By on June 16, 2014

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Global oil prices are on the rise as the crisis in Iraq contributes to market instability. Large chunks of Iraq’s oil production infrastructure have fallen under militant control, leading to a sharp drop in output. Meanwhile, Canadian officials are upset with the Obama administration’s handling of the Keystone pipeline. They contend that the inaction on Keystone is keeping millions of barrels of Alberta crude from reaching more profitable markets.

Bloomberg reports that market analysts are divided on how much the Iraq crisis will influence crude prices in the future. This isn’t particularly surprising, given the number of variables in that still-developing situation. However, all observers expect that the price will only go up. The price of Brent crude on the London exchange has already crested $113 a barrel as of June 13; this is the highest level since last September. In the United States, West Texas crude is near $107, also the highest price since the previous September. Most forecasters expect oil to reach around $120 a barrel by the fourth quarter, when rising demand will also drive up prices. Longtime oilman T. Boone Pickens told CNBC that a complete shutdown of Iraqi production could drive oil into the $150-200 range by destabilizing world markets.

Part of the problem is attributable to the OPEC oil cartel’s difficulties in increasing supply. Since the Libyan revolution, oil production in that key OPEC member has declined precipitously to barely 10% of previous output. Meanwhile, fluctuating production in Nigeria and other OPEC members has introduced more volatility into the supply and demand curve. A report issued by the International Energy Agency last week states that Iraq could provide up to 45% of all growth in global oil output through 2020. As militants from the hyper-violent Islamic State in Syria and Iraq (ISIS) group overrun ever-larger swaths of the country and curb down production, that future is looking cloudy.

The latest Iraq crisis comes just as negotiations surrounding the embattled Keystone XL pipeline are finally coming to a head. The U.S. Senate Energy and Natural Resources Committee will likely vote this week to approve the pipeline. The bill under consideration is an attempt to sidestep the regulatory approval process, which critics say the Obama Administration has intentionally drawn out. The bill is unlikely to make it far in the Senate, due to general gridlock as well as the opposition of several key Senators.

The government of Canadian Prime Minister Stephen Harper is displeased with the Obama administration’s perceived stalling on the pipeline. Finance Minister Joe Oliver and Natural Resources Minister Greg Rickford have both criticized Obama, stating that continued delay of the pipeline is hurting the Canadian economy. Currently, crude from the Alberta oil sands is undervalued due to a transportation bottleneck, leading to lower prices. The Canadian Chamber of Congress estimates that this bottleneck is costing the Canadian economy as much as $50 million a day in lost revenue. Therein lies the contradiction at the heart of the dispute.

Environmental concerns and global warming have long been cited as the Obama administration’s reasons for drawing out the Keystone approval process. In reality, the economics of the pipeline are heavily skewed in Canada’s favor, to the possible detriment U.S. consumers. Keystone is the most visible manifestation of the long-term goal of Canadian energy companies to find markets outside the U.S. As the Wall Street Journal explains, and the Canadian Chamber of Commerce and Harper government freely admit, Keystone’s biggest benefit will be to Canadian oil producers, not American consumers. Keystone will enable them to export oil outside of the low-priced American market to higher-priced markets in Asia, Europe, and the developing world. Keeping Canadian crude from hitting world markets is in the best interests of the U.S., but not the Canadians. Of course, it’s not exactly kosher to say that out loud, considering that the United States is still getting about half its oil imports from Canada.

Given that, the “solution” to the Canadian oil price problem is probably going to be built entirely on Canadian soil. Oil companies are already developing a “Plan B” system of trans-Canada pipelines, should Keystone not be approved. Even so, the long-term viability of the Alberta oil sands depends on a relatively high minimum price floor. The highly adulterated quality of that oil, and the resulting expense of processing and refining it, means that Albertan production can only be profitable when the price of oil is relatively high.  This reason combined with new technology is the explanation for why Canadian tar sands haven’t been highly productive until recently. A worldwide decline in the price of oil, such as what happened in the 1980s and 1990s, could still be devastating to tar sands production.

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170 Comments on “Keystone Vote Looms Amid Iraq Implosion...”


  • avatar
    CoreyDL

    I love how the media and IEA create these self-fulfilling prophecies about the price of oil. Analyzing this and that. “If someone gets angry in Iraq, it could cause a 150% increase in oil prices!” So up goes the price. “Obama won’t sign this pipeline into existence!” Up goes the price. It’s all imaginary. The reaction to Lybia last year was the most ridiculous thing I’ve ever heard. Libya had/has tiny oil production figures. They are largely irrelevant. But The News doesn’t care, as they know most Americans don’t get how it works.

    • 0 avatar
      Landcrusher

      If the press says the price is going up, it’s because the price already has gone up. If the press makes a prediction, success is more correlation than causation.

      Whatever you do for a living or are knowledgeable in, think about how often the press is wrong about it. Now, realize that’s actually true on average for everything else as well.

      Sure, they can help fuel a panic, but seriously, they don’t understand much.

    • 0 avatar
      TEXN3

      I don’t think you get how it works, when it comes to o&g trading.

    • 0 avatar
      RogerB34

      They are not self fulfilling prophecies.
      Gasoline at the pump is driven by market spot price of crude. Problem in the ME and the spot price rapidly increases. The increase reflected in refiners stocks including gasoline and transmitted rapidly to the pump.
      The mainstream media propaganda that the economy is improving and this is a breakthrough year means the event will actually happen.
      Keystone will not be approved.

      • 0 avatar
        CoreyDL

        The “problem” is asploded and quickly blown out of proportion, allowing ridiculous price changes.

        As well, a 10% increase in crude leads to a 10%+ increase at the pump. A 10% decrease in crude leads to maybe 3% decrease at the pump.

      • 0 avatar
        jrhmobile

        Exactly. The way it was explained to me is that independent gas stations don’t price gas for what the LAST delivery cost. When you have to pay for a thousands of gallons of gas on the spot, you price it in anticipation of what the NEXT delivery will cost.

        Literally, cost-pull inflation.

    • 0 avatar

      First off, understand we are NOT talking about BRENT crude here, we are are talking about dirty, sandy, bottom-of-the proverbial barrel, very crude crude. Saudi Arabia and Venezuela will be happy to sell and ship another tanker of their hard-to-sell sour crude TODAY.

      If the Canadians are so dead set to get this crap to market, why dont THEY refine it into something useful up there? Then they make the BIG money, less of course, the expense of dealing with the tons of toxic sand and waste that will inevitably be produced.

      • 0 avatar
        jimboy

        You are correct. It has been a question many Canadians have been asking for a long time. Refining and selling a value added product would seem to be a no brainer, yet it has never happened? Several companies have talked about it, yet it seems to go nowhere each time. This solution would also help counteract the ‘Dirty Oil’ syndrome that now plagues Canadian oil exports.

        Canada, unfortunately is ‘famous’ for NOT WANTING to add value to its resource industries, but prefers to just get the raw goods of any kind out of the country. Many Canadians would like to see this change in the future but our industries are generally run by foreign owners,(americans included) who have no interest in developing local manufacturing of any kind. This is what happens when you sell your country to the highest bidder.

        • 0 avatar

          If it dosent make sense for the handful of near-the-source Canadian refineries to handle this product, how does piping it 2500+ miles improve the numbers?
          Plus, arent they actually going to have build TWO pipelines, the other to return the DILBIT which this crap needs to run in a pipeline. It just dosent sound right on SO many levels, before ya even think about oil spill.
          TWO WORDS…RUBE GOLDBERG!!!

      • 0 avatar
        Pch101

        “If the Canadians are so dead set to get this crap to market, why dont THEY refine it into something useful up there?”

        That’s what Keystone is for. The Canadians have a transportation problem. The lack of a pipeline depresses the price.

        Refining is a low margin business. The value comes primarily from controlling the oil, not from turning it into a retail product.

        • 0 avatar
          Chicago Dude

          It’s not a matter of transportation. Canada will get pipelines to the coast one way or another.

          It’s a matter of pushing oil sand problems off onto others. We up here in the midwest are getting buried in piles of pet coke. It’s a dirty, nasty, toxic byproduct of the oil sand refining process. All the folks out in the rest of the US don’t seem to realize what they are signing up for when they are asking for the pipeline to be built so they can get cheap Canadian oil sands. Cheap gas! Yay! Well, you get what you pay for.

          Hope you like the pet coke. You’ll be stuck with it. It’s the dirtiest fossil fuel known to man; so dirty that it can only be burned in a handful of countries around the world, and the dirtier the oil sands the more pet coke you get. The more oil sands you refine the more pet coke you get. The more countries that realize pollution isn’t so great, the less pet coke anyone wants to buy. Supply and demand. Canada doesn’t want it back. In fact, Canadians are pissed that they can see the piles of it across the river in Detroit. Yes, they’d rather see Detroit than pet coke. We have 6-story tall piles of it on the south side of Chicago. Coming soon to the rest of the country, courtesy of Keystone XL.

    • 0 avatar
      challenger2012

      I actually work for an offshore oil drilling company. The O&G industry pays well. For example: a motorman or a deck hand on a rig makes 60K/year to start. Drillers 120-180K/year. The people building the pipeline will make good money and those who will operate and maintain it will make good money, as well. What jobs are the anti-pipe line types offering? Also, for those who use the “What about leaks” nonsense argument. How many leaks have you heard about from the Alaskan pipeline and it has been around since the 70’s. With good paying jobs hard to find and for something that make the US a little more energy secure, I can’t see what the problem is.

      More Leak nonsense. I used to be a GE Controls Engineer. There is a power plant near Wading River, NY that used diesel fuel to power gas turbines for electrical power. Every day, 2-3 trucks would arrive bringing in diesel for the engines. I asked why not build a pipeline? I was told that land owners objected to a pipeline. Here is what will happen. A severe snow storm hits the north east. Roads close due to snow and ice. The demand for power goes sky high as people want power to stay warm. But since the trucks can’t more, the electrical power plant runs out of fuels just at the most critical time, then rolling blacks outs as demand overloads the grid. Yeh. I don’t think you should be would worrying about leaks.

      • 0 avatar
        ClutchCarGo

        Tell it to the folks in Kalamazoo, MI:

        http://en.wikipedia.org/wiki/Kalamazoo_River_oil_spill

        • 0 avatar
          challenger2012

          I read the story, poor maintenance resulted in a pipe failure. Answer better maintenace. So what do you have to offer to provide energy and jobs to the country? Bullshi*t doesn’t have the same BTU content as oil and the BS industry I know doesn’t pay as well. What jobs by the thousands pay between 60 and 180K without a degree? Oh Mr. ClutchCarGo please tell me. I want to know.

          • 0 avatar
            ClutchCarGo

            So what guarantee that a pipeline across America’s breadbasket and most valuable aquifer is going to be better maintained, or that a cleanup is going to be better handled?

            And most of those great jobs will be temporary during construction. Once complete, those jobs go away and the oil flows overseas while we live with the risk of a leak. It’s like that old divorce joke, she got the gold and all I got was the shaft.

          • 0 avatar
            28-Cars-Later

            This is also an excellent post.

          • 0 avatar
            Landcrusher

            Oh, you said “bread basket” we all have to be terrified and agree with you now. Hey, we should ban lighters there to. We don’t want anyone burning the “bread basket”!

            Demagoguery. Nonsense. Noise.

            The idea that an oil leak will lead to mass famine because it poison huge aquifers is only a tiny bit less nutty than Godzilla being created from pollution and wrecking our cities. At least Godzilla is entertaining.

        • 0 avatar
          bball40dtw

          That spill almost ruined one of our state’s treasures: Bell’s Brewery. Think of all the beer that is in danger! If someone makes its so I cannot purchase Expedition Stout or Hopslam, there will be hell to pay.

          • 0 avatar
            28-Cars-Later

            Bells was in danger? I’m putting my foot down there can be no more pipeline.

          • 0 avatar
            challenger2012

            Mr BBall40dtw I offer my assistance if there is a beer spill in the future. I will provide a straw and myself. There may not be any beer left for others, but first come first serve.

          • 0 avatar
            bball40dtw

            It was in danger. Enbridge did such a terrible job cleaning up the spill that Bells sued them and won. They tried to store the all of the contaminated muck next door to Bells and near a residential area. Bells would have had to shut down for months.

        • 0 avatar
          Landcrusher

          Yep, the bill for that was less than a billion. Less than 100 families were cut off from clean water. That sounds like a good day for some of the federal bureaucracies.

          If you want to compromise, I’ll agree to stop supporting the pipeline and you agree to stop supporting every federal program that makes a billion dollar mistake.

          We can then build the pipeline anyway because there soon won’t be any bureaucrats to stop it and the states will approve and regulate it themselves.

        • 0 avatar
          dash riprock

          or you could tell the people in Lac Megantic that crude by rail is much better than a pipeline

          http://www.theatlantic.com/infocus/2013/07/freight-train-derails-and-explodes-in-lac-megantic-quebec/100548/

        • 0 avatar

          Yes, there was an accident with Canadian oil in Kalamazoo. And there was a worse accident with North Dakota Bakken oil in Lac Megantic, Quebec last year.

  • avatar
    FormerFF

    There’s really very little benefit to the US economy in building this pipeline. Best estimate is there will be around 4000 construction jobs over a two year period, then maybe 50 after it is done. Currently, refineries in the Midwest benefit from the lower price that Albertan oil fetches, and that would go away if the pipeline is built.

    No benefit to the US consumer + possible environmental damage should a pipeline leak occur = bad deal for the US.

    • 0 avatar
      Dr. Kenneth Noisewater

      Leaky pipelines vs leaky and splodey oil railcars, pick your poison.

      Or, Canada could just build a pipeline to their BC coast and ship it to China, probably at a better price.

      No skin off my nose either way, my car’s mostly coal/nuke/wind/natgas/solar powered, whichever’s cheapest at the time.

      • 0 avatar
        heavy handle

        Exactly. It’s not “a pipeline or nothing,” it’s a pipeline or thousands of rail cars each day.

        • 0 avatar
          TEXN3

          Correct. Local counties and property owners will benefit from taxes and easement purchases.

        • 0 avatar
          dash riprock

          There is an industry up here in Canada opposing everything Natural Resource extraction project. It is boom times for them. Some of these new dollars are coming from individuals and charitable trusts from the US to support the fight against pipelines etc. Warren Buffett has generously supported these non-profit organizations. Warren of course has a major investment in Railroads, Burlington Northern Santa Fe. which have seen huge growth in crude by rail.

        • 0 avatar
          Pch101

          “It’s not ‘a pipeline or nothing,’ it’s a pipeline or thousands of rail cars each day.”

          It is a problem. Shipping it by rail is expensive.

      • 0 avatar
        healthy skeptic

        That’s what I don’t get. If Canada is all upset about the U.S. dragging feet, why not just send the pipeline to the BC coast? Looks a lot shorter to me, and I’m sure Asia would be happy to buy the oil.

        • 0 avatar
          danio3834

          Because there are plenty more refineries in the south of the US that could accept the oil without having to ship it overseas.

          • 0 avatar
            danio3834

            It’s not really an either/or proposition though, they are working getting new pipelines built out to the west coasts. Northern Gateway and Trans Mountain.

            Get some while you can!

        • 0 avatar
          Landcrusher

          Closer, but contrary to common foolishness, the Chinese market is not dependable. It could implode just as the pipeline is finished.

          Also, isn’t there some large hills in the way?

          • 0 avatar
            ClutchCarGo

            Not just mountains. The First Nations aren’t too crazy about a pipeline either.

          • 0 avatar
            danio3834

            “Also, isn’t there some large hills in the way?”

            This isn’t really an issue. See the Trans-Alaska line.

          • 0 avatar
            dash riprock

            KInder Morgan has a pipeline from alberta into Burnaby(city next to Vancouver). They are looking to double it.

            If they can build a railway through the Mountains back in the 1870′s….thinking they may be able to handle the pipeline too

            ps…being cautious with the chinese gov’t or state owned companies is a policy I heartily endorse

          • 0 avatar
            Landcrusher

            Wow, you guys. Of course it can be done, but at what relative cost? Why assume there is a vast anti ecological conspiracy? If it made more sense to go west than south then that would have been done already. I’ve met more oil executives than likely anyone else here. They aren’t nuts, they aren’t especially greedy either. They do try to make profits, and most of them are good at it.

            Sheesh.

            By the way, there is not going to be a big ecological disaster from an overland oil pipeline leak. It’s not a very modern way of looking at things. The pipelines lose money on leaks even before they get fined and/or sued. The Gulf of Mexico is just fine, and the crops will be fine. (The real ecological disaster is the fertilizer run off from the crops.)

            There was more oil and gas leaked into the ground unnoticed decades ago than modern oil companies lose in what we now call tragic events. If you don’t give companies credit for new priorities then they will go back to their old ways. I suppose that would make some of you feel reassured in your worldviews, but let’s not go that way.

          • 0 avatar
            danio3834

            “If it made more sense to go west than south then that would have been done already. I’ve met more oil executives than likely anyone else here. They aren’t nuts, they aren’t especially greedy either. They do try to make profits, and most of them are good at it.”

            You don’t need inside knowledge to know there are already pipelines running west. They’re looking to add capacity any way they can. The fact that there are a few western pipeline proposals on the table tells me that they’ve worked the math out and it makes sense.

            I’d love to know some of that sweet inside info your oil exec acquaintances gave you though.

          • 0 avatar
            Landcrusher

            First, no insider info, sorry. Those days are mostly over.

            Second, your logic is faulty. I made no claim that it made no sense to make a pipeline to the west. I made the claim that for this purpose it makes more sense to go south. I made that claim because it simply seems more likely to be true than to believe in a conspiracy.

            If you think it makes more sense to go west, you can make your case, but I will argue the knowledgeable people obviously disagree unless you come up with a really good case.

      • 0 avatar
        challenger2012

        Please read my post above.

      • 0 avatar
        Brad2971

        Frankly, given the dynamics of oil pricing, I’d rather have the Crude By Rail. Fact: Upwards of 900,000 BPD of North Dakota Bakken crude leave the formation by Crude By Rail. So far, only four (count ‘em, FOUR) rail accidents have happened. Only one of those resulted in loss of life or injury, and that one didn’t even happen in the US (sorry Canada. Hope you get better luck building your own pipelines).

        Once you add in more shale crude from Colorado, Oklahoma, and south Texas, you’re looking at nearly 1.5 million BPD hauled via the rails. It’s going to any place that can give them a good price, even California.

    • 0 avatar
      healthy skeptic

      @ FormerFF

      There’s a huge benefit to the U.S. economy–energy! The construction and maintenance jobs are only a small part of it.

      Personally, I favor building the pipeline, which gives us energy and prosperity, but taxing it and using the proceeds to work toward a carbon-free future.

      • 0 avatar
        FormerFF

        If that oil should wind up in the US,it’s just another source of imported oil that adds to our trade deficit. Since we have no shortage of sources of oil, that oil will most likely be exported. The amount of money that the US economy will receive in the process of transporting it is minimal.

        Now, if you want to slap a transport tax on it, there’s an actual benefit to the US.

        • 0 avatar
          Landcrusher

          When you say US, but mean the US government, you can easily miss your own error.

          The taxes will only get paid for by consumers, so the US as a whole gets no benefit from the tax. Just the opposite.

  • avatar
    schmitt trigger

    I’m sure this thread will become highly partisan and volatile within a few posts.

    Having said that, I’ll add my two yen:

    What the US should strive for, is energy independence -as much as possible- from the Middle East. Every petro-dollar that is paid to the region has the potential to be used by our sworn enemies. The US has already paid way too much in blood and treasure in that region.

    • 0 avatar
      Dr. Kenneth Noisewater

      Indeed! And EVs (battery-only or extended) are agents of energy independence since the electricity they use is almost entirely domestically-generated from a range of domestic source fuels. No need to subsidize CENTCOM to guarantee access to oil in shitty places, no need to otherwise offer fat corporate welfare bennies to oil and oil-related industries.

      There’s enough easy thorium in the US to satisfy its energy needs for centuries if not millennia, including hydrocarbon fuels via synthesis from waste heat. That’s plenty of time for fusion to become practical and economic. But when batteries hit 400Wh/kg at $150/kWh, and Supercharging becomes as ubiquitous as diesel pumps (but free), we’ll finally start seeing gas-powered vehicles decline as more reliable and more fun-to-drive electrics become practical.

    • 0 avatar
      Sky_Render

      You do realize that our oil comes from Canada, Mexico, and ourselves and not the Middle East, right?

      • 0 avatar
        Dr. Kenneth Noisewater

        Then why do we spend 12-figures on CENTCOM? Why do we have military forces dedicated to oil regions? Cut that back and put the money towards the debt, or price it into gasoline as an offset. Call it the “oil protection” tax.

        • 0 avatar
          MrGreenMan

          That’s ensuring that the Saudis are happy enough with us as their mercenary force to demand all oil transactions remain in USD, which keeps USD as the world reserve currency and prevents free-fall of USD purchasing power. (The failure to oust the Syrian dictator as per Saudi wishes did more to shake this long term.)

          It’s not about the oil, as we’ve been getting independent, and this would also free up some shipping out of Canadian auto production instead of making Mr. Buffett a mint on the shipping rights for his rail companies:

          http://www.eia.gov/tools/faqs/faq.cfm?id=32&t=6

          • 0 avatar
            Dr. Kenneth Noisewater

            “That’s ensuring that the Saudis are happy enough with us as their mercenary force to demand all oil transactions remain in USD, which keeps USD as the world reserve currency and prevents free-fall of USD purchasing power.”

            Well, that and many thousands of nukes.

            I’d rather we just outright nuclear blackmailed them, it would be far cheaper than maintaining a massive military force.

            (Either that, or engineer a variant of Ebola that only attacks those with the J-M172 haplogroup, released into air and water, with only ‘Westerners’ holding the antidote.)

        • 0 avatar
          FreedMike

          “Then why do we spend 12-figures on CENTCOM?”

          Because if the Middle East implodes, oil prices go up for everyone.

          Isn’t it time to get off this merry go round and develop some kind of energy that doesn’t depend on fossil fuels? We have the technology. All we have to do is develop the will to use it.

        • 0 avatar
          Sky_Render

          …Because we’ve been the world’s police force ever since WWII?

          • 0 avatar
            Dr. Kenneth Noisewater

            Do you think that’s a feature or a bug?

            My wallet says it’s a bug. A pretty onerous bug.

      • 0 avatar
        dash riprock

        Uhm……Saudi Arabia is 2nd largest exporter of oil into the US

        • 0 avatar
          Sky_Render

          Hey, lookie here.

          http://www.npr.org/2012/04/11/150444802/where-does-america-get-oil-you-may-be-surprised

          As I said, the vast bulk of the oil we get comes from ourselves or our neighbors. Yes, we need to come up with better fuels than oil, but I’m sick of hearing about how we’re “sending all of our money to evil OPEC.”

          • 0 avatar
            dash riprock

            You do realize that our oil comes from Canada, Mexico, and ourselves and not the Middle East, right?

            Your original post did not specify that it was just the vast bulk of oil.

            http://www.eia.gov/petroleum/imports/companylevel/

            the above link shows that a slight majority of imported oil comes from countries other than Canada/Mexico.

      • 0 avatar
        FormerFF

        Some of it does come from the Middle East and Nigeria.

    • 0 avatar
      George B

      Schmitt, I would argue that there is no such thing as “energy independence” for a commodity like oil with a worldwide market. Instead, our goal should be energy resilience with a diversity of suppliers so that the loss of production from any one country doesn’t cause crude oil prices to spike up. I would also argue that having money flow to a friendly country like Canada vs. Russia or the insane Islamic countries is generally a good thing for Americans. I’m not going to lose any sleep over how Canadians choose to spend their oil revenue.

      One of the great things about the Keystone XL pipeline is it’s funded by a private company and routed through states that have generally been supportive of the oil and gas industry. In the recent past, people in coastal cities ignored the vast energy infrastructure in flyover country. The people opposed to it will not experience any significant change when it’s built. I look forward to the days when those people in coastal cities ignore the middle of the country again.

  • avatar

    The energy demands of humans are only increasing.
    We NEED oil and coal to heat our homes because Alternative energy can’t exceed peak production.

    The wind will only blow so hard.
    The water turning turbines will only fall so quickly.
    The insolation from the sun will only hit during daylight hours…

    Laptops, smartphones, HDTV, etc…all rely on a steady stream of electricity and there’s just no way we can simultaneously meet the rising energy demands and provide energy with low-environmental impact.

    Windmills CHOPPING DOWN bird species is a big problem.
    Solar panels focusing sunlight on collectors get so hot they can flash fly a pigeon.

    • 0 avatar
      FormerFF

      The newer, slow turning wind turbines are far less dangerous to birds than were previous generations. Alternative energy is just getting started in this country, don’t sell it short just yet.

      • 0 avatar
        George B

        The problem is Alternative Energy makes zero economic sense without government subsidies and mandates. Wind and solar are diffuse energy sources that require lots of expensive hardware to collect the free energy. That hardware wears out before it can generate enough free market revenue to pay for its replacement. Maybe future wind and solar will be cost competitive, but right now it’s still in the government funded research stage.

        • 0 avatar
          jmo

          Until gas prices hit $8 a gallon and you demand another $1 trillion war.

        • 0 avatar
          FreedMike

          “The problem is Alternative Energy makes zero economic sense without government subsidies and mandates.”

          Correct…for now. Historically, new technologies are heavily financed by government “subsidies,” or direct government purchases of cutting edge tech. Best model here is definitely computer technology – the government “subsidized” the development of all kinds of new computer tech with defense and space program spending, which allowed computer makers to amortize at least part of the cost of R/D, and invest in newer, better products. So, the next generations were cheaper, better, and more marketable to commercial customers, and then to individual consumers. The rest is history.

          The Internet was a similar model – the government spent billions to develop the basic architecture and technology, then basically gave it away to the business community.

          I’d say whatever the government spent on subsidizing computer technology and the Internet has been paid back untold number of times by the economic benefits those products and services have provided to consumers and businesses.

          If we can develop a truly effective source of alt energy technology – fusion power, anyone? – we’d be able to largely write our own ticket economically, license the technology and sell it, and tell the Middle East to solve their own damn problems.

        • 0 avatar
          psarhjinian

          “The problem is Alternative Energy makes zero economic sense without government subsidies and mandates”

          Because we don’t subsidized oil or coal at all…

          • 0 avatar
            Landcrusher

            And once again, let’s see the specific subsidies. Or, run the hell away when challenged because I keep pointing this out and no one EVER comes up with diddly!

            The word subsidy does NOT YET mean what the left wants it to mean until they change it. Which, if you look around, you will see they actually are trying to do. They will likely succeed as they generally do, but until then your statement is false.

          • 0 avatar

            Land crusher

            This PDF goes over the incentives for big oil
            http://www.dpc.senate.gov/docs/lb-112-2-63.pdf

            Really they were not huge subsidies just little pieces of tax code that add up to a lot of money at the end of the day. No different then many of the other industries out there. But if your for everyone playing on a level field they should be eliminated.

          • 0 avatar
            Landcrusher

            Mopar,
            Actually, none of those things are subsidies. Tax breaks are not subsidies. Economists and journalists and statists all like to call them subsidies for different reasons, but this is why I ask people to look up subsidy before throwing out the propaganda.

            Now, let me tell you what is wrong with the Democrat scheme here. What they don’t tell you is that the companies mentioned all pay a higher rate of taxes on their profits than their peers in other industries. They want to change the tax laws in ways that will really just punish oil and gas companies because they can’t account the same as regular manufacturers.

            Also, if you look closely they are getting rid of tax cuts for oil and using them to give tax credits to their friends. Cuts and credits are not the same thing. That’s why they use the word subsidy when it really doesn’t apply. They are hiding the fact that they are raising taxes on an industry that pays more than most others which will get passed on to the consumer while taking that money and giving tax credits (which actually can result in you getting a check which is an actual subsidy).

            They are literally trying to take money from everybody who drives or uses energy from natural gas and give it to their college chums who support their campaign funds which somehow they still manage to put into their own pockets when they retire even in the 21st century.

            ITS A CON GAME!

          • 0 avatar

            I Land Crusher I under stand that. Thats really why I phrased it that way. But lets face facts here the reason these small changes exist in the tax code exist at all (they mostly seem to date back to the 80′s) is that oil company lobbyist pushed them into existence. Now I’m not trying to say that other industries don’t do the same thing (of course they do). But I don’t see that as a reason to keep them around. In reality our whole tax system needs to be re written but in the mean time slowly eliminating these little tax acts the were put in place years ago will certainly create a more level playing field.

          • 0 avatar
            Landcrusher

            It’s my understanding the rules don’t all go back to the eighties, many are a lot older. Since much of the code was changed in the eighties, then there was likely a lot changed for oil as well. The bottom line is effective tax rates. If you go after the folks paying the lowest effective rates first, you won’t get to oil for a few decades.

            We can certainly agree the code needs changing. I say the only long term sensible scheme is to tax consumption of everything except unprepared food, cheap clothes, shelter, and health care. Make it progressive by putting everyone on the dole. Additionally, tax land based on its unimproved value. Of course, it will never happen and is clearly a racist scheme. :)

    • 0 avatar
      FormerFF

      Also, what’s all that have to do with Canadian oil production?

    • 0 avatar
      Dr. Kenneth Noisewater

      We NEED nukes.

      Coal burning releases more radiation into the atmosphere than nuclear plants, let alone particulates and smog/acid rain-forming chemicals.

    • 0 avatar
      morbo

      “We NEED oil and coal to heat our homes ”

      Wrong again. We NEED nuclear as a 25 – 50 year bridge to heat and power our homes. Oil will remain the primary fuel for transit based solely on it’s energy density; battery tech may match it on a per/$ schema in 25 – 50 years if we’re lucky. Coal need to die and die quickly.

      I’m not going to go into CO2 BS, I’m far more worried about the Lead, Sulfates, and mercury we’re throwing into the air and than back down onto our farmland and cities from coal burning. Not to mention the sheer volume of water pollution coal ash generates. All this pro-coal nonsense is a terrible idea. Nuclear wouldn’t be as cheap, but nuclear plus natural gas can displace our coal needs for the next 100 – 150 years at an acceptable price point.

      As for oil pipelines, I maintain that routing them through Murica’s prime farmland is stupidity of the highest order.I have never seen a pipeline that wasn’t allowed to eventually degrade to the point of leaking. I don’t care about destroying Texas or Oklahoma’s land, only Texans and Okies get hurt by it. I am very concerned about endangering the farmland and groundwater reservoirs of the Great Plains feeding this country and a good chunk of the world.

      Fresh water will be a far more valuable commodity in the 22nd century that we should be protecting. 22nd Century Murican’s will look at the obscene inefficiencies and pollution of coal and petroleum extraction the way we look at whale oil production from the 19th century.

      • 0 avatar
        28-Cars-Later

        Fukushima is turning out to be the greatest industrial disaster in recorded history.

        • 0 avatar
          bball40dtw

          It certainly is. That doesn’t mean that we should close our nuclear plants or not build new ones. The French have done pretty well with nuclear power. Its a model that we should have followed years ago.

          • 0 avatar
            28-Cars-Later

            I have to disagree with you bball, while we can’t shut them all down en masse plans should be in place to take about 75% of them offline over a period of say 3-5 years. The other issue is the 40+ years worth of waste they have accumulated which we don’t have real solutions to dispose of as evidence by the 2/14 WIPP incident. France runs the same risks by continuing to utilize the technology but if there is any consultation the oldest reactor in France seems to be about ten years newer than the oldest reactor in the US (Oyster Creek, 1969).

            The pragmatic thing to do here is to stop attacking coal fired power and use it as a bridge to something else.

            Additional:

            “In December 2010, Exelon reported that Oyster Creek will close in 2019, 10 years earlier than planned and will not have to install cooling towers”

            1969-2019? Insane…

            “There was some opposition from anti-nuclear groups. According to Harvey Wasserman: “The re-licensing process did not require a test of metals in the core, which can become dangerously embrittled after decades of exposure to super-hot water and intense radiation.” ”

            “In early May 2011, the operator of the plant reported that its fuel supplier, General Electric, notified it that mathematical errors were made which could resulted in reactor fuel’s getting hotter than operator thought.”

            Folks knock CARS designed in the 80s and 90s but Oyster Creek’s BWR2 reactor:

            “The BWR was developed by the Idaho National Laboratory and General Electric in the mid-1950s. The main present manufacturer is GE Hitachi Nuclear Energy, which specializes in the design and construction of this type of reactor.”

            http://en.wikipedia.org/wiki/Oyster_Creek_Nuclear_Generating_Station

            From OC’s wiki:

            “Tritium dumped into water sources is not considered a risk to the environment.”

            Yet this is a headline story:

            “Tritium levels reach new high at wrecked Fukushima nuclear plant”

            but don’t worry:

            “Tritium, which has a half-life of around 12 years, is less harmful to humans than cesium and strontium. A becquerel is a measure of the release of radioactive energy.”

            Well phew its less harmful than cesium, but still harmful?

            http://www.reuters.com/article/2013/09/12/us-japan-fukushima-radiation-idUSBRE98B0SH20130912

          • 0 avatar
            FreedMike

            @bball40dtw –

            Yes, France has done well with nuclear power, but then again, when was the last time you ever heard of a 8.5 earthquake or tsunami there?

            I think well regulated nuclear power is a good idea for areas that are stable, and don’t face the kind of natural disasters that Japan has to deal with.

          • 0 avatar
            CoreyDL

            Or as my grandma would say “toosamey.”

        • 0 avatar

          Fukishima is a perfect example of how underdeveloped countries SHOULD NOT BE ALLOWED TO HAVE NUCLEAR REACTORS.

          Whether you consider Japan developed or not- if they can’t handle it, most other countries definitely can’t.

          And where’s this waste getting stored?

          • 0 avatar
            28-Cars-Later

            Correct.

          • 0 avatar
            morbo

            Quick wikipedia search shows about 15,000 people have died from nuclear power accidents in the last 40 years. About 5,000 people die ANNUALLY from coal production ALONE. The nuclear number takes into account cancer deaths from exposure, civilian plus work. The coal number is soley from production, not civilian deaths from atmospheric / water pollution.

            Everyone freaks out about Fukushima. A 9.2 magnitude earthquake struck the plant. A tsunami hit it. It stood, and didn’t release any radiation. It released radiation because of faulty emergency generator designs, not because of any inherent fault in the plant.

            The lessons from 3 Mile and Chernobyl are incorporated into nuclear power now. They’re not happening again; mainly because the lawyers and insurance companies won’t let it happen again.

            People die daily from coal and oil production. No one cares because it’s accepted. Numbers (and ball) don’t lie; nuclear is the safest way to go, until we’ve mastered energy dense electrical source that can match oil.

          • 0 avatar

            Morbo

            The problem isn’t nuclear related deaths.

            The problem is nuclear-related poisoning.

            You can live with cancer and birth defects.

          • 0 avatar
            28-Cars-Later

            “The lessons from 3 Mile and Chernobyl”

            Most of the plant designs in the US predate Chernobyl and some predate the TMI accident. Little fixes after the fact cannot make up for poor designs such as the GE MkI

            You contradict yourself on the next two points:

            “It stood, and didn’t release any radiation.”

            It has been pouring radiation into the Pacific Ocean at roughly 300/tonne a day since 2011. Also the third reactor completely exploded and the first reactor suffered a small hydrogen explosion.

            “Some 300 tons of contaminated groundwater seep into the ocean each day at the Dai-Ichi station 240 kilometers (150 miles) north of Tokyo, Japan’s government has said.”

            http://www.bloomberg.com/news/2014-02-20/tepco-says-new-leak-of-radioactive-water-found-at-fukushima-site.html

            http://www.sfgate.com/science/article/Fukushima-radiation-could-reach-Pacific-coast-by-5264277.php

            “It released radiation because of faulty emergency generator designs, not because of any inherent fault in the plant. ”

            Incorrect. The GE Mk I reactor’s design flaws were identified in 1972, after commercial use of Fukushima reactor #1 had begun on March 26, 1971. NYT reports:

            “In 1972, Stephen H. Hanauer, then a safety official with the Atomic Energy Commission, recommended that the Mark 1 system be discontinued because it presented unacceptable safety risks. Among the concerns cited was the smaller containment design, which was more susceptible to explosion and rupture from a buildup in hydrogen — a situation that may have unfolded at the Fukushima Daiichi plant. Later that same year, Joseph Hendrie, who would later become chairman of the Nuclear Regulatory Commission, a successor agency to the atomic commission, said the idea of a ban on such systems was attractive. But the technology had been so widely accepted by the industry and regulatory officials, he said, that “reversal of this hallowed policy, particularly at this time, could well be the end of nuclear power.” ”

            http://www.nytimes.com/2011/03/16/world/asia/16contain.html?_r=0

            http://en.wikipedia.org/wiki/Fukushima_Daiichi_Nuclear_Power_Plant

            “The nuclear number takes into account cancer deaths from exposure, civilian plus work”

            This is not possible. Even if all plant worker’s health was monitored -over the course of all of their lives- monitoring the health of everyone in the surrounding areas is not feasible. Proving what causes cancer is another difficult part of the equation.

            “People die daily from coal and oil production. No one cares because it’s accepted.”

            People die every day in traffic accidents from a variety of causes, and its accepted.

            Nuclear power, remote chance as it may be, has the capability of killing millions if not billions of people in accidents such as Fukushima. The radioactive half life of Cesium-137 is 30 years, which is flowing in spades into the ocean and our food supply. Plutonium’s half lives are much longer. Pu-238 has a half-life of 87.7 years; Pu-239 has a half-life is 24,100 years, and Pu-240 has a half-life of 6,560 years. Isotopes like this will kill you over time once they get inside of you.

            http://www.geigercounter.org/radioactivity/isotopes.htm

            http://www.epa.gov/radiation/radionuclides/plutonium.html

            Dirty energy or possible nuclear destruction? Pick your poison.

          • 0 avatar

            28-cars-later

            I LOVE all these points you are making.

            I could bother to do all that but I like to keep it short and simple even if I sound dogmatic.

            #1 Nuclear Power is EXPENSIVE.

            #2 Nuclear Power requires fossil fuels for mining and human activities surrounding its storage and security – for many, many years after it’s been used.

            #3 THERE IS NO COUNTRY ON EARTH that can GUARANTEE Nuclear Reactors won’t ever release their toxins into the environment because no one can guarantee that an earthquake, or meteorite or some other unforeseen disaster won’t lease radioactive material into the environment.

            PLANTS are more resilient to radiation than animals.

            Since people on this site love to misquote me and attack what I say: let them misquote this…

            “there is NO OIL SPILL that can compare to the environmental damage a nuclear disaster can cause”.

            Fukishima is the perfect example and the Japanese are LYING about the continuing problems they are having from it.

            …and this is what you’d call a “developed” country.

            their children and children’s children’s will feel the effects of this.

            Meanwhile, that BP spill isn’t being talked about because nature itself cleaned up most of the oil with bacteria that love to eat oil.

            Do any of these IDIOTS realize that plate tectonics causes oil to leak into the ocean ALL THE TIME?

            Do they realize how much water is near the mantle that we didn’t even know about – mixed with subducted plate coal, and oil?

            I don’t mind being the voice of dissent. Apparently GEOLOGY COURSES aren’t required for many of these people.

    • 0 avatar
      svan

      Not the pigeons!

  • avatar
    frozenman

    The majority of “Canadian companies” doing business in Alberta are in fact Global multinationals with “US companies” leading the way in per barrel output.The provincial/federal governments being very much under the influence of said corporations, are just mouth-pieces for the oil industry. The underlying current in Canada is either do business with US big oil or our “friends” from the south will come up and take what they need if push comes to shove.

    • 0 avatar
      dash riprock

      Huh? Mouth pieces for the industry? The US will come up and take our oil? You need some new night time reading material

      • 0 avatar
        frozenman

        Don’t need the night time reading material, I live/work here, “boots on the ground”, so to speak and much to my determent am a realist. Just saying that govt will do what is required to get what is needed politically or otherwise. Hope this reply to your comment does not make me come off as a condescending tool.

        • 0 avatar
          dash riprock

          Fair enough. I do hear too much of a conspiracy like thought process that the oil industry are puppet masters to our Government. Reality is that the Natural resource industry employs a huge (non government) percentage of working Canadians. Logically they will have a strong voice and it is prudent for the Gov’t to listen. Without the tax revenue from oil production every Canadian would either pay higher taxes or have fewer services

    • 0 avatar
      Landcrusher

      In my limited experience, the majority of Canadian workers prefer to work for the US companies. I heard some of them begging for their division to be sold to another US company rather than a Canadian one. I don’t know the chicken or egg of it, but you guys have nice bureaucrats and despicable company managers. (I’ve worked for sociopaths in three different countries, but you guys seem to be the best at getting them out of the local government office and I to the corner offices.)

      No matter the reason, that’s going to make foreign companies more competitive in your country when it comes to industries like oil. It’s not lobbying or bribery, even though I don’t doubt they have an effect.

      • 0 avatar
        dash riprock

        Sorry you had bad experiences….we have many oil and gas companies that are extremely well run and operated.

        As far as having foreign owned companies operating in the oil sands and the oil and gas industry in general, the answer is simply that we are a small population base. The capital required to make huge investments is not there, we need outside capital to expand. Nothing sinister, capital needs a profitable environment to invest in, we need the capital to create jobs and increase our tax base

  • avatar
    ponchoman49

    The oil companies, traitors(traders) and government must be dancing a jig. Record profits are a comin again!

  • avatar
    Omnifan

    My RAM with HEMI is now for sale. Need to beat the $5 gas.

    • 0 avatar
      FormerFF

      I bought a PHEV about three months ago. It’s probably not what you want, but it’s wonderful in traffic, and only going to the gas station every couple of months is very nice.

  • avatar
    kvndoom

    Wulp, sounds like it’s about time for another Iraq invasion. Still need to get them WMD’s that we never found. Spread some good ol’ “democracy” around while we’re at it.

    Liberate the oil and justify military spending all at once. Win-win!

    (FWIW, I work for the War, Inc complex, not always proud of it, but there’s job security…)

  • avatar
    dash riprock

    There are no “Tar” sands, they are “Oil” sands. Tar comes from coal.

  • avatar
    bikephil

    Whatever Obama thinks is the right thing to do is what we SHOULDN’T do.

  • avatar
    danio3834

    The only place the pipeline expansion would likely increase prices are at the mid-west refineries where the bottleneck is. Expanding the pipeline down to the gulf would give southern refineries better access and normalize prices. There’s more than a hint of environmentalist scaremongering in proclamations that the pipeline would be bad for US consumers. On the whole, more oil available to more US refineries would be a net benefit. Whatever’s left over can be sold on the world market and reduce the overall price.

    Right now, the bottlneck only benefits the localized mid-west refineries.

    • 0 avatar

      BECAUSE THE MIDWEST HAS THE HIGHEST M-F’ing prices in the G-D’mn world!!!

      Our, *ahem* (speaking as a midwest [Ohio] resident)”bottleneck” should mean HIGHER prices for our gasoline versus any other area in this country, and that is JUST NOT TRUE.

    • 0 avatar

      I beg to disagree.
      The oil companies make more money exporting to Asian countries than making it here. Essentially the pipeline would likely raise the cost of oil every where if it reaches full volume. Now I haven’t found articles anywhere that fully explain if pipeline oil will be subject to US oil export restrictions. If they were than none of this matters. However if they are exempt it surely would cause a price increase for us here. Asia seems to always pay more for oil than the rest of the world so where would you sell it if you could.
      http://www.ensec.org/index.php?option=com_content&id=393:exploring-the-asian-premium-in-crude-oil-markets&catid=130:issue-content&Itemid=405

      http://www.businessinsider.com/crude-oil-around-the-world-2014-5

      http://money.cnn.com/2014/01/07/news/economy/oil-export/index.html

      • 0 avatar
        danio3834

        The simple fact is that there isn’t enough pipeline capacity to get all the potential oil to refineries and the market fast enough. Adding nearly 1 million barrels a day of availability for Gulf refineries will help normalize prices for refineries who didn’t have access to that oil. Right now, the only benefit of the supply constraint is to select mid-west refineries, not really of any benefit to the rest of the country. Increasing total supply does not increase prices on the whole.

        The supply of Alberta oil to the world market will be increased one way or another, there will be new pipelines to the west coast. What the US has to decide is if they want a piece of the action by expanding supply to their country, giving their refineries a better chance to buy it. Blocking the Keystone expansion is short sighted and only serves to benefit midwest local refineries.

  • avatar
    APaGttH

    Most of Iraqi’s big oil contracts for development are with China. Imports from the Middleeast and OPEC nations is at the lowest level in decades. Mexico and Canada are our biggest source of imports, with Saudi Arabia and Mexico trading for that number two spot. The United States largest export since 2011 has been refined fuel – representing almost 11 billion barrels of crude (post refinement numbers are lower – this is the raw material number). Our fuel prices are never going back down due to a weak US dollar, our relatively low fuel prices compared to the rest of the world, and other markets in Asia and South America paying more than North Marican buyers. Even the oil industry has documented, Keystone XL would decrease US supply because Camadian oil would have easy access to the Gulf region for refinement and export. Canada can build through Canada and export out of BC.

    • 0 avatar
      FormerFF

      Not to mention that much of the newly developed oil sources are of the expensive to produce variety. Oil goes to $80 per barrel, much of that production will be suspended.

  • avatar
    Kenmore

    I’m just glad my wife and I are early adopters of sippy-cars.

    We’ll be drivin’ till the nice Hmong girl has to feed us our meds.

  • avatar
    Point Given

    Choices:
    1. Buy oil from a friendly neighboring country
    2. Buy oil from people that don’t really like you
    3. Is there any realistic 3rd option? (freeze in the dark?, pay more for everything? drive less? finally develop a society and economy virtually free of oil?)

    • 0 avatar
      APaGttH

      You need to do some research.

      We already buy a majority of our oil from people who like us. Last I heard, Canada, our number one trading partner, and Mexico our number two or three trading partner (depending on monthly production numbers) like us. Canada imports are almost 3:1 to Saudi Arabia. Mexico was number two in 2010 and 2011, Saudi Arabia increased production to take the number two slot back in 2012.

      “North American” oil independence is about 6 years away – even without Keystone XL. (e.g. we could run on oil only extracted from Mexico, Canada and the United States)

      Keystone XL gives Canada a direction connection to the Gulf – for export. The largest export in the United States since 2011 has been refined fuel products – the equivalent of about 11 billion barrels of crude (that’s the raw material figure, not the refined figure). We actually have significant over capacity of refineries today because our consumption peaked in 2005, and has been in decline (with just a tiny uptick in 2013 with growing economic activity). It is predicted by basically every source to continue to decline. We are on track right now, to be 100% energy independent by 2035.

      Keystone XL, even by the admission of the oil industry, will do nothing for the supply in the US – it will likely raise prices in the Midwest, where Canadian crude can bypass those refineries and go straight to the Gulf, for export to other nations in Asia and South America who are willing to pay more.

      The price of oil is never going to decline because:

      1) Weak US dollar

      2) We already enjoy some of the lowest prices in the world if you eliminate third world Hellholes and Banana republics

      3) We have declining demand and over-capacity for refineries, we are running at around 81% to 85% capacity depending on the month.

      4) If the price drops much below $80 a barrel, production of harder to access tar sands, fractured shale oils, and sour heavy crude becomes not worth it, production will slow down raising prices back up to over $80 a barrel – keeping prices high – but high is relative as we again, enjoy some of the lowest prices in the world now (again, stripping out third world Hellholes and banana republics)

      5) the BRIC nations are happily buying every single drop we no longer consumer – oil is a global commodity that we must buy on the global market – our demand may be shrinking – but global demand is keeping supply tight

      6) We are already getting less oil from OPEC nations – down 38% since 2008. Imports from OPEC nations have declined every year – even as the economy has improved and the reduction is accelerating. Only Qatar and Kuwait has increased – every other OPEC nation is flat or down, some down a lot (and Qatar imports are token).

      http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_a.htm

      Keystone XL is a “courtesy” to Canada to aid in exports to China and South America. That’s it. We derive no benefit. Do some research, even the oil industry is saying it.

      Canada can build their own export terminal through BC – the pipeline is harder to build for them, but the export route to China becomes shorter, and easier to secure.

      • 0 avatar
        28-Cars-Later

        This is an excellent post. I would add the fiscal break even points of the major producers are simply too high. If another oil glut were to occur, revolution throughout OPEC and possibly in Moscow may not be far behind.

      • 0 avatar
        TheyBeRollin

        “3) We have declining demand and over-capacity for refineries, we are running at around 81% to 85% capacity depending on the month.”

        This is only true when you look at the country as a whole and is probably reasonable. That is, you probably shouldn’t run at maximum capacity at all times in a market with demand fluctuations. Some is probably artificial, too, in the interest of keeping refined fuel prices up.

        Do we really have declining demand? This sounds like a claim from 2007-2008.

        • 0 avatar
          APaGttH

          Down 20% since 2005, Bush in 2007 set the goal. Internets are your friend.

        • 0 avatar
          APaGttH

          There is a nuance down here – oil consumption is down 11% since 2005 as of 2012, it continued to drop in 2013 (can’t find the feckin’ link) to 13% for oil.

          The other 7% reduction is all other energy sources consumed – so coal, natural gas, hydro, etc. etc. etc.

          http://theenergycollective.com/lindsay-wilson/240436/how-america-stopped-using-2-million-barrels-oil-each-day

          Bush had set out these goals in a bi-partisan effort back in 2007 – the recession helped drive the numbers down – but we are seeing dramatic improvements in efficiency across the board.

          http://georgewbush-whitehouse.archives.gov/news/releases/2007/12/20071219-6.html

  • avatar
    stingray65

    The stupidity of the Obama energy policy on carbon based energy and the the Keystone pipeline is that it will not prevent the Canadian tar sand oil or W. Virginia coal from being processed and burned, at best it will only slow development down a bit until a West Coast pipeline is built and/or increased rail capacity is utilized for moving it to eager markets. China and other developing countries are eager to buy all the oil and coal they can get, so if Americans don’t process it and burn it someone else will, and I strongly suspect that Chinese refineries, powerplants, factories, and vehicles are not as clean as American equivalents, so the Obama policy will have the unintended effects of increasing global greenhouse gas emissions and hurting the US economy.

  • avatar

    Oil prices are going up but have you noticed how Gasoline prices have slowly fallen over the last month? Doesn’t add up.

    • 0 avatar
      jimboy

      Only in the US, ours have spiked again this week! Here in the land of crude – how does that work?

      • 0 avatar
        FreedMike

        We both know how it works. And as a country, we’re too stupid to do anything about it – we let these bozos bleed us slowly, while greasing the hands of politicians to keep the bleeding going.

        DISGUSTING

    • 0 avatar
      Landcrusher

      The refiners consciously absorb cost increases on the rise knowing they can make it up on the decline. This helps prevent a lot of shocks in the market. No one wants lines and shortages so it’s a good plan even though it likely keeps demand higher over the long run (which the refiners desire being normal people).

  • avatar
    FreedMike

    Last I checked, doesn’t Canada have ports on its east and west coasts it can use to export its oil?

    The best case I can see is scratching the backs of an ally. That’s about it.

  • avatar
    wsn

    I do know a thing or two in term of oil pipeline due to my work. I will use an analogy to answer some questions raised here:

    Imagine Canada = Japan, and oil = cars. Let’s say, the USA does allow Japanese cars to be shipped to California, but disallow any of those to be transported to any other state.

    1) Why doesn’t Canada ship oil to Asia?
    It’s like asking, why doesn’t Japan sell cars to China? They do, or are working on it. But they still have enough capacity to sell to the US at the same time.

    2) Will the Keystone pipeline push oil price higher for Americans?
    It depends on the region. Like the car analogy, the Californians would enjoy low car prices, because that’s the only state where Japanese makers can dump their cars. But, if the transportation ban is lifted, most American car buyers will see a better deal (due to competition), except Californians.

    3) Why doesn’t Canada refine the oil where it’s extracted.
    I don’t have a good car analogy. But it’s fairly straight forward: sunk cost. There is huge refining capacity in US gulf states, whose cost has long been paid. Their price for refining is much much cheaper than building new infrastructures in Alberta. In terms of economic benefit to the US, the refinery income, in long term, dwarfs that of the construction jobs (from the pipeline).

  • avatar
    ExPatBrit

    It’s been reported that Saudi Arabia needs a minimum $100 a barrel to break even on their fiscal obligations.

    The US increasing efficiency and becoming energy independent along with Canada exporting via Keystone could cause another revolution in the middle east.

    That or pull a bunch of Saudi princess off the dole.

    Couldn’t happen to nicer folks.

    • 0 avatar
      28-Cars-Later

      You win a cookie for paying attention. These high break even figures both in Riyadh and Moscow are what is fueling some of the conflicts currently happening in the world. I predicted further conflict in January based on these facts alone, although Ukraine wasn’t in my forecast.

      http://www.thetruthaboutcars.com/2014/01/qotd-your-automotive-predictions-for-2014/#comment-2592834

      http://www.thetruthaboutcars.com/2014/03/cadillac-elr-sells-just-99-units-in-february/#comment-2893793

      • 0 avatar
        ExPatBrit

        Middle eastern governments can’t borrow money in a conventional way because of their religious ideology (interest is haram), there are ways to skirt that of course.

        Back in the 70s when I was working there, most of the locals had basically “no show jobs” with us European , US or Aussies running things with imported labor. Doesn’t seem much has changed and their oil economies are essentially “one truck ponies”.

    • 0 avatar
      Brad2971

      Would some of you Canadians who drop by this site like to elaborate how Canada treats ownership of mineral rights/resources? Do you treat it like the US does; i.e. pay the landowner a royalty? Or is it like Saudi Arabia, where the oil is considered to be the property of the House of Saud, and the family needs the revenue to pay the budget?

  • avatar
    cartunez

    I am amazed that none of you have stated the obvious. We don’t even need the Canadian Oil sands. We have enough natural resources within our own grasp without the need for war for at least the next 100 to 150 years. The problem is the lunatics are running the asylum these days and the people who actually know what they are talking about are in straight jackets. The real issue is we should not mask the cost of fuel (power) for any technology and allow the market to offer all choices at let people freely choice what they want to pay for and what they don’t.

    • 0 avatar
      28-Cars-Later

      The whole point of the Petrodollar is to use up everyone else’s oil.

      • 0 avatar
        morbo

        That is actually a tru-ism. That and magnifying dollar purchasing power through forced usage of the American financial system. Not that the Euro or Yen are serious competition, but if international oil transactions occurred in a more frictive currency, US purchasing power overall would decline.

        • 0 avatar
          28-Cars-Later

          I agree the dollar’s purchasing power would decline is oil were transacted in another currency, but this inflation is happening regardless. Kissinger also pointed out another benefit:

          “Another aspect of the petrodollar system was that oil producing nations would take their excess oil profits and place them into U.S. debt securities in Western banks thus becoming a primary lender to the U.S. long before China came on the scene. This system would later become known as “petrodollar recycling” as coined by Henry Kissinger”

          http://en.wikipedia.org/wiki/Petrodollar

    • 0 avatar
      krayzie

      Didn’t Lindsey Williams say the US will just resume domestic oil production (Alaska and the Rocky Mountains?) once the petrol dollar dies and the economy collapses so that they can repay all of their debt with ease by selling their own oil?

    • 0 avatar
      wsn

      “We don’t even need the Canadian Oil sands.”

      LOL, who are you? Are you representing 100% of Americans? Even Obama can’t say that.

      There are enough Americans who could enjoy the revenues generated by the refineries down the south, plus drivers who would see a few cents off their gas price. There is also the NAFTA free trade agreement. Even Obama has to use environment concerns as his excuse.

      Also, don’t forget about all that American oil that must flow into Canada, i.e. ND to QC.

      • 0 avatar
        FormerFF

        There is no reason to believe that Keystone XL will lower gasoline prices in the US. The most likely scenario is that prices in the upper midwest will increase as the Alberta oil finds better prices overseas. There is also no reason to believe that there will be a net increase in refining done on the Gulf Coast, the most likely scenario is for that oil to displace other imports. The total net benefit to the US economy is likely close to zero.

  • avatar
    morbo

    @twenty-eight.

    I maintain that Fukushima’s disaster was caused by a faulty design in the emergency generator setup, not in the physical nuclear plant itself. I’m not saying the plant should have survived the disaster. Just that the release of radiation, caused by overheating of the core, would not have happened if the emergency generators had functioned to keep the coolants flowing. The lack of containment space isn’t a flaw should containment not fail. The containment failure was precipitated by the location and design of the emergency generators.

    http://www.platts.com/latest-news/electric-power/washington/single-diesel-generator-saved-two-reactors-at-8932416

    I actually grew up in the shadow of Oyster Creek in South Jersey. It’s emergency containment plan is to breach the containment wall and let Barneget Bay flood the reactor core. I sleep comfortably with that knowledge, despite the fact that yahoo’s that run that place and are constantly being fined by the NRC.

    I’ll pick remote chance of nuclear holocaust over guaranteed poisoning of the air and water by coal production any day. Nuclear devastation is ultimately limited by time and distance. Mercury and lead build-up in the ecosystem will just accelerate over time.

    • 0 avatar
      28-Cars-Later

      I agree had the emergency cooling system been online the entire disaster may have been averted. But like so many other things that should not have happened, such as the tsunami wall not being high enough, it did happen. The Mark I is just a poor design as Hanauer points out not only being more susceptible to a hydrogen explosion in certain scenarios, but also in suspending the spent fuel pools above the reactor, and in the case of Fukushima, four stories in the air. I recall reading the basic layout of the Mark I was derived from US Navy submarines and it was for a time preferred because it could make higher quality nuclear material for bombs.

      That’s interesting about Oyster Creek’s contingency plan. I truly hope it would never be put into effect but I wonder in the event of an INES 7 event at the site how this wall would be breached (i.e. are explosives planted there, or at least onsite?).

      “Mercury and lead build-up in the ecosystem will just accelerate over time”. I suspect this will continue regardless of coal fired technology. Personally I take the devil I know over the devil I don’t.

  • avatar
    Big Al from Oz

    From what I’ve read oil that’s sold out of Cushing was selling in the mid 60s per barrel when West Texas crude was between 90-100 per barrel.

    The Canadian’s are already considering and have considered an oil line to the west coast with a terminus at Port Rupert to move oil to Asia.

    Asia is a far better market than the US, especially when Tapis is around 25% dearer on a constant basis, that one of the reasons why we pay more in Australia for oil.

    Energy is far more complex than many realise, especially after reading quite a few of the comments.

    A classic example is the US energy market and the controls and regulations manipulating it. It’s the most subsidised and controlled OECD market costing the US taxpayer 3.5% of GDP to maintain the current status quo.

    The US can’t export crude (this is currently under review). The US exports Euro quality diesel to the EU and imports unleaded back, but in ever dimishing quantities.

    The US is even procrastinating over building pipeline infrastructure to support the ‘shale boom’ and fracking. I’ve read the energy companies don’t have a really good handle on the actual amounts of oil in these locations and the construction of a pipeline was to large a risk, hence the movement of oil by rail.

    Warren Buffet would have bought ‘pipeline’ shares instead of rail shares if pipelines were more viable.

    The energy market globally is a very controlled by large government, large business all trying to feather their nests.

    I do think moving much of the plentiful LNG to home, power and industry in the US would have been the best energy move and had a far more significant impact than the US current energy/vehicles policies.

    The current energy and vehicle policies in the US appears to be protecting the best lobbyist in DC (big business/unions) and not the consumer (the voter).

    • 0 avatar
      Landcrusher

      Here we go again…

      Please provide your definition of the word subsidy and your source for those subsidies. Please do not once again provide a link to a leftist site that simply claims there is a subsidy without naming the laws which provide it.

      When you figure out you are being hoodwinked, which you will once you go try to figure this out for real, please come here and admit you were wrong. Otherwise, don’t expect to have any credibility here again. You shouldn’t be ashamed. The lefties have spent at least tens, if not hundreds of millions on this propaganda campaign.

      • 0 avatar
        dash riprock

        In Canada several years ago, they Feds provided accelerated depreciation allowances for capital costs. It was to spur development of the oil sands, which it seems to have done. Anti corporate/capitalists here have ever since referred to these incentives as a subsidy.

        • 0 avatar
          Landcrusher

          Accelerated depreciation may act like a subsidy, but anyone calling it a subsidy is mistaken. Look it up. A tax cut is not a subsidy. A subsidy is a grant, cash, moolah. Not a tax break. Besides that, accelerated depreciation isn’t really a tax break unless you are able to play all sorts of tax games or manage to go bankrupt. In most cases, it simply allows you to take a normal deduction of costs earlier than normal. It would most accurately be described as one government stealing tax revenue from the future government.

          As you say, the anti corporate types call it a subsidy. I can’t be sure of their motives, but it seems they want to give low information types the impression that the government is giving money to big companies.

        • 0 avatar
          Big Al from Oz

          @dash riprock
          I’m very much a capitalist.

          Any form of support is a subsidy.

          Even the dreaded chicken tax is a form of subsidy.

          The difference is rather than physically handing money to a manufacturer. The cost of another item is increased to subsidise the cost of the protected goods, which are inflated.

          To susidise means to support in a way that other don’t receive.

          In Australia depreciation for an industry over another for gain is used then, the tax savings would be a form of subsidy. Someone is receiving a greater financial gain for the same or similar transaction.

          Like the chicken tax, if the tax wasn’t there not as many US pickups would be sold. So the chicken tax subsidises the sales of the US pickup.

          This can be proven by the fact that a pickup earns around 25% profit, which is roughly the same as the subsidy it receives from the 25% tariff.

          Cars in the US attract a 2.5% import tariff and make approximately 2-3% profit.

          All of the tariffs, technical barriers, EV handouts etc give the US a much more heavily subsidised auto sector than the EU.

          So, I do think your socialist view on what a subsidy is quite left wing and hiding the real facts.

        • 0 avatar
          Pch101

          “In Canada several years ago, they Feds provided accelerated depreciation allowances for capital costs. It was to spur development of the oil sands, which it seems to have done. Anti corporate/capitalists here have ever since referred to these incentives as a subsidy.”

          It’s really debatable at best and disingenuous at worst to refer to depreciation as a subsidy.

          Businesses get to write off most of their expenses. Many expenses are taken in the year in which they are incurred (which is what makes them “expenses” from an accounting standpoint) and are deducted from revenue. But assets are depreciated, and those costs are taken over more than one year.

          As an example, for my own business, costs such as office supplies, phone, internet, wages paid, etc. are expensed (taken in full in one year), whereas my new shiny laptop is considered to be an asset and is depreciated over a few years. Yet it would be dubious to claim that my laptop is being “subsidized” simply because I depreciate it instead of expensing it. Depreciation takes longer, which makes it less desirable than an expense from a tax standpoint.

          “Accelerated depreciation” simply means that the depreciation schedule is skewed toward the early years. It’s a term of art, not a value judgment. Those who don’t understand finance and taxation will have difficulty with these concepts, which helps to explain why so many critics tend to botch this up.

          • 0 avatar
            Big Al from Oz

            @Pch101
            Disingenuous??

            I do think you are speaking in a riddle here mate.

            If everyone is allowed to depreciate their laptops it isn’t a subsidy.

            But if the tax office via government policy only allow the oil industry to depreciate laptops, then it’s a subsidy to the oil industry.

            Any form of allowance, support, handout, tax, tariff to support a favoured industry/group is a subisidy.

            A tariff is a susbsidy. Look at it this way rather than the taxpayer give a full size pickup manufacturer a 25% rebate for each pickup sold, what is the difference in making an import 25% more expensive.

            Who is paying the price in the end…………….it’s still the consumer subsidising the protected pickup.

            It’s not a hard concept to comprehend.

            The same can be said for depreciable goods and services. If one can get and the other doesn’t, someone is being subsidised because the money must be gotten from somewhere to allow for the protection.

          • 0 avatar
            Landcrusher

            Big Al,
            First off, you might consider these things subsidies, but you are changing the meaning from regular dictionaries. But since you can’t seem to get that, let’s use another term – Targeted tax breaks.

            What you don’t understand is that the accounting for an oil company isn’t the same as accounting for a car company. I am not qualified to explain it except to point out that the car companies don’t find huge amounts of wealth, have to estimate its value, and account for that value and even pay tax on that value before they realize that value which they may never realize or may honestly find was under estimated and, that value changes daily. Applying the normal rules would bankrupt every oil company as soon as they found oil.

            Your laptop anology is lacking. If we let Apple depreciate chip fabs and expense copper then we should allow similar treatment for oil company equivalents and that is what is really done. Some oil haters want to take the equivalent treatments and call them targeted tax breaks, but what they really are is a fix because capital investments in oil and gas would not be deductible under the codes as they work for Apple. The bottom line is that oil companies pay a higher effective tax rate already. In spite of all these so called targeted tax breaks, they pay higher effective rates than Apple and GE and lots of other companies.

            I’m not sure what tariffs you speak of, but those are tariffs, not subsidies. Why do you have to call it a subsidy? It’s protection from competitors. Call it what it is, protectionism. Calling everything a subsidy is just trying to make it so you can say everyone gets subsidies so subsidies aren’t bad. Aren’t we better off keeping it straight so when someone IS getting a subsidy the word has the power it was meant to have?

      • 0 avatar
        Big Al from Oz

        @Landcrusher
        You see, subsidisation isn’t the actual transfer of money to provide support.

        Support can come in many various forms, ie, tariffs, protectionism, handouts, technical barriers (as in tradable goods), etc.

        I do think you must realize that a protectionist barrier whether it be an exise, tariff or form of taxation on one product and not on a similar or the same product from a different source is a form of subsidy.

        Read below.

    • 0 avatar
      FormerFF

      There was a surplus in Cushing because of the increases in US production. A pipeline was reversed, last year I believe, and that surplus is now gone, and the spread between Brent and West Texas Intermediate (Cushing) has decreased.

  • avatar
    Big Al from Oz

    subsidisation

    DEFINITIONS OF: subsidisation

    1

    n the act of providing a subsidy

    Synonyms:grant, subsidizationTypes:show 4 types…

    Type of:allocation, allotment, apportioning, apportionment, assignation, parceling, parcelling
    the act of distributing by allotting or apportioning; distribution according to a plan

    2

    n money (or other benefits) obtained as a subsidy

    Synonyms:subsidizationType of:money
    the most common medium of exchange; functions as legal tender

    USAGE EXAMPLES


    All Sources

    But powerful lobbying forces have ensured the continued subsidisation of the hunt with taxpayer money.
    The GuardianJun 8, 2014

    She said that if changes were not made to the government’s agreement with the service, “then significant and ongoing government subsidisation” may be required.
    BBCOct 22, 2013

    It discourages investments, because prices are too low, and also leads to across the board subsidisation, not just for poor.
    New York TimesSep 6, 2013

    But would any government be willing to take on such a big shift to state subsidisation and risk the numbers not working out?

  • avatar
    Landcrusher

    Not sure why you skipped subsidy or subsidize and went all the way to subsidization, but you still haven’t connected the dots. Likely because you haven’t looked up subsidy which is used in the definition above.

    You keep saying the US subsidizes petroleum, but never can name a law, act, or program where they receive money from the government. I am perfectly willing to stipulate that all sorts of people incorrectly call things subsidies that are not, so quoting those fools proves nothing. The only actual subsidies that I can ever find are grants to oil companies to do basic research on things like like green energy.

    The oil hate industry, and it is an industry full of people making money off of anti oil propaganda, like to refer to any tax deduction as a subsidy. If you look, you will find that oil companies in the US have exceptionally high effective tax rates compared to other industries. I can keep telling you all the methods they use to make this stuff up, but you won’t believe me. I don’t know why you doubt me. What do I need to do to show you?

    • 0 avatar
      Big Al from Oz

      Landcrusher, this is for the state of Texas. Read everything. You will see what I’m referring to. A subsidy isn’t just handing ‘cash’ over. It’s quite complex and the deeper you dig the more you will find.

      For many years, federal, state and local governments have provided subsidies to energy producers and purchasers to encourage the development and production of various fuel sources. These subsidies provide financial support for specific industries in the form of tax incentives, direct spending, research and development funds and other support mechanisms.

      The federal government has traditionally used financial subsidies to encourage the development of new energy sources, to improve the extraction or production of the energy source, or to encourage domestic production of the energy source.

      As early as 1916, the federal government instituted income tax incentives to encourage individuals and corporations to drill for oil. During the 1930s, federally financed dams created hydroelectric power. From the 1950s onward, the federal government financed research into nuclear power. More recently, the federal government has provided research funding and other financing to expand the availability of renewable energy sources. 2 Virtually all U.S. energy resources have received or currently receive subsidies.

      As a result of this complex web of subsidies, Texans as both energy consumers and federal, state and local taxpayers may pay more for some energy sources than is reflected in their electric bill or the posted price at the gas station. Finding the cost of energy produced by different fuels has implications for the choices made by individual Texans, Texas businesses and policymakers.

      http://www.window.state.tx.us/specialrpt/energy/subsidies/

      • 0 avatar
        Landcrusher

        First, please recheck your own definition. Or better yet, check oxford, merriam, dictionary.com for the meaning of subsidy. Its much more succinct there.

        Then, Read the very page you are quoting. Specifically where they explain they are changing the definition:

        “In May 1999, the Office of Policy at the U.S. Department of Energy asked the Energy Information Administration (EIA) to prepare an update of its 1992 Service Report on federal energy subsidies, using a more specific definition of “subsidies” provided by the Office of Policy”

        And here:

        “The federal government provides financial energy subsidies through tax incentives; direct spending for government services; the assumption of certain types of liability or risk by the federal government; government ownership of energy production; access to resources on federal lands and tariffs (Exhibit 28-2).

        NONE of those things are actual subsidies. And, those things are quite misleading stretches anyway.

        Especially the grants which are for (you should know by now) green energy:

        “The federal government provides grants and loans to encourage the development and purchase of certain energy systems, such as the purchase of renewable energy systems.”

        Note further down the page how the “subsidies” for Oil and Gas compare with the actual subsidies for renewables. I think this is the real heart of the matter. The ability to parse out real money for favored green projects with or without the obvious graft that was involved in many of them, is being compared to tax incentives from years when different governments gave some breaks to encourage spending in their jurisdictions to raise the tax base as well as tax rules that are more or less the same as given to other industries.

        And, once again, my all time favorite, “Reduced Royalties!” For folks who tuned out last time we had this argument, this where some pointy headed fellow takes a royalty payment that was as high as the market would bear and assigns it a much higher value and calls it a subsidy. IOW, when the car dealer sells you a used car, the discount off the new car is a transportation subsidy from him to you. Feel subsidized?

        • 0 avatar

          Perhaps some people feel that the “subsidies” term should be applied to ANY assistance given to any product or service where the FULL COSTS are not DIRECTLY BORNE by the immediate purchasers of said product/commodity?

          • 0 avatar
            Landcrusher

            You are right. They feel that way. Should that mean we change the language? Besides that, there is no end to externalities not included in prices. You can justify anything based on externalities which is exactly what the change in the meaning of subsidy is designed to accomplished.

          • 0 avatar
            jkross22

            potatoes, that’s how I interpret the definition of the word subsidy, in terms of how a subsidy actually functions.

            For example, I pay state taxes and the state has chosen to provide a subsidy to people who buy electric cars. I am therefore indirectly subsidizing people who buy electric cars.

            I own a home and get tax break for interest paid. Renters who pay tax are subsidizing my tax break.

            I’d rather see all these subsidies go away and let the free market do its thing, but that wont happen.

          • 0 avatar
            Brad2971

            If those people feel that way, then I’m sure I can get them to agree that, oh, the H1-B VISA program is a rather generous subsidy given to tech firms to control their direct labor expenditures. Or not, given how imperial Silicon Valley is acting nowadays.

            Once nearly every metric is said to be subsidized, in effect, nearly no industry is subsidized.

  • avatar
    50merc

    Pssst…don’t tell the Sierra Club and other econuts, but there’s already a jillion miles of pipelines carrying oil, etc., unnoticed all over the U.S. Rarely is there an incident, but when there is, the econuts go into Full Chicken Little mode. It’s their religion.

  • avatar
    Lynn E.

    Why are you people still driving around in ICE vehicles and discussing oil?

    I plug in my electric car every evening and my electric bill last month was $13. The solar panels on my little condo supply more energy than I need. The excess energy the solar panels provide I have to sell to the local power company for $0.04/KW and when the power company sells my excess to you they charge you $0.15/KW.

    The $13 was the connection fee (rent) for connecting to the grid.

    Kick Gas.

    • 0 avatar
      kvndoom

      The only reason your bill was $13 is because you’re in a statistical minority that is a fraction of a fraction of one percent. When the day comes that most/all cars are electric, we’ll be on here complaining about the exorbitant cost of electricity and ever-increasing miles-driven taxes.

      Money WILL be made. There is no elimination of cost, only transfer.

  • avatar
    mechaman

    Um, the Canadians can’t build going east off their shores? Yeah.

  • avatar
    Landcrusher

    For those still not convinced that oil companies aren’t getting back door tax handouts maybe you will believe the NY Times:

    http://www.nytimes.com/interactive/2013/05/25/sunday-review/corporate-taxes.html

  • avatar
    mr.cranky

    I got two words for Mr.Harper and his government: TOUGH SHIT.

    Any American with more than half a brain does not want raw bitumen flowing through their land, especially when that bitumen comes from Canada and will not benefit U.S consumers in the long run.

    The Canadian government should be ashamed of how they’ve exploited the Tar Sands. Environmental degradation on a massive scale disguised as “energy independence” is not the way to go.

  • avatar
    Big Al from Oz

    It seems the Alberta oil will move west to Asia.

    Well, I sort of knew this as I stated the oil is of more value to the Canadian’s going to Asia then south to the US.

    http://www.bbc.com/news/world-us-canada-27896552

  • avatar
    Big Al from Oz

    @Lou_BC
    What rumblings have you heard of or read in your neck of the woods?

    Have there been surveyors out and about looking at viable routes?


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