European Militaries Don't Need US? Oh Really??

[Kuciwalker]

To spell it out for you:

If Alberta no longer ships oil to the US, the US has to import from elsewhere. This raises the cost of oil.
Importing from elsewhere reduces the supply of oil from elsewhere. This raises the cost of oil.
The worldwide supply of oil is now meaningfully impacted because Alberta cannot currently ship all of its oil overseas.

Alberta ships less oil, oil prices go way up. Where is the economic fail?

The economics fail is where Alberta doesn't lose tons of money from the deal.

[Kuciwalker]

No, it most certainly is not.

The only way that would be true is if you don't actually understand basic supply and demand.

Given how atrocious your economics knowledge has been in the past, this doesn't surprise me very much.

[Asher]

Yes, and they are already doing it to the maximal profitable extent.

Not true, because OPEC is only a dozen countries. They can only control so much of the supply.

If cutting global production by X barrels would raise prices on the remaining barrels sold, larger producers than Alberta would ALREADY HAVE CUT THOSE X BARRELS because it would be even more profitable for them.

But they couldn't do that with the competitive market coming from stable oil exporters. That situation changes in this hypothetical scenario.

Moreover, you assume that there is no slack in oil production and no speculative stores.

****.

Tell me, Kuci -- what is the slack in oil production? I'm curious.

[giblets]

So despite OPEC being responsible for nearly 40% of the world's oil production and having already limited production as much as it considers desirable, Canada with just 4% could break even by cutting its oil production?

[Kuciwalker]

Not true, because OPEC is only a dozen countries. They can only control so much of the supply.

Holy **** you're stupid.

You believe that Alberta, by unilaterally reducing production, can increase the price of oil enough to mean they gross more on the reduced output.

However, Saudi Arabia, an even larger oil producer, cannot do the same.

How can someone from Alberta be this stupid wrt the oil market?

[Asher]

The economics fail is where Alberta doesn't lose tons of money from the deal.

Kuci -- Alberta is the most desirable place on the planet to get oil from. Your other options are Saudi Arabia, Iran, or Russia. All 3 of those options are considered unstable and actually have diminishing production, so each year they become less important.

If Alberta no longer exported oil to the US, the other countries would be more than willing to buy it off us. Hell, China wants us to be sending them far more oil than we do now at the expense of the US.

Prices would go up, Alberta wouldn't LOSE any money because we're still sitting on trillions of dollars worth of oil. The assets only go up in value while we sit on them.

[Felch]

Asher is including the effects of psychology, and he might be right. Oil speculators are not known for their pure rationalism.

[loinburger]

So despite OPEC being responsible for nearly 40% of the world's oil production and having already limited production as much as it considers desirable, Canada with just 4% could break even by cutting its oil production?

Where did he say they'd break even?

[Asher]

So despite OPEC being responsible for nearly 40% of the world's oil production and having already limited production as much as it considers desirable, Canada with just 4% could break even by cutting its oil production?

OPEC's production declines every year a non-insignificant amount in real terms. In relative terms it's dropping even faster.

[giblets]

Why the **** is Canada increasing its oil production? Apparently it'll make them lose money.

[giblets]

Where did he say they'd break even?

He said the higher prices caused by a Canadian embargo of the US would cause Canada to make just as much money while selling less.

[loinburger]

He said the higher prices caused by a Canadian embargo of the US would cause Canada to make just as much money while selling less.

I thought he meant in the long-term, not the short-term:

Prices would go up, Alberta wouldn't LOSE any money because we're still sitting on trillions of dollars worth of oil. The assets only go up in value while we sit on them.

[Asher]

Holy **** you're stupid.

You believe that Alberta, by unilaterally reducing production, can increase the price of oil enough to mean they gross more on the reduced output.

However, Saudi Arabia, an even larger oil producer, cannot do the same.

Saudi Arabia does do the same. They also have far more geopolitical concerns that prevent them from being too aggressive. It's hard enough for the US to stomach buying oil from them.

How can someone from Alberta be this stupid wrt the oil market?

You just don't understand the oil industry. You're looking at it like a high school student would with a pristine theoretical supply/demand market unaffected by the realities of geopolitics, speculators, logistics, and cartels.

[loinburger]

The point is moot anyway, if Canada went to economic war with the US it would just give Quebec an excuse to be even more obnoxious.

[Asher]

Why the **** is Canada increasing its oil production? Apparently it'll make them lose money.

We need to have the capacity to replace the diminished capacity from falling US, Russian, Saudi Arabian, and Iranian oil production. We can't control the market until we can produce a large enough share.

People can continue to claim they'll just "buy from elsewhere", but those people clearly don't understand worldwide oil production trends. Most countries produce less oil each year as demand goes way up each year. The long-term implications are clear. Very few increase production, let alone on the scale that Canada is doing.