Subsidizing oil.

[the big wheel]

So is it true oil is 56 but we're selling it for 30 to the states? Holy crap so that explains why we're paying above world price here. Which is a main reason prices for everything's so stupid.

[Kinger]

My understanding is our oil is significantly lower quality than most of the oil the US produces.

I've also heard ours is used as blending for the higher quality lighter oils that come from the US.

Also doesn't help most of Europe does not want to buy any oil produced by the oilsands. China is the main buyer hence there buying up of oilsands companies and sites.

Totally could be wrong. Honestly don't know much about oil refinery processes.

[ajl]

Oil production is a lot like farming. When the price drops we need to produce more bushels (barrels). Western Canada Select is trading around $40 US but that is a delivered price. Due to various pipeline problems, there is a glut backing up in Western Canada, hence more oil on rail again. Transportation is a larger component of this price once again. Also WCS is heavy oil and use full for diesel fuel but a refinery has to be set up properly to use it.

[Klause]

Lots of refiners can use heavy oil... and not all oil from Canada is heavy...

The main problem is transportation... Oil is that cheap because the basis (freight) is that high. It's no different than grain...

What happens to prices in SK when there's no rail traffic headed west? They collapse.

[Horse]

Ajl. We gust opened a refinery at redwater for diesel with feed stocks from Ft mac,typicaly oil business they are way over budget and time delays but it is producing and supposed to increase3 fold by next yr.

[bucket]

The gas and diesel is price based on world prices.... saskatchewan's gas and diesel is domestically produced....doubt there is any imports.....based on saskatchewan's domestic oil price I think some refiners here ....federated....are gouging and making a shitload of money
....

[LEP]

Horse, actually it isn't typical oil industry, it is typical government. This is being built by the Alberta government, because they take oilsand royalty in physical oil.I don't care what stripe or party. They can't bring anything in on time and on budget.

I remember an interview with a petroleum expert in the US on qr77. They were discussing the cost per barrel of refining capacity. He was dumbfounded. He said it was 10x the last refinery built in North America.

[WiltonRanch]

There is almost excess refining capacity at the Gulf of Mexico. Initially built for gulf oil and Venezuela imports. That kinda dried up. I would assume those refineries are set up for heavy oil as Venezuela oil is heavy. Hence it’s a path of least resistance for our heavy oil. A fair portion goes for bunker fuel. All oil is different. High wax oil is no good for diesel. Our local heavy oil makes good diesel but makes the best asphalt. Husky was supposed to build another asphalt refinery but cancelled cause they bought one in the USA. Cost to build anything here isn’t competitive and unless govt isn’t in on it it won’t fly. Upgrader in Lloyd was paid for by both prov govts. Sure it costs taxpayers a chunk cause govts sold their shares back to husky for peanuts. The economic spinoff for than paid for it. So I don’t know sometimes subsidizing an industry in the right places pays off for everyone in the end. This new refinery may look crazy but if the govt is value adding their royalty oil, and it adds economic activity in the long run it may be a good thing.

[fjlip]

Canadian Oil Shippers Find Rail Space Is Scarce as Prices Slide - The trains are running late for Canada’s oil producers just when they need them the most. After a two-week shutdown of one of the largest export pipelines to the U.S. caused oil to back up in Alberta tank farms, Canadian railroad companies struggling to fulfill commitments to ship other commodities aren’t able to help ease the oil glut. “It’s hard for the railroads to change their operating plan really quickly,” Steve Owens, rail analyst at IHS Markit, said in a phone interview Wednesday. “There are equipment constraints and crew constraints.” Canadian National Railway Co. is facing a backlog of grain-carrying hopper car orders, according to the Ag Transport Coalition. Three derailments in the past two months have left the rail company playing “catch up” to fulfill orders, Kate Fenske, a spokeswoman, said by phone Monday. Canadian crude is selling at such a big discount that it’s economic to ship it on manifest trains, where tanker cars of crude are linked to existing trains carrying other commodities, Kevin Birn, a director at IHS Energy in Calgary, said by phone. Shipping by manifest train used to cost as much as $24 a barrel, he said. The recent disruptions to service, including one that shut the company’s main line between Edmonton and Saskatoon, Saskatchewan, for four days, have hindered grain shipments. The number of rail-car orders that Canadian National hasn’t filled is growing and “we’re beginning to recognize early-warning signs of a possible deterioration of service on the horizon,” said Wade Sobkowich, executive director of the Winnipeg-based Western Grain Elevator Association. Canadian National regards getting the country’s grain crop to market a “top priority” and is hiring new crews and bringing more locomotives online, Fenske said. Meanwhile, Canadian oil producers are struggling. With heavy crude trading at a more than $25-a-barrel discount to futures, oil producers are losing more than $20 million a day compared with shipping by pipeline, IHS’s Birn said. (BLOOMBERG)