Gas prices; Canada as an example?

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Rick in Canadia
Rick in Canadia's picture

I just filled up in Ontario Canada at about $1.35 / Litre; you have about 4 Litres to your gallon and our dollar is even or above the US$ now.

So, Not sure about the exact numbers but Canada is definitely a net exporter of oil and gas, so if drill baby drill is the solution, we should have a lot cheaper gas than you do.  Yes our taxes are higher, but the oil we pump goes to the world market at the world price, then we pay the world market price for what we use.  Our oil will flow down the Keystone Pipeline to the world markets too, making more money for the multinationals.  Neither the pipeline nor drilling under wildlife refuges will have an impact on gas prices.

Pushing for new drilling leases?  The multinational oil companies (just what / where is an 'American' oil company?) have huge areas banked that they haven't drilled.  To give them more is simply giving them assets that they can show on a balance sheet and you wouldn't see oil from any new areas until they are good and ready and figure they can get top dollar.

So, if drilling is the answer, how come my Canadian gas still costs more than milk?

Rick in Canadia


Capital's picture
Rick in Canadia wrote: So, if

Rick in Canadia wrote:

So, if drilling is the answer, how come my Canadian gas still costs more than milk?


We need to produce more oil than we consume. 

Rick in Canadia
Rick in Canadia's picture
Ahh, yes, that was my

Ahh, yes, that was my point.

We do produce considerably more than we consume here in Canada.  Our price for gas etc. is higher than yours.  Some of that is tax but our base price for the oil ends up as the same world price that you pay.

If supply / production was the answer, even if current drilling could yield anything immediately, we should have a better price.

My point is, people who figure that un-limited / un-regulated drilling would be some sort of answer, double, triple your production and in proportion you might look like our situation and it still wouldn't cut the price at the pump.



Americans are doing

Americans are doing everything they can to "not see" the cost of gasoline at the pump.  If it were the *real* price, including all "externalized costs", from pollution, environmental degredation, and health related issues - to their cleanup/repair/healing, we'd be paying around 15$/gal.  That's the conclusion presented in a 5 minute, animated, YouTube "real cost of gasoline" video:

Even at that - the costs they calculate are "from the time it's brought out of the ground", and stick pretty closely to "just gasoline" and pollution related issues.  They've not included fuel related costs of mining and manufacture and operating of all rig structures, trucks, refinery construction, etc. Given all the costs they did *not* include to reach a $15.00/gal pump price, and given that their calculations  were made in 2010, it's got to be - closer to, maybe even well-above, $25.00 (??). 

Given total destruction of the earth while we and Canada (which I love and where I lived for several decades) tear the place apart, like looking for coins in furniture cushions but ever-so-much worse, - I'd say the faster we address our high-consumption life-style dependency on fossil fuels, the better for now and 7 generations to come.  

You left out the costs of

You left out the costs of making sure the oil gets to market, including probably half of our budget for defense.

planetxan's picture
We do not buy oil they way

We do not buy oil they way other things are bought in bulk. Typically, if a country wanted to buy beef for import, for example, representatives would go to that country, scope out the facilities and make an offer of a guaranteed price over a period of several years. With an assured customer base at an assured price, production can move forward without worry. Most things are done like this - grains, metals, meats, etc. But oil is not. If the US went to Canada and Mexico (the leading oil imports to the States) and made a similar deal for say 10 years at $80 a barrel, a sufficient amount to cover costs, 'producers' (we should really call them 'extracters', they produce nothing) uh, extracters, well, let's say 'oil companies' would have the insintive to make the long term investments necessary to set up new operations profitably. With prices swinging up and down radically for no apparent reason, it is unreasonable for them to make those investments. Oil requires serious upfront costs and years to prepare fields for extraction. The military may be the most stabilizing customer base for oil production. In fact, that may be why it buys so much. It does not have to be, but it probably is.

Choco's picture
chilidog wrote: You left out

chilidog wrote:

You left out the costs of making sure the oil gets to market, including probably half of our budget for defense.

Yes, this should not be overlooked. To make matters worse, the military is used primarily to secure oil fields and protect oil and gas pipelines, all the while, the military is the single biggest consumer of oil. Oil companies are the most profitable of all and use their insane profits to lobby govt. to continue the oil depletion allowance (subsidies) and to engage in wars for the oil companies' and military industrial complex's benefit.


DanP's picture
Much of what has been driving

Much of what has been driving up the price of oil has been the problems between Israel and Iran and their effects on the Oil Futures Market, as has been discussed in the media.  But, one thing that is overlooked is the effect of Japan's shutting down all but one of its nuclear reactors in the wake of last year's earthquake and tsunami.  It has caused their oil and gas imports to rise, further straining an already strained market.  National Geographic ran a story about it recently.

I know the nuclear power industry might not be all that popular here...but, I think we can make nuclear power a lot safer if we have a "zero tolerance for crap" policy with regards to energy companies using nuclear fission to generate power.  I mean, I think we need to not be afraid to lock people up for systemic leaks and safety violations.  I also think people at BP and/or Transocean and/or Haliburton should have been locked up for what happened in Deepwater Horizon.  Anybody here watch "Cold Diggers" on Science?  When a mistake involving the blowout preventer happened on the show, which cost MGM Energy $40,000, they didn't just decide not to have the blowout preventer, or have one that was not installed properly...they decided to spend the money and do it right.  And that was for a well which did not even end up producing.  Now, if they could have done that, why couldn't the principles have spent the extra time and money to do the blowout preventer properly on the Deepwater Horizon.  I think we need to stop thinking of nuclear power, definitely, and some forms of fossil fuels, to a lesser extent, as an entirely either, or, proposition.  The choice between no nuclear power, on the one hand, and dangerous nuclear power, on the other, is, in my opinion, a choice we should NOT have to make.  I believe it can be done better, and doing so begins with holding power companies benefitting from shoddy-run nuclear power facilities responsible...not with a total ban on nuclear power!

DanP's picture,0,7453928.story?track=rss


Hopefully, this is just the beginning............

Choco's picture
As I understand it, correct

As I understand it, correct me if I'm wrong, but nuclear power is owned by private corporations and they can't get or afford private insurance policies so the government steps in and insures the private stockholder companies. Insourcing profits outsourcing risks. Am I wrong?


DanP's picture
Maybe you aren't wrong.  And,

Maybe you aren't wrong.  And, maybe the nuclear power industry needs to be restructured.  But, if you think you can make a dent in greenhouse gas emissions by relying soley on solar and wind...then you are poorly mistaken.  If we are to greatly reduce the amount of fossil fuels we use in the next fifty years, nuclear is the only way.  Great strides have been made, and will continue to be made, in wind and solar.  But, in spite of those great strides, solar cells are still highly inneficient.  It has to do with how the nanno crystals line up...and the way the nanno crystals are lined up, the most efficient solar panel is still under 18% effective.

I am not sure if what you said is correct, or not.  But, even if it is, I see no reason why such an example of moral hazard has to stand.  Even if the government has taken on the role of insurer, it seems to me some statutes could be passed which would make some people in those private companies responsible for certain things which could go wrong...and there could be potential jail time for it.  Maybe a criminal negligence statute?  The simple fact of the matter is, as much as we should shift as much electricity production to alternatives and renewables as we can, if we abondon nuclear fission power altogether, we will be confining ourselves to the use of fossil fuels until, God willing, we figure out how to get nuclear fusion going which does not require the heavy elements which nuclear fission does.  In fact, if we can ever figure out how to get net power out of fusion, the most dangerous chemical from a pure fusion reactor would be tritium, which is radioactive hydrogen.  Unlike plutonium or uranium, it tritium only has a half-life of about 12 years, so it isn't even radioactive for very long.  But, until then, we need to increase our use of nuclear fission power if we ever want to: see petroleum prices come down; end (or at least greatly reduce) greenhouse gas emissions; stop fighting wars in the middle east over energy.  But, I do agree we need to reorganize the nuclear power industry.  Once we do that, we can make it safer and more efficient.

The reason I connect increased use of nuclear fission to gas prices coming down is the idea that the government could take even bigger steps to get more Americans into EVs and hybrids, i.e tax breaks or even government-backed "green" loans funded by environmental fines for malfeasent companies.  But, if more Americans start driving those hybrids and EVs and more nuclear fission power plants are not built, the bulk of that electricity will come from coal and natural gas-fired power plants.  Coal will mean more greenhouse gasses than even petroleum; natural gas will mean more "fracking" and the environmental costs associated with it, unless "greener" methods of "fracking" are employed.  And, lets face it, if it will cost them more money, Haliburton and the other gas producing companies are not going to employ "greener" "fracking" methods on their own.  I currently see no other way forward except to rely more on nuclear power, even if it means we have to overhaul that industry.

DanP's picture
Planentxan: I wouldn't call


I wouldn't call the oil companies mere "extractors".  I think they do a little more than that.  If you don't believe me, try running your car on crude oil and see how far you get.  The refining process is actually what makes the gasoline that goes in your tank, the jet fuel that goes in the planes, and the plastic that your groceries go into. 

But, I do agree that, more so than any other commodity-producing industry, that it is nature which is the true "laborer" in the oil industry.  As to your comments about the "upfront costs" of the oil companies, have you ever seen "Cold Diggers" on Science?  It is a great show and really drives home, without intending to do so, the high risk of "wildcatting".  For example, there was a well drilled which cost the company drilling it, MGM, $50,000 a day.  They must have been at that site for at least a couple weeks, working day-and-night.  At $50,000 a day, two weeks would have cost a minimum of $700,000, but I suspect they were there longer than two weeks because, according to the narrator, it was the only well that team drilled all winter.  In the end, the geologists had gotten it wrong and there was no oil at that spot.  All that money, literally down the hole.  As cruel as it was of me to do so, I kind of chuckled a little to be honest.  The drilling supervisor, John Williams, said that "wildcatters" only get oil in about 2-out-10 wells...and that is if they are lucky.  Another good show on Science which illustrates the cost oil and gas companies can incur is an episode of "Build it Bigger" about the making of the Shahklin oil and gas facility in Siberia.  Though host Danny Forester never mentioned the price of the facility, when I saw all that went into it...I concluded it had to be astronomical.  And, one can always find out the cost if they really wanted to merely by visiting Wikipedia or looking at information that might be floating around out there for investors.  I think when I looked it up on Wikipedia I saw it had a number of delays and cost overruns which led to the costs of the construction rising.  As much hope I have for solar and wind to take a chunk of the market share, and for fusion to meet all our energy needs fifty years from now, when I look out and see the landscape, all of this still makes me see a need for nuclear fission power, even if a restructuring of the industry is necessary.