Oil politics: It’s like arguing with the mirror

Water runs downhill and so does crude oil.

Well, at least oil is running south of the border. This, despite the efforts of the foreign-funded E-Wacks, and our very own energy denier, Prime Minister Justin Trudeau, ironically the owner of the Trans Mountain Pipeline, which will never be built under his… errr… leadership.

Western Canadian Select (WCS) is reaching the U.S. Gulf refining hub at record levels, with imports from Western Canada hitting five million barrels in May. To pile irony on the aforementioned irony – much of this is now being exported by U.S. refiners to China, where heavy crude is in high demand in order to keep pace with asphalt production for infrastructure projects.

This means Alberta is selling crude at a discount to its only customer, who is then selling it to the world’s second-largest energy consumer at a profit. All this while we in this country, floating in a cloud of mass hypnosis, pontificate on our need to find other markets for our energy resources.

Whoa baby! Are we ever on that!

Declarations and table thumping of a need for more pipelines at this point means more pipelines to the same customer. We are exporting crude to a customer with no carbon tax, who didn’t sign the unenforceable Paris accord on greenhouse gas (GHG) emissions, who is then reselling WCS to a country with no carbon tax.

The way things are going, Canada – a collection of provincial fiefdoms – will forever be debating or applying some pseudonym for a tax on our refined products, which will make us less and less competitive compared to our only customer and largest energy consumer on the planet.

If you think I’m repeating myself you’re right, I am. It’s getting like arguing with the mirror.

The pump price of gasoline is an optical beacon that all politicians are wary of. But the pump price is inelastic, meaning that large changes in price have little effect on its demand. But large pump price increases have a huge effect on political futures.

As we endure this federal election soap opera, I dare any political party to promise to increase the carbon tax to $100/ton in an attempt to meet our Paris commitment. This would increase pump prices by 16 cents a liter.

Any attempt to convince the voters at the ballot box with this announcement would only prove that political waters also run downhill — and in a torrent.

~ The Grouch

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Roger McKnight is the Chief Petroleum Analyst with En-Pro International Inc.
Roger has over 25 years experience in the oil industry, and has held senior marketing management positions responsible for national and international accounts. He is the originator of the card lock concept of marketing on-road diesel that is now the predominant purchase method of diesel in Canada. Roger's knowledge of the oil industry in North America, and pricing structures has resulted in his expertise being sought as a commentator by local, national, and international media. Roger is a regular guest on radio and television programs, and he is quoted regularly in newspapers and magazines across Canada.

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