[DerbyX]

$1:

Well your wrong Derb, it isn't cheaper to ship refined products overland that’s why we don't do it. The way it works is you build a pipeline from the source of supply to an area of demand, Chicago is a good example. At that point it is refined into gas, diesel, polyethylene, propane, O2, natural gas and ect.. One pipeline as opposed to .. up to 20 or 30 (because there are hundreds of products created from raw crude). Not to mention you can't ship many of the products through pipelines such as gasoline, diesel, polyethylene, O2 (not great distances anyways due to safety and regulatory limits) and well pretty much 80% of the materials that are refined.

1) I don't know about the difficulties shipping gasoline vs oil and its something I didn't consider. If its more costly to ship gas then oil then you are correct. If nor then I don't see how that can work.

To me it seems cheaper to convert the crude into refined product as close to extraction points as possible and thus eliminating transport costs of crude. However you have mentioned factors to which I am not aware of.

$1:

Now if we had to refine those bi-products here in Alberta and truck them down to Chicago you can imagine the bill. Gas down there would cost close $10 to $20 bucks a liter by the time it was finished. That's why we ship raw crude.

Canada has refineries in every province except Manitoba and PEI (and the NWT for obvious reasons). Refineries are no small business, they are huge plants that require hundreds of people to run and that’s why we don't have an excess amount of them. Simply put, a refinery running at 60% capacity would go broke in a matter of months.

It would be great if e could increase the amount of refining here in Canada and then ship the finished products down to the states through pipelines but like I mentioned it just isn't possable. Oh, and by the way, yes it's true some of the fuel you buy is from the states particullary in southern regions where the distance to the US refinery is closer to the point of sale but the vast majority of gas you and I buy is made right here in Canada.

The only person on this forum with good knowledge of the oil patch is Ziggy and its his advice about increasing our refining capacity that I base my answer on.

Without further knowledge all I have is my inadequate understanding of gas/oil transport.

[dog77_1999]

The reason why so much oil is refined elseware(the US) is because US oil production has been steadily falling. Hence, those refineries now have excess capacitiy to refine foreign crude. It is much cheaper to send the oil down south, refine it, then send it back up, rather than building a brand new refinery.

Oven so, the refining business has lower margins than extraction. Despite not having alot of refining capaicty, Canada is ultimatly wealthier and better off focusing on extraction.

[Benoit]

dog77_1999 dog77_1999:

The reason why so much oil is refined elseware(the US) is because US oil production has been steadily falling. Hence, those refineries now have excess capacitiy to refine foreign crude. It is much cheaper to send the oil down south, refine it, then send it back up, rather than building a brand new refinery.

Oven so, the refining business has lower margins than extraction. Despite not having alot of refining capaicty, Canada is ultimatly wealthier and better off focusing on extraction.

If major refiners agree to under-invest in refining capacities, they can artificially increase their margins. Limiting competition in such a way is illegal but it can happen.

[dino_bobba_renno]

One thing worth mention here is that the price we pay for gas really doesn't have a lot to do refining capacity, unless of course one of our refineries goes down for some reason.

One thing I think most of us in the industry keep asking is why the price of oil is so high. We are producing just as much oil now globally as we ever have and demand is down a bit according to most sources.

While it's true most oil companies are reaping the rewards I personally don't think they're the only ones we should be pointing the finger at. If we look around to see who's really benefiting from the prices being where they are at it's a bunch of guys in suites who work in places Bay Street and Wall Street.

I know this is going to sound kind of like a conspiracy theory thing but I really do believe futures traders are some how manipulating the markets in an Enron type of scheme. Electronic trading of futures over seas should not be allowed and there should be an investigation of the market practices surrounding this issue.

Another thing that really chaffs my ass is the price of electricity lately. Here in Alberta we have Epocor and Enmax crying the blues because they say that their infrastructure is getting so old and that we will probably be faced with rotating brown outs because of it despite the fact both companies have recorded record profits for the past 10 years.

There is no reason why these two companies should be complaining about their (emphasis on their) infrastructure when all new utilities are bought and paid for by developers and what isn't covered by the developers is covered by municipalities and the provincial governments. The only thing they have to worry about is maintaining their existing lines and making sure they have the generation capacity meet the needs of their customers but yet they are still looking for the government and tax payers to pay for these two things.

If tax payers are expected to pay for maintenance and generation then why the hell do we need these companies? What exactly is their purpose, we pay for damn near everything and they sit back and rake in the cash for simply operating the system and making monthly bills and yet they are still crying the blues about how there going to have to raise electricity prices to cover costs.

The most disturbing thing is that here in Alberta you can bet old Ed and his team of mathematically challenged colleagues will rubber stamp any rate increase with out even doing an audit to validate their claims.

Regulatory over site of energy markets is woefully lacking in all markets across Canada and globally. We should start following the money and find out once an for all who really is benefiting from higher oil and gas prices and other energy prices and start holding the markets accountable to everyone and not just the select few who are wearing the Armani suites on Bay Street.

[Benoit]

dino_bobba_renno dino_bobba_renno:

One thing worth mention here is that the price we pay for gas really doesn't have a lot to do refining capacity, unless of course one of our refineries goes down for some reason.

If futures market exist is to stabilize the price of a commodity whatever incident is happening.

[dog77_1999]

Benoit Benoit:

dog77_1999 dog77_1999:

The reason why so much oil is refined elseware(the US) is because US oil production has been steadily falling. Hence, those refineries now have excess capacitiy to refine foreign crude. It is much cheaper to send the oil down south, refine it, then send it back up, rather than building a brand new refinery.

Oven so, the refining business has lower margins than extraction. Despite not having alot of refining capaicty, Canada is ultimatly wealthier and better off focusing on extraction.

If major refiners agree to under-invest in refining capacities, they can artificially increase their margins. Limiting competition in such a way is illegal but it can happen.

Refineries take a long time to build (10 years). 10 years ago, oil was near $10/barrel. Why would companies invest so much money into something where they wouldn't get any money back?

There is no secret agreement here. It is much cheaper and more profitable to focus on upstream than downstream. Alot less liability that way.

[dino_bobba_renno]

Benoit Benoit:

dino_bobba_renno dino_bobba_renno:

One thing worth mention here is that the price we pay for gas really doesn't have a lot to do refining capacity, unless of course one of our refineries goes down for some reason.

If futures market exist is to stabilize the price of a commodity when an incident like this one happened.

Yeah and we can see how that's working so far. There is no reason for oil to be over $100 a barrel right now other than the reasons associated with futures trading.

[Benoit]

dog77_1999 dog77_1999:

Benoit Benoit:

dog77_1999 dog77_1999:

The reason why so much oil is refined elseware(the US) is because US oil production has been steadily falling. Hence, those refineries now have excess capacitiy to refine foreign crude. It is much cheaper to send the oil down south, refine it, then send it back up, rather than building a brand new refinery.

Oven so, the refining business has lower margins than extraction. Despite not having alot of refining capaicty, Canada is ultimatly wealthier and better off focusing on extraction.

If major refiners agree to under-invest in refining capacities, they can artificially increase their margins. Limiting competition in such a way is illegal but it can happen.

Refineries take a long time to build (10 years). 10 years ago, oil was near $10/barrel. Why would companies invest so much money into something where they wouldn't get any money back?

Because investors base their decisions on future prices.

[dog77_1999]

dino_bobba_renno dino_bobba_renno:

One thing worth mention here is that the price we pay for gas really doesn't have a lot to do refining capacity, unless of course one of our refineries goes down for some reason.

One thing I think most of us in the industry keep asking is why the price of oil is so high. We are producing just as much oil now globally as we ever have and demand is down a bit according to most sources.

While it's true most oil companies are reaping the rewards I personally don't think they're the only ones we should be pointing the finger at. If we look around to see who's really benefiting from the prices being where they are at it's a bunch of guys in suites who work in places Bay Street and Wall Street.

I know this is going to sound kind of like a conspiracy theory thing but I really do believe futures traders are some how manipulating the markets in an Enron type of scheme. Electronic trading of futures over seas should not be allowed and there should be an investigation of the market practices surrounding this issue.

Another thing that really chaffs my ass is the price of electricity lately. Here in Alberta we have Epocor and Enmax crying the blues because they say that their infrastructure is getting so old and that we will probably be faced with rotating brown outs because of it despite the fact both companies have recorded record profits for the past 10 years.

There is no reason why these two companies should be complaining about their (emphasis on their) infrastructure when all new utilities are bought and paid for by developers and what isn't covered by the developers is covered by municipalities and the provincial governments. The only thing they have to worry about is maintaining their existing lines and making sure they have the generation capacity meet the needs of their customers but yet they are still looking for the government and tax payers to pay for these two things.

If tax payers are expected to pay for maintenance and generation then why the hell do we need these companies? What exactly is their purpose, we pay for damn near everything and they sit back and rake in the cash for simply operating the system and making monthly bills and yet they are still crying the blues about how there going to have to raise electricity prices to cover costs.

The most disturbing thing is that here in Alberta you can bet old Ed and his team of mathematically challenged colleagues will rubber stamp any rate increase with out even doing an audit to validate their claims.

Regulatory over site of energy markets is woefully lacking in all markets across Canada and globally. We should start following the money and find out once an for all who really is benefiting from higher oil and gas prices and other energy prices and start holding the markets accountable to everyone and not just the select few who are wearing the Armani suites on Bay Street.

Demand in increasing throughout the world. Demand is falling in Western countries, but not enougth to lower overall demand. Hence prices are increasing.

Refineries are not maintained by taxpayers, but oil companies.

Regulating profits on oil can lead to a dangerous precident. Why is it that you don't want to regulate copper, gold, or coal? After all, those prices have increased more than oil has. How about retailers? Their profit margins are 30-50%. Do you think they should have their profits regulated?

You and everyone else is upset because you are using so much oil and you don't want to change. In now way is it possible to consume as much oil as we do and expect to meet the demands of everyone else. Just using so much oil and you'll gas bills will come down.

[dino_bobba_renno]

Benoit Benoit:

Because investors base there decisions of future prices.

Which is the entire problem, why should an investor be guarantied a return on that investment 5 or 10 years from now contrary to market conditions? No other investment is guarantied that way.

Why are energy futures such a sure thing right now if there isn't something going on behind the scenes?

[dog77_1999]

Benoit Benoit:

Because investors base their decisions on future prices.

Investors don't decide on building refineries. Even so, if the oil company announced building new refineries when they were losing money, it would lower the value of the company. Something investors don't like.

[dino_bobba_renno]

dog77_1999 dog77_1999:

dino_bobba_renno dino_bobba_renno:

One thing worth mention here is that the price we pay for gas really doesn't have a lot to do refining capacity, unless of course one of our refineries goes down for some reason.

One thing I think most of us in the industry keep asking is why the price of oil is so high. We are producing just as much oil now globally as we ever have and demand is down a bit according to most sources.

While it's true most oil companies are reaping the rewards I personally don't think they're the only ones we should be pointing the finger at. If we look around to see who's really benefiting from the prices being where they are at it's a bunch of guys in suites who work in places Bay Street and Wall Street.

I know this is going to sound kind of like a conspiracy theory thing but I really do believe futures traders are some how manipulating the markets in an Enron type of scheme. Electronic trading of futures over seas should not be allowed and there should be an investigation of the market practices surrounding this issue.

Another thing that really chaffs my ass is the price of electricity lately. Here in Alberta we have Epocor and Enmax crying the blues because they say that their infrastructure is getting so old and that we will probably be faced with rotating brown outs because of it despite the fact both companies have recorded record profits for the past 10 years.

There is no reason why these two companies should be complaining about their (emphasis on their) infrastructure when all new utilities are bought and paid for by developers and what isn't covered by the developers is covered by municipalities and the provincial governments. The only thing they have to worry about is maintaining their existing lines and making sure they have the generation capacity meet the needs of their customers but yet they are still looking for the government and tax payers to pay for these two things.

If tax payers are expected to pay for maintenance and generation then why the hell do we need these companies? What exactly is their purpose, we pay for damn near everything and they sit back and rake in the cash for simply operating the system and making monthly bills and yet they are still crying the blues about how there going to have to raise electricity prices to cover costs.

The most disturbing thing is that here in Alberta you can bet old Ed and his team of mathematically challenged colleagues will rubber stamp any rate increase with out even doing an audit to validate their claims.

Regulatory over site of energy markets is woefully lacking in all markets across Canada and globally. We should start following the money and find out once an for all who really is benefiting from higher oil and gas prices and other energy prices and start holding the markets accountable to everyone and not just the select few who are wearing the Armani suites on Bay Street.

Demand in increasing throughout the world. Demand is falling in Western countries, but not enougth to lower overall demand. Hence prices are increasing.

Refineries are not maintained by taxpayers, but oil companies.

Regulating profits on oil can lead to a dangerous precident. Why is it that you don't want to regulate copper, gold, or coal? After all, those prices have increased more than oil has. How about retailers? Their profit margins are 30-50%. Do you think they should have their profits regulated?

You and everyone else is upset because you are using so much oil and you don't want to change. In now way is it possible to consume as much oil as we do and expect to meet the demands of everyone else. Just using so much oil and you'll gas bills will come down.

I'm not advocating for regulating oil prices I'm saying that there simply isn't enough market over site to ensure prices aren't being manipulated. Over seas futures trading with unregulated markets should be stopped.

[Benoit]

dog77_1999 dog77_1999:

Regulating profits on oil can lead to a dangerous precident. Why is it that you don't want to regulate copper, gold, or coal? After all, those prices have increased more than oil has. How about retailers? Their profit margins are 30-50%. Do you think they should have their profits regulated?

It is more profitable to focus on upstream than downstream because the profit margin is less regulated downstream then upstream. Governments are giving away a precious natural resource instead of asking for the highest royalties possible.

[bootlegga]

Canadaka Canadaka:

I've never understood why we don't have our own refining capacity, we shouldn't be at the mercy of the international oil market, OPEC and wallstreet. If only Trudeau was able to push through the NEP

I guess it would be good for lower gas prices but its counter to your first point, we wouldn't be motivated to switch if our gas was still 70Cents.

Canada does have refining capacity. Most of what Albertans use is refined in the province. Edmonton has two very large refineries on its eastern edge. And there are others in nearby cities/towns as well.

http://www.cppi.ca/Refining_Marketing_Distribution.html

The thing is western Canada produces more than western Canada can use itself, and costs being what they are, it's better to build a pipeline to Chicago than Toronto and Montreal, simply because that market is much bigger.

[dino_bobba_renno]

Part of the problem stems from a few years back when they regulated the markets so that an upstream provider could no longer also be the mid and down stream provider and inserted middle men for the trading.

That change set the stage for Enron and it should be re-examined to see if it is having beneficial or negative effects.