[Newsbot]

Title: Canada, Saudi oil set for showdown
Category: Business
Posted By: N_Fiddledog
Date: 2015-01-07 00:51:10
Canadian

[martin14]

Oil went through 50$ a barrel, I think it will go below 40 before bottoming out.

Question is for how long ?

[GreenTiger]

Hopefully a long time.

[DrCaleb]

I can't even buy a barrel for $48, let alone one filled with oil. Sounds like a good deal!

[stratos]

Is Canada producing that much oil that it is now a threat to the Saudis, or is this just hype for news stories or some other reason all together?

[DrCaleb]

stratos stratos:

Is Canada producing that much oil that it is now a threat to the Saudis, or is this just hype for news stories or some other reason all together?

I believe that a combination of oilsands production and fracking has meant the US is nearly self sufficient in meeting it's energy needs and has drastically scaled back imported oil from all sources. That's my recollection, anyhow.

I'm sure the Saudis still have South Asia and China as big demand customers.

[stratos]

DrCaleb DrCaleb:

stratos stratos:

Is Canada producing that much oil that it is now a threat to the Saudis, or is this just hype for news stories or some other reason all together?

I believe that a combination of oilsands production and fracking has meant the US is nearly self sufficient in meeting it's energy needs and has drastically scaled back imported oil from all sources. That's my recollection, anyhow.

I'm sure the Saudis still have South Asia and China as big demand customers.

Interesting. I'll have to ponder on this some. Thanks.

[DrCaleb]

stratos stratos:

DrCaleb DrCaleb:

stratos stratos:

Is Canada producing that much oil that it is now a threat to the Saudis, or is this just hype for news stories or some other reason all together?

I believe that a combination of oilsands production and fracking has meant the US is nearly self sufficient in meeting it's energy needs and has drastically scaled back imported oil from all sources. That's my recollection, anyhow.

I'm sure the Saudis still have South Asia and China as big demand customers.

Interesting. I'll have to ponder on this some. Thanks.

http://time.com/67163/why-are-u-s-oil-imports-falling/

http://www.eia.gov/dnav/pet/hist/LeafHa ... RIMUS1&f=M

[DrCaleb]

Predictions for the Kingdom of Saud are not looking good:

$1:

The net import share of total U.S. energy consumption is 4% in 2040, compared with 16% in 2012 and about 30% in 2005.

http://www.eia.gov/forecasts/aeo/er/ear ... uction.cfm

[andyt]

DrCaleb DrCaleb:

stratos stratos:

Is Canada producing that much oil that it is now a threat to the Saudis, or is this just hype for news stories or some other reason all together?

I believe that a combination of oilsands production and fracking has meant the US is nearly self sufficient in meeting it's energy needs and has drastically scaled back imported oil from all sources. That's my recollection, anyhow.

I'm sure the Saudis still have South Asia and China as big demand customers.

As the article explains, fracking produces light, sweet oil, of which the Saudis have the most reserves in the world. So they were competing with US frackers for price in the US market. Fracking is expensive, while the Saudis have the lowest production costs in the world.

As the article also says (it can pay to read the op), the Saudis also produce a lot of medium crude. Many refineries in the US are only set up to refine this heavier oil. Suppliers were mixing the heavy crude that Canada produces with light crude to produce medium crude for these refineries.

As long as oil prices were high, the lower transportation costs gave Canadian and US oil the advantage and US reliance on Saudi oil had drastically reduced in recent years. Now that the price per barrel is below the cost of production for a lot of US and Canadian oil, Saudi oil is becoming competitive again.

[andyt]

DrCaleb DrCaleb:

Predictions for the Kingdom of Saud are not looking good:

$1:

The net import share of total U.S. energy consumption is 4% in 2040, compared with 16% in 2012 and about 30% in 2005.

http://www.eia.gov/forecasts/aeo/er/ear ... uction.cfm

This was written while oil prices were high. I don't know how long the Saudis can keep up depressing prices, but probably long enough to put a lot of US and Canadian projects and exploration on hold. Also, with low oil prices boosting the US economy, and probably taking the focus off conservation (it's hummer time), demand in the US will rise. So who knows what 2040 will bring. I think the Saudis will only be in trouble once they start running out of oil. And then there will be trouble indeed, not just in SA. Or if jihadis manage to take over and cut off or way back on oil production - we can see how influential Saudi oil is in the world. This would cause an instant spike in oil prices with western economies going in the crapper again. Probably make 1973 look like a picnic.

[DrCaleb]

andyt andyt:

As long as oil prices were high, the lower transportation costs gave Canadian and US oil the advantage and US reliance on Saudi oil had drastically reduced in recent years. Now that the price per barrel is below the cost of production for a lot of US and Canadian oil, Saudi oil is becoming competitive again.

And that fits nicely into the thread current-events-f59/new-questions-raised-about-u-s-saudi-relationship-t111253.html
"New questions raised about U.S.-Saudi relationship".

Business is Business, but would Canada ever undercut an industry in order to undermine the market of an ally? The softwood lumber surrenderagreement says 'no'.

[DrCaleb]

andyt andyt:

This would cause an instant spike in oil prices with western economies going in the crapper again. Probably make 1973 look like a picnic.

[andyt]

That's because we need the US more than they need us. Meanwhile, for some reason I can't seem to get an answer to, the Saudis have the US sucking their dicks.

As for business is business, in Canada the oil is privately produced. If those producers could produce it for cheaper than the same producers can in the US, you bet they would sell it for less and undercut US production. Since oil is traded on an open market, the US producers would have no case. They are able to claim that since we (ie BC) don't auction off our logs to the highest bidder, we are artificially lowering the price of those logs.

[stratos]

This is something I heard on one of those news talk shows done on Sundays back in the 70's during the oil crisis.

I do not recall who the man was but he was basically the head of the oil department in the US. He clearly said that the plan was for the US to be the last nation on Earth with oil still in the ground. That was why we were not producing more oil but actually shutting down some of the oil wells during the crisis.

I think that is still the plan.