canada held back from swamping over the world solely by the fact that this one pipeline has not been built. Which means you think that petroleum companies haven't bothered to come up with another way to bring their product to the world market.


Maybe not a tsunami, but the existing pipeline to the southern BC coast has been running at 100% capacity for years now. A lot of oil is transported by rail, but there's still enough of an oversupply that "Western Canada Select" is currently trading at a $20/barrel discount relative to WTI (and was $40/barrel cheaper in 2013). There are at least 3 other projects trying to build pipelines (Northern Gateway, twinned Trans Mountain pipeline, and something to eastern Canada) but many people up here aren't any more enthusiastic about those than you guys are about Keystone XL.

Also please keep in mind that the "export" half of Keystone XL has been in operation since January, so the market has already had time to react. The only part still under discussion is the section which would bring oil from Canada in to the Cushing, OK terminal.
 
2014-08-10 07:46:41 PM  

Shirley Ujest: According to the Republicans I work with, every time Obama is p issued off he raises the gas prices.

I'm not kidding.

i159.photobucket.com

Don't forget about how he is always pulling on the "bad economy" lever.
 
2014-08-10 07:48:08 PM  

Apocalyptic Inferno: Man, people on fark really don't read the articles do they? The article wasn't trying to sell Keystone based on it lowering oil prices. That assumption was from a group who released a study saying the administration's estimates of its impact on global warming were too low and in fact consumption would go up because of the presumed $3/brl reduction in oil price. Whether they're right or not on that point, they are demonstrating that this is a bad thing, not a good one. The industry group, however, rightly pointed out that the study is irrelevant because the tar sands will be developed regardless of the te ansportation method.


Their argument that the pipeline will reduce cost of gas and therefore it will increase pollution is nonsense.

Even if it did cause a $3/barrel drop in price, that wouldn't do anything for actual gas price or gas demand.

If their argument is to reduce pollution by reducing gas consumption through higher gas prices, then they should be arguing for the pipeline to be built.

Outside of economic collapse like we had in 2008ish, prices of gas won't go down in any appreciable manner.
 
2014-08-10 07:48:35 PM  

Lionel Mandrake: Shirley Ujest: According to the Republicans I work with, every time Obama is p issued off he raises the gas prices.

I'm not kidding.


Don't forget about how he is always pulling on the "bad economy" lever.


Yes, that's about sums it up.
 
2014-08-10 07:49:50 PM  
Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.  I'm talking to you Subby.  Even if every last drop goes to China.   China will then buy less from the Middle East and other markets that we and the Europeans get some of their oil from.   So yes we will supply go up no matter where it goes.  Oil is desired all around the world and once it in a supertanker, it can go anywhere where that supertanker can.

Yeah, it not enough to make a huge difference.  And the increase in demand from the emergence of the middle class in India and China will swamp it unless there is another economic breakdown.    And the long-term price in environmental  damage will also be far more than the short-term savings resulting in excess supply.
 
2014-08-10 07:51:44 PM  

Fantasta Potamus: Apocalyptic Inferno: Man, people on fark really don't read the articles do they? The article wasn't trying to sell Keystone based on it lowering oil prices. That assumption was from a group who released a study saying the administration's estimates of its impact on global warming were too low and in fact consumption would go up because of the presumed $3/brl reduction in oil price. Whether they're right or not on that point, they are demonstrating that this is a bad thing, not a good one. The industry group, however, rightly pointed out that the study is irrelevant because the tar sands will be developed regardless of the te ansportation method.

Their argument that the pipeline will reduce cost of gas and therefore it will increase pollution is nonsense.

Even if it did cause a $3/barrel drop in price, that wouldn't do anything for actual gas price or gas demand.

If their argument is to reduce pollution by reducing gas consumption through higher gas prices, then they should be arguing for the pipeline to be built.

Outside of economic collapse like we had in 2008ish, prices of gas won't go down in any appreciable manner.


It is a stupid argument, and irrelevant as I stated, but it was framed as an environmental detriment, not shilling for the oil companies as everyone in here knee-jerk assumed.
 
2014-08-10 07:52:24 PM  
The bottom end of a business cycle could do a lot more than that....
 
2014-08-10 07:52:25 PM  

jaytkay: At least they acknowledged that Keystone XL is a pipeline for overseas export.


I don't see anything wrong with that; what I have a problem with is the Canadians' expectation that we'll gladly let them build a pipeline over US territory so they can sell their tar on the global market.  The US will see very little benefit from it, for a lot of potential downside both economical and environmental.  If they want to sell on the global market so badly, that's their right, but they should build their own pipeline out to Vancouver or Prince Rupert or wherever.
 
2014-08-10 07:52:56 PM  

TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.


How will the XL pipeline increase the supply?
 
2014-08-10 07:54:55 PM  

jaytkay: TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.

How will the XL pipeline increase the supply?


Even if it did increase supply, gas prices don't follow supply vs demand.
 
2014-08-10 08:01:02 PM  
No public money, no tax breaks.

A route that doesn't put the sand hills or any other sensitive ecosystems at risk.

Meet these criteria, and I'm ok with keystone being part of an energy bill that includes huge investments in renewables.

I'm a liberal environmentalist, but I also recognize that fossil fuels are an important part of our economy currently.
 
2014-08-10 08:05:54 PM  

TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.  I'm talking to you Subby.  Even if every last drop goes to China.   China will then buy less from the Middle East and other markets that we and the Europeans get some of their oil from.   So yes we will supply go up no matter where it goes.  Oil is desired all around the world and once it in a supertanker, it can go anywhere where that supertanker can.

Yeah, it not enough to make a huge difference.  And the increase in demand from the emergence of the middle class in India and China will swamp it unless there is another economic breakdown.    And the long-term price in environmental  damage will also be far more than the short-term savings resulting in excess supply.


col·lu·sion
noun \kə-ˈlü-zhən\
: secret cooperation for an illegal or dishonest purpose  -  except for the secret part, in the case of the oil industry.
 
2014-08-10 08:05:55 PM  

Fantasta Potamus: jaytkay: TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.

How will the XL pipeline increase the supply?

Even if it did increase supply, gas prices don't follow supply vs demand.


The oil that would be flowing out to the gulf and on to the global market via Keystone XL is presently subject to a sort of monopsony; Canadian producers can effectively only sell the stuff to consumers in the US, while those US consumers are under no such restriction, they can buy their oil from anywhere.  Accordingly, US consumers buy that oil at a discount under the spot price, and Canadian producers have no choice but to acquiesce to that.

Turn on the pipeline, and that oil is sold on the global market.  Ergo, the price of that oil rises to meet the spot price established on the global markets.

There's plenty enough economic motivation for Canada to get that oil onto the global market, so for me the question of "if" has already been answered in the affirmative.  What remains to be seen is "when" and "how," and as I said above, it's not really in the economic best interests of the US to make that happen any sooner than necessary, nor to build that pipeline across priceless agricultural land in the midwest.  If they want the profit, they should assume the risks.
 
2014-08-10 08:08:50 PM  

user437: Somebody educate me please.

Seems like a pipeline would be a hell of a lot better for the environment than the armada of tanker trucks and rail cars that currently move this oil down to Texas.  Is that not the case?


Well, except for the irreparable environmental damage that's done in and around the places where the pipe-line is built, not even accounting for the occasional leak / spill.  It's more of a transference of damage.
 
2014-08-10 08:10:59 PM  
I have a pretty good grasp of how oil prices work. I'm no professional, but I've followed it as a serious hobbyist for quite a while. That said, from my experience, if the price of a barrel of crude dropped by three bucks, the price of a gallon of gas will go up by 34 cents.
 
2014-08-10 08:14:37 PM  
The American driving public is a large group that spends a lot of money every day on a single product. Isn't there anything we can do as a people to save ourselves some money at the pump?
 
2014-08-10 08:18:53 PM  

user437: Somebody educate me please.

Seems like a pipeline would be a hell of a lot better for the environment than the armada of tanker trucks and rail cars that currently move this oil down to Texas.  Is that not the case?


If nothing else, it's harder to hide or cover up a spill from a truck or rail car than it is a leak from a pipeline that's probably underground.
 
2014-08-10 08:20:25 PM  

user437: Somebody educate me please.

Seems like a pipeline would be a hell of a lot better for the environment than the armada of tanker trucks and rail cars that currently move this oil down to Texas.  Is that not the case?


Quiet, you.

It's like when people argue that we don't want nuclear waste traveling through all these states via rail car to Yucca Mountain - we should send it to Florida to launch into the sun.
 
2014-08-10 08:22:05 PM  

jaytkay: TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.

How will the XL pipeline increase the supply?


Presumably, Canadian oil production is stymied by a bottleneck in transportation and the pipeline allows oil production to increase.
 
2014-08-10 08:22:55 PM  

Kumana Wanalaia: The American driving public is a large group that spends a lot of money every day on a single product. Isn't there anything we can do as a people to save ourselves some money at the pump?


Invest in electrics?
 
2014-08-10 08:32:04 PM  
Step 1: build pipeline under the guise of lowering prices
Step 2: don't lower prices
Step 3: shut down pipeline for maintainance, or some catastrophe.
Step 4: profit by gouging.
 
2014-08-10 08:33:38 PM  
There are plenty of people in the US who will buy this logic because they have no idea how world markets work.
 
2014-08-10 08:34:22 PM  

vygramul: jaytkay: TheMysteriousStranger: Anyone who does not think that increasing the supply of oil will not make it cheaper than it would otherwise have been is clueless economically.

How will the XL pipeline increase the supply?

Presumably, Canadian oil production is stymied by a bottleneck in transportation and the pipeline allows oil production to increase.


Yep. The "bottleneck" is that tar sand oil only goes to the Great Lakes refineries at the moment, and it "only" gets sold in the US, and it "only" powers countless commercial transporation fleets and agricultural equipment (and some cars) in America's farmland. That's horrible for competition, and therefore, horrible for consumers.

Finish the pipeline, and the "bottleneck" is solved. Great Lakes refineries will have to compete with China's refineries for the same oil. The competition between the two buyers, according to everything Republican Math has taught us, will lower prices by $3/barrel, by $.10/gallon at the pump, and food prices by 5% across the midwestern US.

Ta-da!

/way to stick it to the socialist Democrats - by selling it to the Communist Chinese
 
2014-08-10 08:35:56 PM  
Just not for us.
 
2014-08-10 08:46:31 PM  

user437: gadian: Well, except for the irreparable environmental damage that's done in and around the places where the pipe-line is built, not even accounting for the occasional leak / spill.  It's more of a transference of damage.

How would their be irreparable environmental damage when it would be buried 4 feet underground?  Even in spots where it had to be above ground, you're talking about a footprint no more than 10 feet wide.  A new road being built would do more damage than the pipeline.

Leaks would be a concern, but I'd imagine they're pretty good at preventing them, or at least being able to shut off sections of the pipeline to minimize the spill.


It's painfully obvious that you do not work in the industry.

Pipelines are NOT built with that kind of redundancy. Small leaks would be all but untraceable. A standard US Oil barrel is defined as 42 gallons.

A nomination being off 1 or 2 barrels at the destination is a rounding error. The people who monitor wouldn't be concerned unless it was 100 barrels or more.

If the Canadian government won't let them go across their own god damn country with the pipeline, I don't know why we should be chomping at the bit to let them come through our country. Especially when the "jobs" that people like to tout would be temporary at best. Once that pipeline was finished *poof* go the jobs....and that assumes they bid it to a local contractor and don't, you know, use contractors who know what the fark they're doing like we do when we do any other type of big project.

/works in the Oil and Gas Industry
//Fark TransCanada, let them go across their own country
///Tar sands suck as an energy source
 
2014-08-10 08:46:54 PM  

user437: gadian: Well, except for the irreparable environmental damage that's done in and around the places where the pipe-line is built, not even accounting for the occasional leak / spill.  It's more of a transference of damage.

How would their be irreparable environmental damage when it would be buried 4 feet underground?  Even in spots where it had to be above ground, you're talking about a footprint no more than 10 feet wide.  A new road being built would do more damage than the pipeline.

Leaks would be a concern, but I'd imagine they're pretty good at preventing them, or at least being able to shut off sections of the pipeline to minimize the spill.


Are you claiming that miles upon miles of pipeline underground would leave a footprint only 10 feet wide for the entire stretch?  That's... that's amazing.

As for the likelihood of oil companies maintaining their lines and keeping abreast of spills, the gentleman would kindly read up on the Niger Delta region.
 
2014-08-10 08:52:11 PM  

Pincy: Wow, $3.00/barrel!!!  That would translate to like three cents a gallon for gas, right?


No, you're wrong.
 
2014-08-10 08:58:55 PM  

Karac: user437: Somebody educate me please.

Seems like a pipeline would be a hell of a lot better for the environment than the armada of tanker trucks and rail cars that currently move this oil down to Texas.  Is that not the case?

If nothing else, it's harder to hide or cover up a spill from a truck or rail car than it is a leak from a pipeline that's probably underground.


The pipeline almost certainly wouldn't be underground.

It's not a matter of leaks in an underground pipeline contaminating groundwater; the whole fracking deal is enough proof that the oil companies could not give less of a rat's ass about whether or not their corner-cutting causes people's tap water to become poisonous and/or combustible. The issue is the cost of building an underground pipeline in the first place versus building it above ground -- paying for the construction of the pipeline would cost less if it didn't include digging a ditch to put the pipeline in and the covering it up afterwards, and that's assuming that an underground oil pipeline would be built via cut-and-cover instead of boring a tunnel through bedrock.

/this is also why they want to build their leaky-ass china-quality pipeline over the aquifer that provides fresh water to pretty much every other farm from Chicago to Denver without environmentalist oversight
//alternatives that aren't being considered due to higher up-front cost include:
 -- building a pipeline that ISN'T china-quality and thus doesn't leak like a sieve
 -- building their leaky-ass china-quality pipeline WITH environmentalist oversight, to make sure that they don't "accidentally" poison a huge chunk of the country's food supply
 -- building their leaky-ass china-quality pipeline AROUND the country's largest fresh-water aquifer instead of OVER it
 -- building their leaky-ass china-quality pipeline over the Canadian Rockies instead of over American farmland, since the oil being transported is gonna go to China anyway
 
2014-08-10 09:00:25 PM  

user437: gadian: Well, except for the irreparable environmental damage that's done in and around the places where the pipe-line is built, not even accounting for the occasional leak / spill.  It's more of a transference of damage.

How would their be irreparable environmental damage when it would be buried 4 feet underground?  Even in spots where it had to be above ground, you're talking about a footprint no more than 10 feet wide.  A new road being built would do more damage than the pipeline.

Leaks would be a concern, but I'd imagine they're pretty good at preventing them, or at least being able to shut off sections of the pipeline to minimize the spill.


Yeah, they are real good and preventing leaks and minimizing the spills.
 
2014-08-10 09:01:48 PM  

udhq: Kumana Wanalaia: The American driving public is a large group that spends a lot of money every day on a single product. Isn't there anything we can do as a people to save ourselves some money at the pump?

Invest in electrics?


Why do you hate America?
 
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