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

[Kuciwalker]

What do you not get? Yes, you do. But your replacement pipelines have to go far longer than ours do which cost a lot more and take a lot longer to build.

Unless there's some reason that it's way way easier to build pipelines from northern Alberta to the West Coast than from the West Coast to Montana, this doesn't work. Even then, we can probably extend pipeline capacity from some other part of the country more cheaply.

[Asher]

So your theory is that Canada will sneakily build a bunch of excess pipeline capacity and then SURPRISE NO OIL FOR YOU!!! ? Really? That's your plan?

It's not sneakily when it's clear as day that is what we're doing. eg, the Northern Gateway Pipeline Project.

The premiums are all transaction costs and accrue to the people who own the tankers. Not only does Alberta recoup none of these costs, it actually incurs some of them because the elasticity of demand is greater than 0.

You believe that transaction costs really have no bearing on the market value of oil? Most of the value in oil is in its speculative future value and the logistics of retrieving it and transporting it.

[Kuciwalker]

Rather than go through all of this ridiculous hassle, why don't you suggest that Alberta just raise the price it charges the US for oil?

[Asher]

Rather than go through all of this ridiculous hassle, why don't you suggest that Alberta just raise the price it charges the US for oil?

Because that has already happened and is happening?

The first million barrels were free. Now they face increasing royalty costs.

[Kuciwalker]

You believe that transaction costs really have no bearing on the market value of oil?

Transaction costs increase the price of oil to purchasers. They do not increase the fee received by sellers. This is elementary.

Imagine a guy with a gun hanging outside of a shop, threatening to shoot anyone who enters without paying him $5. This is a transaction cost. It increases the price of the goods in the store. Does it make the store owner better off?

[Kuciwalker]

Because that has already happened and is happening?

But as you've admitted, your entire plan is just for them to raise the price even more. Rather than futz around with these absurd scenarios, why not just raise the price by an additional $5/barrel over what they were already going to?

OH WAIT MAYBE THAT WOULDN'T WORK BECAUSE ASHER'S ENTIRE THEORY OF ECONOMICS IS MORONIC.

[giblets]

Okay, so I looked for a pipeline map on Google. I think this is supposed to prove we can't get our oil from overseas, or something:

Spoiler:

green = oil pipelines

[Kuciwalker]

[Asher]

Transaction costs increase the price of oil to purchasers. They do not increase the fee received by sellers. This is elementary.

The US could scalp oil from offshore tankers by paying market cost + 15% OR the US could buy oil from the Middle East at a higher rate less than the tanker-scalping-markup, driving up the average price.

[Kuciwalker]

The US could scalp oil from offshore tankers by paying market cost + 15%

Really? We'd have to pay 15% above market prices to ship oil from Vancouver to Seattle? Why? Why can't we hire the tankers at their normal rates?

[Asher]

Okay, so I looked for a pipeline map on Google. I think this is supposed to prove we can't get our oil from overseas, or something:

Spoiler:

green = oil pipelines

The vast majority of those pipelines are not arterial pipelines and are very small in capacity. Many of them don't even ship actual crude, but refined products (which is somewhat useful but limiting).

[Asher]

Arterial crude oil pipelines:

[Asher]

But as you've admitted, your entire plan is just for them to raise the price even more. Rather than futz around with these absurd scenarios, why not just raise the price by an additional $5/barrel over what they were already going to?

OH WAIT MAYBE THAT WOULDN'T WORK BECAUSE ASHER'S ENTIRE THEORY OF ECONOMICS IS MORONIC.

The fact that it's a patently absurd scenario that you've been taking seriously for many posts is what's moronic.

[Asher]

The US could scalp oil from offshore tankers by paying market cost + 15%

Really? We'd have to pay 15% above market prices to ship oil from Vancouver to Seattle? Why? Why can't we hire the tankers at their normal rates?

Because we would refuse to supply tankers breaking the embargo habitually, of course. You need to make it worth their while.

[Kuciwalker]

Arterial crude oil pipelines:

Oh, then the answer is really easy. We build out the orange one a bit more on our side and then ship the extra oil entering it Chicagoabouts up through the now-spare capacity on your side