[Newsbot]

Title: Cenovus expands rail shipments of oil to avoid pipeline bottleneck
Category: Business
Posted By: DrCaleb
Date: 2013-01-08 14:26:25
Canadian

[Canadian_Mind]

This has got me thinking, with such a huge differential, wouldn't the US be inclined to NOT build keystone for fear of lowering their prices? The lower the oil prices the less the producers make. As for us, if our oil starts selling for more, will we have to start paying more for fuel and other oil-based products?

[DanSC]

I was back in Montana a few weeks ago, and oil trains were a constant sight. Of course trains have higher accident rates than pipelines, often cross rivers and lakes, and sometimes even pass through metropolitan areas. Doesn't make much environmental sense.

[Canadian_Mind]

People who think with their hearts and not with their heads are idiots.

[Zipperfish]

DanSC DanSC:

I was back in Montana a few weeks ago, and oil trains were a constant sight. Of course trains have higher accident rates than pipelines, often cross rivers and lakes, and sometimes even pass through metropolitan areas. Doesn't make much environmental sense.

doesn't amke much sense to me either. Although you only got half the equation in the above note. Risk equals probability x consequence. While the probability of derailment is greater than a pipeline rupture, the consequence is typically less (less prduct spilled).

Still pipelines are the safest. The problem I have with the Enbridge proposal isn't the pipeline, but the tankers plying the Hecate Strait, up the Douglas Channel.

[Xort]

Canadian_Mind Canadian_Mind:

This has got me thinking, with such a huge differential, wouldn't the US be inclined to NOT build keystone for fear of lowering their prices? The lower the oil prices the less the producers make. As for us, if our oil starts selling for more, will we have to start paying more for fuel and other oil-based products?

It's regional, for all the cheaper oil someone can access another can't get at it. For a perfect game theory play the refiners with access to the cheap oil should try to block it, while those without should try and move it forward. However many of the players at both locations are the same overall player, so overall greater access to a steady supply helps.

As for the local fuel prices, the amount of price depression is held in check by the ability to export to higher fuel cost areas. A refined tank of fuel can be shipped if the price falls far enough so as to be more economical in another market. So for people in some areas of Alberta yes fuel costs might rise. However the planned growth of production is still higher than planned pipeline capacity.

As the price differance grows I would expect more to be shipped by rail, as the rail's ability to ship more cargo isn't maxed.