Clifford Kraus
The New York Times
1/31/2011
In case you haven’t noticed, oil prices in the United States differ from those in the rest of the world. Usually the variance is just a few dollars, but over the last few weeks the difference between West Texas Intermediate prices and Brent crude, which is sourced in Europe’s North Sea, has widened to about $10.
That means that while Americans are buying oil at just over $90 a barrel, the price Europeans and Asians are paying is already over $100. And if the turmoil in Egypt spreads to its oil fields and the Suez Canal, a major transit point for European supplies, that spread could expand even more.
But so far the spread, which began widening before demonstrators took to the streets of Cairo, has little to do with the Middle East. It is mostly about a big buildup of crude in the Cushing, Okla., oil depot. Cushing is flush partly because demand in the United States is only slowly recovering. But most of all, it is a result of increasing imports of refined synthetic oil produced from Canadian oil sands, now the single most important source of imported oil.
Canadian oil producers love the way that Americans are growing increasingly dependent on them as opposed to our trading partners in the Persian Gulf. It is no coincidence that while most of the world’s stock exchanges experienced declines on Friday related to the crisis in Egypt, the Canadian stock market rallied. Particularly strong were the oil sands company stocks.
The shifting oil trade and the Egyptian crisis come as the controversy over the Keystone pipeline is heating up. The State Department needs to decide whether to grant approval to the pipeline, which is designed to substantially expand the flow of Canadian synthetic crude to the United States.
Environmentalists fiercely oppose the pipeline because oil sands production emits more greenhouse gases than production of most conventional oil products. Those who put a higher priority on national security would rather buy from Canada than from OPEC.
As Secretary of State Hillary Clinton and other senior administration officials try to hammer out a decision, the turmoil in Egypt may loom large.
Also at The New York Times, Wyoming Senator Seeks to Lasso E.P.A.
Senator John Barrasso, Republican of Wyoming, introduced legislation on Monday to block the Environmental Protection Agency from taking any action to regulate greenhouse gases to address climate change. His broadly written bill is one of several assaults on the E.P.A.’s regulatory authority that will be coming from Republicans and coal-state Democrats in both houses of Congress in coming days.
The Barrasso bill would overturn the agency’s 2009 finding that carbon dioxide and other greenhouse gases are harmful to public health and the environment. It would pre-empt any action by the E.P.A. to limit greenhouse gas emissions without specific Congressional authorization. It would forbid the use of several landmark federal laws for the purpose of dealing with global warming, including the Clean Air Act, the Clean Water Act, the National Environmental Policy Act and the Endangered Species Act.
“It’s time for the administration to face the facts: Americans rejected cap and trade because they know it means higher energy prices and lost jobs,” Mr. Barrasso said in a statement. “Washington agencies are now trying a backdoor approach to regulate our climate by abusing existing laws.”…
…The bill would also allow states to enact climate change legislation…
Related: Oil prices rise on Egypt unrest; Brent tops $100
Update: At Blazing Cat Fur, Teachers: The New Green Police
“Canada’s National Post has published a story that raised blood pressures in my household this morning. A six-year-old, kindergarten boy begs his mom not to wrap his sandwich – the one he’ll be eating for lunch at school – in a ziplock bag.”
Read the whole thing…
