Oil price differential doesn’t exist

Oil price differential doesn’t exist

This great hysteria for building both Trans Mountain and Keystone is based on a chimera

Editor, The Times:

It must amuse those who vote “the other way” to watch two NDP premiers square off with each other over the Trans Mountain Pipeline.

Well, fair enough. As I’ve said before, my own objection to Trans Mountain – never mind the wales, snails, aboriginal or environmental concerns – is that twinning simply doesn’t make any financial sense whatsoever.

READ MORE: Trans Mountain twinning makes no financial sense (Dec. 22, 2018)

I was always under the impression that the price differential and the current low price for oil were the biggest factors in all of this. However, Robyn Allan, respected economist (“Scotiabank leaks credibility with oil report,” Mar. 5, Vancouver Sun) put a different wrinkle into this whole Trans Mountain – Keystone Pipeline thing.

According to Allan, the amount of Canadian crude subjected to the light-heavy differential is only about 10 per cent, 400,000 barrels as opposed to Scotia Bank’s estimate of 2.1 million barrels.

Are their number crunchers not up to the job? After all, this is one of Canada’s big banks.

In another development in true Keystone Kop’s fashion, Trans Canada’s pipeline failed last November. According to Robyn Allan, “Until Keystone sprang a leak there was sufficient pipeline take-away capacity to deliver Western Canadian oil in market.”

So if I’ve interpreted Robyn Allan right, this great hysteria for building both Trans Mountain and Keystone is based on a chimera, a non-existent or very minimal light-heavy price differential.

Is it just to bail Scotia Bank, Kinder Morgan or both out? This makes this whole “… build the pipelines before Canada goes broke or the Russians manage to sabotage the whole works” worse instead of better

Dennis Peacock

Clearwater, B.C.