There is something you're missing about this pipeline though Pat. The oil transported through it wasn't coming to us for direct use, the terms of the proposed contract were to permit them to sell almost all of it from our ports to other countries
There is a bit of hyperbole going on here. The agreement does not mean the oil is not going to the American market, it means it is not required to go to the American market. If I were Canada making sure this is the case is just common sense.
The fact is the portion of this oil actually staying in the US is going to fluctuate, but right now Canadian oil all has to be shipped via tanker to a refineries and then shipped again to final users. Even if they ship this oil from the Gulf to India we have still removed a hell of a lot of transport cost/risk from one leg of that journey.
Of course all that refined oil is not going to leave the US, and a good portion of it is probably destined for Central/South America, so its still a leg up on transporting from the Middle East.
Is that as good a result as just keeping every drop in the US in an enviromental sense? No, but I don't think I or anyone every simplified it to that degree, just that it increases local access and that is a good thing.
Also remember that one of the big problems with Canadian oil is right now it all goes from the out to West Coast ports. That means its cheaper to ship it to Japan/Korea/China through the Pacific than shipping it the the Central America, through Panama, then back to the US East Coast. Huge portions of the US market are effectively cut off from Canadian supply. This would change that.
The point of the pipeline wasn't to supply America, it was to get Trans Canada a decent American port to sell from that was near to refineries.
Again, that cuts out one of the logistics nightmares of current Canadian oil economics, it needs to be shipped so many thousands of miles to a refinery, then so many thousands of miles to a customer. Now that process has been streamlined, avoiding risky tankers for half of it and removing half the transport journey outright.
Again, still a win.
If it was for our use, then I would be all for it. Like I said before, its supposed to move a volume equal to what we get from Saudi Arabia. But it's not coming to us, to potentially make us independent of the Saudis, they were going to dump it into the world market and then sell it back to us again.
There isn't some central nexus of oil everyone ships their oil to and then they farm it out from there. The process is far more complicated as that. Sometimes they store vast quantities locally, sometimes refinery hubs stockpile it as it arrives there, sometimes custermers have made long term contracts that require them to source their supply from places that seem odd looking at current market prices. My favorite is when expected customers don't buy supply already sent there and tankers sit anchored off places like Jebel Ali and Singapore for sometimes years because it isn't worth it to ship that oil anywhere else. That sort of thing will all take years to settle out (I believe companies like airlines lock in fuel at up to ten years at a time)
That's a pretty crappy deal for us having let them ship it through our country and then refine it for them.
Only if you are considering #2/#3/#4. Nobody says the US can't buy that oil, its pretty obvious why we won't be doing so entirely off the bat (legacy pricing/contracts).
So I guesst the question is, what do we need to do to get that oil to stay in the US?
To be clear, I see where the advatage erodes as more of that oil leaves North America, but an eroded advatage is still an advantage.
