Canadas crude pipeline to Ontario goes through America If Canada with holds it's crude to America than eastern Canada won't get it it's just that simple
I cannot see Canada refusing to supply its heavy oil to the US, any tariffs would ultimately raise prices for American consumers, the flow of oil will continue. However longer term supplies of Canadian crude may decline if the economic returns become challenged
@ would Canadians buy an expensive American ICE car or an affordable EV that doesn’t need oil changes etc…. Also Chinese batteries have better range, new Teslas use Chinese batteries for extended range.
The fact that Canada has not built relevant infrastructure to refine its own heavy oil is desperately shortsighted for the Canadian people. This is like the Afro Arrow all over again, where Canada allows itself to get bullied into virtual poverty by our big neighbour. Why? As Kissinger said, having the US for an enemy is a serious problem, but having them as a friend is fatal… This is so basic it borders on the ridiculous. We know enough to grab our own oxygen mask on the plane, so why don’t we have the brains and foresight to look after our welfare, and survival in the world? The worst of it is that eventually this will fall to consumers to foot the bill on both sides of the border, as neither country can produce or ship goods at a loss for very long.
Canada has a shortage of the light oil needed to produce for example Gasoline, It is true that export infrastructure to alternative markets for Canadian Crude is lacking - Rory Johnstone comments about this on twitter - follow home there Canada has had a symbiotic relationship with its southern neighbour, which has benefited both parties - this is IMO sadly been spoilt by the current inhabitant of the White house with damaging consequences for both nations
Which corporations mostly produce heavy crude in the us or friendly countries? Which corporations run refineries in the Us not reliant on Canadian crude? Trying to research this, but I haven’t had much luck. Thanks for the vid and insights 🎉
1. There is little Heavy crude produced in the US - mostly in California and parts of Texas. best to look at the EIA website (www.eia.gov) for API production by state - almost all the oil produced from Shale is very light, heavy oil is almost always produced in conventional fields or in Canadian Tar sands 2. Depends on what you define as friendly - Canada was about as Friendly as it gets! - most of the rest is produced in Mexico, Colombia, Venezuela , Iraq or Saudi Arabia . Platts is a good source - please see my video here = ua-cam.com/video/oOHxVinv9NM/v-deo.html on global benchmark crudes 3. Almost all US refineries tend to use Canadian crude in their blends -most reliant are Refiners in PADD2 (mid west) but Gulf coast (PADD3) use more shipborne imports such as Mexican Maya as well as Canadian crude by pipeline
You were providing valuable info until you tried to define tariff. You got that wrong, presumably or the same reason american voters get it wrong. A tariff is a tax paid by the importer, not the exporter. If I want to send something to a buyer in the U.S., I don't have to think about tariffs. When it hits the border, U.S. customs will charge the importer a tariff. They use ther terminology that the tariff is being applied against Canada because it is imports from Canada that are taxed. However, the cost is born entirely by the importer. The exporter gets less business if buyers don't want to pay the original price + tariff.
Great presentation, but the tariffs will go in place, Trudeau's "retaliatory" response will be ignored. Alberta will keep sending their heavy oil at the highest price it can, it is not a fungible supply. However, refineries cannot run at a loss in the US forever. The Canadian dollar will likely go down to balance the tariff, and Canada will pay when they import other items from the US. Canada needs to come up with something creative or take a overall GDP hit.
It is true, that Albertan oil basically has no other outlet but to go south to the US with very limited other export options. The US has no other realistic options for importing heavy crude, so US refiners will need to buy Canadian Crude - somebody will have to pick up the cost of the tariffs - and I think that the tariffs will be passed on to US consumers in the form of higher prices, so both countries will take a GDP hit Maybe War Plan Red from the 1920;s might make a comeback?
@@AlanFoumGeophysicistThe US announced a hostage deal with Venezuela yesterday, and reportedly the US side of the bargain was an offer to begin buying larger volumes of heavy crude from the Maduro government.
Canada needs to impose a minimum price on oil exports to the U.S. Those Alberta oil companies are selfish, so they’ll probably be more than willing to take a 10% hit on the oil price if they can keep the pipelines full and their profits high, meaning the U.S. will feel no effect of the tariffs while Canada suffers the entire 10% hit (or more since resource extraction rates might go down due to the lower price). Canada needs to control the price to ensure that Americans endure the maximum pain of the tariffs while modulating the price so that there’s still no room for alternate producers to enter the market.
This is not how the crude oil market works. Crude is almost always priced in usd per bbl with pricing based on marker crudes. If the Canadian dollar drops, they will be more profitable as they will be getting more Canadian dollars but have the same costs. On the flipside the US dollar will probably rise (it tends to in turbulent times) so US exports will be less competitive. The only caveat would be if the refineries play hardball and can force Canada to sell at a reduced price (to offset the tariff). In that case Canada will be worse off for a short time while they put in place mechanisms to sell their crude elsewhere, unless they just turn off the tap.
You'd think that the shortfall in refinery capacity will be addressed through tax breaks or subsidies to get refinery capacity up so Gulf and Texas resources can be maximized. America will be fine.
Except that Texas produces very little heavy oil, Permian & Eagle ford oils are very light >45 API gravity. Refinery capacity is adequate for the US market , but set up for mid weight oils which are needed for all the petroleum products that are needed, US can always import heavier oil from Venezuela or Russia instead of Canada and Mexico
Brilliant 👍 Very well explained 👏 Thanks Alan.
Canadas crude pipeline to Ontario goes through America
If Canada with holds it's crude to America than eastern Canada won't get it it's just that simple
I cannot see Canada refusing to supply its heavy oil to the US, any tariffs would ultimately raise prices for American consumers, the flow of oil will continue. However longer term supplies of Canadian crude may decline if the economic returns become challenged
so Canada couldnt use trucks? Yea simple
Excellent explanation. Probably fall on deaf ears in the White House trying to explain this...
Canada could threaten to not tariff Chinese EVs. US car companies are already in trouble. A BYD seal is $10 000 US.
Can an American drive across the border , buy a car from a Canada based dealer and drive it home w/o paying any taxes / import duties ???
@ would Canadians buy an expensive American ICE car or an affordable EV that doesn’t need oil changes etc…. Also Chinese batteries have better range, new Teslas use Chinese batteries for extended range.
The fact that Canada has not built relevant infrastructure to refine its own heavy oil is desperately shortsighted for the Canadian people.
This is like the Afro Arrow all over again, where Canada allows itself to get bullied into virtual poverty by our big neighbour. Why?
As Kissinger said, having the US for an enemy is a serious problem, but having them as a friend is fatal…
This is so basic it borders on the ridiculous. We know enough to grab our own oxygen mask on the plane, so why don’t we have the brains and foresight to look after our welfare, and survival in the world?
The worst of it is that eventually this will fall to consumers to foot the bill on both sides of the border, as neither country can produce or ship goods at a loss for very long.
Canada has a shortage of the light oil needed to produce for example Gasoline, It is true that export infrastructure to alternative markets for Canadian Crude is lacking - Rory Johnstone comments about this on twitter - follow home there
Canada has had a symbiotic relationship with its southern neighbour, which has benefited both parties - this is IMO sadly been spoilt by the current inhabitant of the White house with damaging consequences for both nations
Which corporations mostly produce heavy crude in the us or friendly countries? Which corporations run refineries in the Us not reliant on Canadian crude? Trying to research this, but I haven’t had much luck. Thanks for the vid and insights 🎉
1. There is little Heavy crude produced in the US - mostly in California and parts of Texas. best to look at the EIA website (www.eia.gov) for API production by state - almost all the oil produced from Shale is very light, heavy oil is almost always produced in conventional fields or in Canadian Tar sands
2. Depends on what you define as friendly - Canada was about as Friendly as it gets! - most of the rest is produced in Mexico, Colombia, Venezuela , Iraq or Saudi Arabia . Platts is a good source - please see my video here = ua-cam.com/video/oOHxVinv9NM/v-deo.html on global benchmark crudes
3. Almost all US refineries tend to use Canadian crude in their blends -most reliant are Refiners in PADD2 (mid west) but Gulf coast (PADD3) use more shipborne imports such as Mexican Maya as well as Canadian crude by pipeline
Tariffs are paid by the importer, not the exporter.
I agree tariffs are ultimately paid by the consumers in the importing country, By higher prices, worse products and services, less consumer choice
You were providing valuable info until you tried to define tariff. You got that wrong, presumably or the same reason american voters get it wrong. A tariff is a tax paid by the importer, not the exporter. If I want to send something to a buyer in the U.S., I don't have to think about tariffs. When it hits the border, U.S. customs will charge the importer a tariff. They use ther terminology that the tariff is being applied against Canada because it is imports from Canada that are taxed. However, the cost is born entirely by the importer. The exporter gets less business if buyers don't want to pay the original price + tariff.
Great presentation, but the tariffs will go in place, Trudeau's "retaliatory" response will be ignored. Alberta will keep sending their heavy oil at the highest price it can, it is not a fungible supply. However, refineries cannot run at a loss in the US forever. The Canadian dollar will likely go down to balance the tariff, and Canada will pay when they import other items from the US. Canada needs to come up with something creative or take a overall GDP hit.
It is true, that Albertan oil basically has no other outlet but to go south to the US with very limited other export options. The US has no other realistic options for importing heavy crude, so US refiners will need to buy Canadian Crude - somebody will have to pick up the cost of the tariffs - and I think that the tariffs will be passed on to US consumers in the form of higher prices, so both countries will take a GDP hit
Maybe War Plan Red from the 1920;s might make a comeback?
@@AlanFoumGeophysicist I would not bet that US consumers pick up the tab. Check out "A User’s Guide to Restructuring
the Global Trading System"
@@AlanFoumGeophysicistThe US announced a hostage deal with Venezuela yesterday, and reportedly the US side of the bargain was an offer to begin buying larger volumes of heavy crude from the Maduro government.
Canada needs to impose a minimum price on oil exports to the U.S. Those Alberta oil companies are selfish, so they’ll probably be more than willing to take a 10% hit on the oil price if they can keep the pipelines full and their profits high, meaning the U.S. will feel no effect of the tariffs while Canada suffers the entire 10% hit (or more since resource extraction rates might go down due to the lower price). Canada needs to control the price to ensure that Americans endure the maximum pain of the tariffs while modulating the price so that there’s still no room for alternate producers to enter the market.
This is not how the crude oil market works. Crude is almost always priced in usd per bbl with pricing based on marker crudes. If the Canadian dollar drops, they will be more profitable as they will be getting more Canadian dollars but have the same costs. On the flipside the US dollar will probably rise (it tends to in turbulent times) so US exports will be less competitive. The only caveat would be if the refineries play hardball and can force Canada to sell at a reduced price (to offset the tariff). In that case Canada will be worse off for a short time while they put in place mechanisms to sell their crude elsewhere, unless they just turn off the tap.
You'd think that the shortfall in refinery capacity will be addressed through tax breaks or subsidies to get refinery capacity up so Gulf and Texas resources can be maximized. America will be fine.
Except that Texas produces very little heavy oil, Permian & Eagle ford oils are very light >45 API gravity. Refinery capacity is adequate for the US market , but set up for mid weight oils which are needed for all the petroleum products that are needed, US can always import heavier oil from Venezuela or Russia instead of Canada and Mexico