There is a lot of oil bottled up in storage at Cushing Oklahoma. As a
result prices for Canadian produced oil (and North Dakota) as well is declining
relative to other sources of oil. There is only so much storage available so
prices could go down in the near future. This is one reason that Trans-Canada
wants to build the Cushing to Texas link as quickly as possible.
Cheers, ken
http://www.allvoices.com/contributed-news/11718345-canadian-oil-companies-facing-glut-of-oil-in-us-storage-point
Blog: http://kenthink7.blogspot.com/index.html
Blog: http://kencan7.blogspot.com/index.html
________________________________
From: Jim Devine <[email protected]>
To: Progressive Economics <[email protected]>
Sent: Friday, March 16, 2012 5:47:46 PM
Subject: Re: [Pen-l] Why High Gas Prices Are Here to Stay
> Counterpunch March 13, 2012
> A Tough-Oil World
> Why High Gas Prices Are Here to Stay
> by MICHAEL T. KLARE
>
> Oil prices are now higher than they have ever been — except for a
> few frenzied moments before the global economic meltdown of 2008.
> Many immediate factors are contributing to this surge, including
> Iran’s threats to block oil shipping in the Persian Gulf, fears of
> a new Middle Eastern war, and turmoil in energy-rich Nigeria. Some
> of these pressures could ease in the months ahead, providing
> temporary relief at the gas pump. But the principal cause of
> higher prices — a fundamental shift in the structure of the oil
> industry — cannot be reversed, and so oil prices are destined to
> remain high for a long time to come.
In the near future, it's quite likely that oil and gasoline will
become cheaper in purely market terms (i.e., prices). On the demand
side, high prices encourage oil's replacement with other energy
sources and greater efficiency in the use of petroleum products --
and also slower GDP growth. On the supply side, high prices also
encourage exploration, as Klare emphasizes, along with greater
efficiency in the extraction of existing oil reserves. All of these
encourage falling oil and gasoline prices, as do the end of various
temporary (or "conjunctural") forces like sabotage in Nigeria.
On the other hand, Klare's argument is that the environmental (or
external) costs of petroleum are rising is strong. Not only does the
extraction of non-"easy" oil destroy the environment even more than
the old "easy" oil fields did, but the use of the product encourages
global warming and other environmental disasters (cf. those tar
sands). The true or social cost (price + environmental cost) will
likely rise, since the long-run trend of rising environmental impact
will continue and likely intensify. In terms of true costs, it seems
to me, Klare's argument is totally valid.
Some say that we should hope for higher oil and gas prices in order to
discourage the use of petrochemicals due to the disastrous effect on
the environment. The problem with this is that high prices just reward
the oil companies with large natural-resource rents and encourages
them to invade more parts of the world to suck out the oil. Instead
what's needed is active governmental efforts to reduce the demand for
petroleum and its by-products. It's not likely to happen soon, so
we're likely to see the steady rise of the true cost of oil, even if
market prices fall.
--
Jim Devine / "In science one tries to tell people, in such a way as to
be understood by everyone, something that no one ever knew before. But
in poetry, it's the exact opposite." -- Paul Dirac
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