Can someone (maybe Errol) answer some nagging question I have on oil pricing. Why is the discount for WCS increasing? Is it actually a lack of pipelines and/or rail capacity? Or is it world wide supply and demand for crude? Are Gulf coast refineries now at capacity, therefore refiners can be choosy on the crude they refine and WCS is way down on the list? We know what the price of WCS is in Alberta, but what is the landed price for WCS at the refinery? And then, how much more does it cost to refine WCS?
Looking at crude oil price charts I see that a huge variation in Canadian oil prices today, from US7.56 for Hardisty Light to US22.06 for Syncrude Sweet Premium all the way up to US$51.66 for Canadian Premium Synthetic. I also note some disappointing US prices such as Wyoming General Sour is less than Hardisty Light at US7.50 and Central Montana crude is just US19.45. Does Montana and Wyoming have the same shipping problems we do, or is it refineries just do not want these blends therefore discounts them?
Which then makes me ask, does China actually want WCS crude shipped to them? Do they have the upgraders and refineries to even handle WCS? I have been told we made the very first ever shipment of WCS to China just this spring and it was only a quarter million bbls shipment through Portland. Furthermore, most of China's imports come via very large crude tankers carrying 2 million bbls and that the biggest tanker that can be filled in Vancouver would carry less than half a million bbls. Could we even compete by shipping small tankers of WCS to China or would WCS be discounted for tanker size and high costs of refining?
Like Canadian farmers, are oil companies simply producing all they can and then wondering how and where they can market it? Willing to produce as much as possible and take firesale prices because of a lack of transportation and actual viable markets with refining capabilities to handle our product, given there is currently abundant supply of competing crude. Is this the Canadian way of doing business?
No question we need to sell oil at higher prices. But will shipping WCS by rail actually decrease the discount or are we simply adding the costs of rail cars to production costs and at the same time increasing competition for rail service for every other industry including movement of grain?
Looking at crude oil price charts I see that a huge variation in Canadian oil prices today, from US7.56 for Hardisty Light to US22.06 for Syncrude Sweet Premium all the way up to US$51.66 for Canadian Premium Synthetic. I also note some disappointing US prices such as Wyoming General Sour is less than Hardisty Light at US7.50 and Central Montana crude is just US19.45. Does Montana and Wyoming have the same shipping problems we do, or is it refineries just do not want these blends therefore discounts them?
Which then makes me ask, does China actually want WCS crude shipped to them? Do they have the upgraders and refineries to even handle WCS? I have been told we made the very first ever shipment of WCS to China just this spring and it was only a quarter million bbls shipment through Portland. Furthermore, most of China's imports come via very large crude tankers carrying 2 million bbls and that the biggest tanker that can be filled in Vancouver would carry less than half a million bbls. Could we even compete by shipping small tankers of WCS to China or would WCS be discounted for tanker size and high costs of refining?
Like Canadian farmers, are oil companies simply producing all they can and then wondering how and where they can market it? Willing to produce as much as possible and take firesale prices because of a lack of transportation and actual viable markets with refining capabilities to handle our product, given there is currently abundant supply of competing crude. Is this the Canadian way of doing business?
No question we need to sell oil at higher prices. But will shipping WCS by rail actually decrease the discount or are we simply adding the costs of rail cars to production costs and at the same time increasing competition for rail service for every other industry including movement of grain?
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