I don't think there's an actual shortage of production capacity; just a short term misalignment with some countries having agreed earlier to produce less so prices could go up. Oil companies in the US in particular seem sensitive to low prices as their cost is high. E.g. a lot of fracking activity stops being profitable around a 30-40$ oil price. Current prices are of course great for such companies and they probably will end up having a great year.
But lets not get carried away, these might just be short term effects and once the Saudi's and whomever else picks up the slack, prices might drop just as rapidly as they've risen. Also, the Russians might re-appear on the market if they manage to come to some diplomatic resolution. Either way, the current shortage might only be temporary and could easily turn into a surplus.
And of course a long term effect of the current high prices is an acceleration of the move to renewable energy. If you are still burning oil or gas, you are at the mercy of market prices. And that looks to be like an expensive thing right now. The long term effect of people needing less oil and gas is fierce competition among oil and gas producers for a shrinking market. So, adding more production is not really necessary if demand starts dropping instead of increasing (which it has historically done). That might be sooner rather than later.
EV production is currently millions of vehicles per year and will soon hit tens of millions of vehicles per year and eventually ICE vehicle production is going to be less than half of the market a few years later. That's a lot of petrol and diesel that won't be needed any more.
> If you are still burning oil or gas, you are at the mercy of market prices.
industrial uses of oil and gas, not just as an energy source, but as feedstock, is not easily abated with renewables.
I think that residential and may be some commercial heating with gas could be replaced in the short and medium term with electricity, which then makes renewables possible for these use cases. But a factory making steel beams or something would require gas heating because it is built into their production process, and changing that over would basically mean re-designing and re-engineering the factory! I dont think that can be done in the short to medium term at all, even if they start planning today.
There's still a good half-century of life left in oil and gas imho, and that's not including the emerging economies' needs in the future as they develop.
Steel manufacturing emissions are indeed enormous, but can be significantly curtailed, especially if you're willing to accept higher steel prices as a result (or of course regardless, if you have carbon pricing so that existing techniques are expensive)
High prices also incentivize re-use and re-cycling. If it's cheaper to buy brand new steel beams and drop the ones from the old building into a landfill, that's what people will do, but if that costs twice as much, the new building will have old (or at least recycled) beams, same way England is full of houses that are say 150 years old but have 200 year old timber because timber was expensive then and so they re-used it.
Ultimately, even if our society insists on ignoring the crisis, Mother Nature isn't fooled, our borders will be overwhelmed by people fleeing the destruction of their homes, in many places summer temperatures will be unbearably hot, and all this acts as a permanent reminder that we fucked up, which can't help but spur (even if belated) policy change.
I don’t think it would have much of an impact. There are a lot of untapped wells with much lower breakeven cost in west Texas that aren’t being exploited because the North American industry has become much more supply disciplined. Bringing more capacity online won’t increase output unless the export markets become much better developed, which will take massive refinery and terminal investments on both sides of the Atlantic.
There is plenty of refining and export capacity in Texas. It would have an enormous impact on investment in oil production and therefore future oil prices in North America. Pipelines are much cheaper and safer than rail and would lower the cost of production and therefore the cost of the final product.
> Pipelines are much cheaper and safer than rail and would lower the cost of production and therefore the cost of the final product.
Would it?
Oil is a commodity with a huge market. Isn't that oil going to fetch the same price no matter how it actually gets to the market? Lowering production costs for any given small producer should simply mean more profit for them rather than lower prices for buyers of the commodity.
Is your argument that the pipeline would reduce cost of the oil sands? Because yes, it would. But that would lead to even more US wells shutting off at these price levels. I was talking specifically about natgas terminals and processing.
Nah, there's a boom and bust cycle to these industries. Prices go up, everyone exploits new wells and pours in money. Prices go down and a ton of folks go broke because the new wells are too expensive. You don't need any sort of cartel arrangement - the large companies and investors just learned their lesson after being burned a bunch of times.
From a purely selfish American standpoint, I'm not enthusiastic about damaging the environment in the United States so that Canadian oil companies can sell it to Europeans.
>From a purely selfish American standpoint, I'm not enthusiastic about damaging the environment in the United States so that Canadian oil companies can sell it to Europeans.
Keystone XL goes south to Steele City. Helping also move Baker, MT oil. Not really a total Canadian thing.
A key point of the Keystone pipeline is to move Canadian crude to the Gulf where it can be refined and exported. It was originally seen as being politically expedient to run the pipeline over U.S. land instead of Canadian land not to mention the refining and exporting capabilities already present in the U.S. Golf. The key piece often missed when talking about "energy independence" is oil is sold in a global commodities market. Global demand will affect domestic prices, even when the oil is pumped and refined domestically.
The dotted lines exist already. What got cancelled is in Green.
We already get our oil to the gulf. XL is about getting Montana hooked up.
> It was originally seen as being politically expedient to run the pipeline over U.S. land instead of Canadian land not to mention the refining and exporting capabilities already present in the U.S. Golf.
Energy east was cancelled as well. There is a pipeline almost all the way across canada.
There's also another line that briefly goes over Michigan, Line 5. They tried to shut this pipeline down rather illegally.
Never did hear much more. Obviously they didnt shut it down. Toronto would basically be a ghost town if they did.
>The key piece often missed when talking about "energy independence" is oil is sold in a global commodities market. Global demand will affect domestic prices, even when the oil is pumped and refined domestically.
The more important factor. Russia has been planning this invasion since before 2014.
For environmental reasons we cancelled every possible way to deliver oil to Europe. We then made a promise to Europe to help them but... ugh... how? Oh right that's why our government really impressed upon them to look into renewables. We are MANY years away from ever helping Europe.
Sure is interesting that our government played right into Putin's hands.
Keystone and by extension Keystone XL routes oil to refineries on the gulf coast where the vast majority of it is exported. In fact TransCanada was caught lying about how many American jobs Keystone XL would create, claiming thousands when the real number was 35.
Deep water well isn't going to be getting built tomorrow. Even if they magic the best resources every and rush this... I would expect it's minimum 5 years out? Europe can wait 5 years without oil right?
Really our only option will be oil trains but those crash and burn far too often and probably wont be allowed.
So basically... Canada's promise that we are going to be there to help Europe is a lie.
IPCC report: The evidence is clear: the time for action is now
> Limiting global warming will require major transitions in the energy sector. This will involve a substantial reduction in fossil fuel use, widespread electrification, improved energy efficiency, and use of alternative fuels (such as hydrogen).
> "Having the right policies, infrastructure and technology in place to enable changes to our lifestyles and behaviour can result in a 40-70% reduction in greenhouse gas emissions by 2050."
I think some people in the comments didn't read the article.
The article concludes that solving supply shortage issues would be faster and more efficient by re-opening currently offline oil wells domestically and finishing existing projects (that aren't XL).
Nevermind, what the article doesn't mention, that a lot of the shortage is due to the OPEC+ deal that happened to stop the prices from plummeting and is already in the process of being unwound (on schedule... despite some wanting to unwind it quicker).
What could possibly convince TC Energy or any other entity to trust that the US wouldn't cancel it again? There's a reason that company has given up on it.
If it already existed sure, but couldn't you add some wind or solar capacity to offset other energy uses in the time it would take to get a project of this scale going? When you choose the low carbon option you get the benefit of being insulated from oil and gas market shocks.
> The Keystone XL pipeline extension was proposed by TC Energy in 2008 to transport 830,000 bpd of Alberta tar sands oil to refineries on the Gulf Coast of Texas.
Is this oil currently being transported by truck or is it sitting in the ground waiting for a pipeline? Or something else?
According to the government of Canada, [0] typically there is enough capacity in pipeline and rail to transport all of the crude. In 2018, there was a surge in demand and they weren't able to transport it all until the rail network caught up. Transportation by truck does happen, but would be too expensive and doesn't have the capacity to be a primary component. The pipeline mostly would lower transportation costs, as trains are more expensive than pipelines, and would provide some surge capacity, while making the US and Canada's lol industry even more integrated. (Currently over half of all US oil imports are from Canada and 59% of Canada's oil exports are to just the Midwest states.)
Is that supposed to be oil industry? If not, I not sure I understand.
What I'm trying to understand is if this pipeline is for additional capacity or if it is meant to replace the trucks and rail? I'm trying to understand a bit of the environmental impact. If the choice is pipeline vs no pipeline then it seems clear from an environmental perspective. But if the choice is pipeline vs truck/rail than there might be some factors in play that I'm not currently aware of.
The stuff that is obtained, usually rail, which is hilariously awful accident record. Pipelines are designed with remediation in mind. Tracks were put down by tycoons 100 years ago.
I think you are seriously underestimating just how frequently pipelines fail. There are definitely more pipeline spills than rail accidents each year, and I believe if you take into account severity of spills (e.g., ignoring spills that don't make it outside a pumping station), I think it comes out to "pipelines spill on average as much in a year as rail has in my entire lifetime."
Isn't it cheaper/safer to build railroads that can transport anything rather than a pipeline that only does oil? If the problem is the quality of the aging railways, why don't we just fix that?
Great question. That can and has been done. The problem is it's enormously expensive as you're dealing with competing optimizations.
Railroads can't go "anywhere", generally you need very shallow grades and the right structure underneath the tracks. Unfortunately the soil, rock layers, fault lines (think small fractures that water travels along, not san andres), drainage patterns, and many more factors contribute to environmental safety beneath said lines. So your rail would likely not be able to take the most efficient or straight path for rail. This isn't a problem for something like the XL pipeline, which had sealed clay basins planned in worrysome areas. Train wrecks are also catastrophic, so while catch basins work pretty dang well, they can damaged easily in events like that. So you end up having to make compromises somewhere: efficient trains vs environmental safety. Pipelines have similar issues, but they're not dealing with thundering transient loads, and modern pipelines are very safe compared to their 50 year old counterparts, in the same way US nuclear reactors are far safer than RMBK reactors. Tracks that can "haul anything" certain could be built, but at a larger cost than general freight rail.
One of the reasons we got in this geopolitical sh*tstorm is that the western countries have a naive view and lots of wishful thinkings on authoritarian regimes. I think it's OK for environmentalists to not think about geopolitics and to imagine they live in a world peace utopian, but the leaders of the major western countries should not fall in this trap. Energy independence and manufacturing independence of essential goods of the free world is crucial not only to the free world, but to the whole humanity. Authoritarian China is coming to be another superpower, but I am not sure the free world is ready for the challenge.
The "Free World" has become markedly less free since the fall of the Berlin wall. Part of this is just the result of the fact that was deemed no longer necessary by those in power to portray the image of being "The Free World" now that the cold war was over, part of it is due to the fact that the enemy-shaped hole left by the demise of the Evil Empire was filled by things like "globalism" and "climate disaster". Globalism created the conditions for the rise of China as the up-and-coming superpower, the climate scare created the conditions for the WEF "Build Back Better" [1] strategy which is to usher in that globalist world where "you will own nothing and you will be happy" [2]. Then the SARS2 pandemic hit - oddly enough just a few months after the WEF finished practising for just such a scenario in their "Event 201" program [3] - which severely restricted freedom all over the world, markedly so in states which were deemed to be the poster children of "The Free World". Many leaders started using the rhetoric of "The Great Reset" and "Build Back Better" [4], some leaders of "The Free World" openly proclaimed their admiration of the Chinese approach [5], many others were inspired by the Chinese "social credit score" system and forwarded plans to create similar systems in "The Free World" under the guise of "Pandemic preparedness". Many if not most of those schemes ended up being shot down in the parliamentary process but is has been made clear that the freedoms which were once seen as inviolable in "The Free World" - from ownership rights through freedom of speech to freedom of association and freedom of movement - are seen as a detriment to their ideas of how society is to progress by a number of influential people.
[2] https://www.weforum.org/agenda/2016/11/8-predictions-for-the... - notice that the WEF removed the page related to this quote: '1. All products will have become services.' leads to 'Sorry, but we can’t find the page you were looking for' while other links still work
The first step to a carbon free future is energy independence. You walk before you run a marathon.
Why is this? If an external supplier sees you building an alternative to get off their product, they will sabotage your efforts by artificially dropping their prices below cost, tanking your efforts. This happens repeatedly with OPEC and we keep falling for it.
I think this is an opportunity for blue + red to agree on the outcome, but for slightly different conclusions. Until we can work past cutting off your nose to protect personal identity politics, we are unlikely to see any measurable progress.
> Until we can work past cutting off your nose to protect personal identity politics, we are unlikely to see any measurable progress.
I agree. Hypothetically speaking, are there any betting markets that would allow a person to "short" this issue? I think we all know this will never happen.
Energy independence doesn't mean immunity to global commodity prices. As long as we use and sell oil, we will see energy price impacts from external suppliers manipulating the price.
> If an external supplier sees you building an alternative to get off their product, they will sabotage your efforts by artificially dropping their prices below cost, tanking your efforts.
US owned / domestic oil companies can still do this. I don't see what independence gets us here. Unless we go the communist route and nationalize oil production, which clearly will never happen in the US.
gas being expensive doesnt make destroying indigenous lands ok???? this is incredibly disrespectful to anyone who fought for the environment and for indigenous sovereignty
I'm not sure I trust such suggestions when they come from "Oil and Energy news". In other news, a publication focused on the nuclear industry thinks we need a lot more nuclear, and a publication focused on renewables thinks we need more solar and wind.
I'd trust each subject matter expert to report their 'beat' more accurately than some random author. Of course, 'it is ever the province of specialists to overstate their domain.' This nihilist argument that all journalists are generating nothing but fake news and lying is disingenuous in general. I understand healthy scepticism but dismissal of all news isn't a good idea. Being aware of biases is good, yes, but outright nihilism, no.
But lets not get carried away, these might just be short term effects and once the Saudi's and whomever else picks up the slack, prices might drop just as rapidly as they've risen. Also, the Russians might re-appear on the market if they manage to come to some diplomatic resolution. Either way, the current shortage might only be temporary and could easily turn into a surplus.
And of course a long term effect of the current high prices is an acceleration of the move to renewable energy. If you are still burning oil or gas, you are at the mercy of market prices. And that looks to be like an expensive thing right now. The long term effect of people needing less oil and gas is fierce competition among oil and gas producers for a shrinking market. So, adding more production is not really necessary if demand starts dropping instead of increasing (which it has historically done). That might be sooner rather than later.
EV production is currently millions of vehicles per year and will soon hit tens of millions of vehicles per year and eventually ICE vehicle production is going to be less than half of the market a few years later. That's a lot of petrol and diesel that won't be needed any more.