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

[Kuciwalker]

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.

Saudi Arabia produces several times as much oil as Alberta. It's going to take a long time before that evens out.

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.

Oh boy, we're back to the "Alberta has unlimited ability to change its logistics, but the US would take 10 years to import oil from somewhere else" story

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.

So Alberta would just be making a massive speculative gamble on oil. I don't see how that could possibly go wrong!

[giblets]

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

That makes less sense, because in the long term rival producers can increase their production and demand would be more elastic.

[Kuciwalker]

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.

Yes, the long-term implications are that oil will continue to be fungible, and that if you start selling all of your oil to China then we will still just buy our oil from whoever they used to.

[Asher]

Saudi Arabia produces several times as much oil as Alberta. It's going to take a long time before that evens out.

So you've looked into the numbers, then. What year would this be?

Oh boy, we're back to the "Alberta has unlimited ability to change its logistics, but the US would take 10 years to import oil from somewhere else" story

Alberta has already started massive investments in changing its logistics, the US is spending their efforts to increase their dependence on Alberta oil. Oil for us is a profit game, oil for you is a necessity and Achilles heel for your economy.

The problems are appreciably different.

So Alberta would just be making a massive speculative gamble on oil. I don't see how that could possibly go wrong!

The entire oil industry is based off of the concept of speculative gambling.

We're talking about companies that spend tens of billions of dollars to build single plants with projections that they won't even break even for 30 years. Their entire profitability is based off of speculation.

[Kuciwalker]

The only possible story Asher can tell here is that infrastructure costs impose short-term local inelasticity of supply. That strikes both ways.

[Asher]

Yes, the long-term implications are that oil will continue to be fungible, and that if you start selling all of your oil to China then we will still just buy our oil from whoever they used to.

Are you ****ing serious?

"whoever they used to"?

You CLEARLY have no idea how the worldwide oil market works...

The reason China is desperate for Canadian oil is because they cannot get enough as it is. Look at the statistics for how much oil consumption rises each year in China. They're not going to just stop buying from other people. They're rapidly buying more and more of the worldwide production. Why do you think oil prices are sustaining so high?

[Asher]

That makes less sense, because in the long term rival producers can increase their production and demand would be more elastic.

No, they can't. Again, much of the conventional reserves in the world are already tapped. Virtually all of the major oil producers are facing reduced production because their supplies are not what they used to be.

Other countries can't just shrug and decide to make X more million barrels of oil per day.

[giblets]

No, they can't. Again, much of the conventional reserves in the world are already tapped. Virtually all of the major oil producers are facing reduced production because their supplies are not what they used to be.

Other countries can't just shrug and decide to make X more million barrels of oil per day.

Asher, aren't reserves measured by assuming a certain price and figuring out how much oil can be profitably recovered at that price? What happens to reserves if there is a price increase?

[Asher]

No, they can't. Again, much of the conventional reserves in the world are already tapped. Virtually all of the major oil producers are facing reduced production because their supplies are not what they used to be.

Other countries can't just shrug and decide to make X more million barrels of oil per day.

Note that they can claim this. Saudi Arabia famously claims to have millions of barrels of spare capacity, but they never actually do. Goldman Sachs recently even called them out on this.

For the Libya crisis, they increased production by something like 300k only even though they claim 3.5 million spare capacity.

[Kuciwalker]

So you've looked into the numbers, then. What year would this be?

http://www.eia.doe.gov/countries/country-data.cfm?fips=SA
http://www.eia.doe.gov/countries/country-data.cfm?fips=CA

The latter overestimates Alberta, unless there really is no oil production in the rest of Canada.

Alberta has already started massive investments in changing its logistics, the US is spending their efforts to increase their dependence on Alberta oil.

Oh man, you have a huge head start on us because you've already started making the investments! It's not like we have any ports or anything already accepting overseas oil.

Oil for us is a profit game, oil for you is a necessity and Achilles heel for your economy.

Oil for you is a necessity and Achilles heel for your economy too, ****. You're long and we're short; as a proportion of your economy, you are far more exposed.

The entire oil industry is based off of the concept of speculative gambling.

We're talking about companies that spend tens of billions of dollars to build single plants with projections that they won't even break even for 30 years. Their entire profitability is based off of speculation.

It's not speculation if you agree with the market forecast of oil prices. Your entire theory is that Alberta can net profit by shifting production into the future, which is only true if speculators underestimate future prices.

[Kuciwalker]

Are you ****ing serious?

"whoever they used to"?

You CLEARLY have no idea how the worldwide oil market works...

The reason China is desperate for Canadian oil is because they cannot get enough as it is. Look at the statistics for how much oil consumption rises each year in China. They're not going to just stop buying from other people. They're rapidly buying more and more of the worldwide production. Why do you think oil prices are sustaining so high?

God you're a moron.

China is desperate for oil, period. They don't ****ing care if it comes from Canada. At any given time, they are already consuming approximately the amount they want to consume at the going price. If they buy more from you they'll buy less from someone else. If they buy more oil total then it doesn't matter to the US whether they buy it from you or from Iran, except possibly in the very short term due to logistics.

[Asher]

http://www.eia.doe.gov/countries/country-data.cfm?fips=SA
http://www.eia.doe.gov/countries/country-data.cfm?fips=CA

The latter overestimates Alberta, unless there really is no oil production in the rest of Canada.

You've got it backwards. It's generally accepted that Saudi Arabia's oil reserves and production are overestimated (there were comments from a Saudi Prince last year basically confirming this).
Alberta's oil is underestimated.

Notice in your sources that SA's oil production went from ~11M barrels per day to ~9M barrels per day in less than five years and it was flat before that. That's an appreciable trend. Extrapolate that.

Compare that to Canada's line, which is a steep incline.

Canada's oil sands production is expected to (and on pace to) triple by 2020.

Connect the dots.

Oil for you is a necessity and Achilles heel for your economy too, ****. You're long and we're short; as a proportion of your economy, you are far more exposed.

We're not as exposed because we're self-sustained and a net exporter of energy.

We can always sell oil elsewhere (for more money). You will have to pay a lot more to get oil from elsewhere, which is very damaging to your economy.

[Kuciwalker]

You've got it backwards. It's generally accepted that Saudi Arabia's oil reserves and production are overestimated (there were comments from a Saudi Prince last year basically confirming this).
Alberta's oil is underestimated.

I was comparing annual production, as I clearly stated.

[Asher]

God you're a moron.

China is desperate for oil, period. They don't ****ing care if it comes from Canada. At any given time, they are already consuming approximately the amount they want to consume at the going price. If they buy more from you they'll buy less from someone else.

China is buying as much oil as they can and still have huge deficits. The assertion that they'll stop buying oil from other suppliers once they secure more oil from Canada is hilarious.

PS: Do you know where most of China's current oil comes from?

PPS: Your assertion that they "consume as much as they want to consume" is also hilarious. You clearly have no idea what the oil situation is in China. They are far short of what they want to consume. The problem is there is little in the way of infrastructure for them to get as much oil as they want. Which is why they're spending many billions of dollars in Alberta to secure oil, and want to do it yesterday.

[Kuciwalker]

We're not as exposed because we're self-sustained and a net exporter of energy.

We can always sell oil elsewhere (for more money). You will have to pay a lot more to get oil from elsewhere, which is very damaging to your economy.

Net exporters are just as exposed to price as net importers.

Outside of the very short run, it does not cost us appreciably more to get more oil from elsewhere instead of Alberta. ONE HUNDRED PERCENT of the effect you've been talking about has to do with short-run logistical issues.