The advantages of using alternative energies


Alberta Oilsands Enough to Impact World Oil Market Prices? Part 2 of 3

To continue from where we left off in partcrude oil, or about 1,018 thousands of
1:With a viable world market within strikingbarrels per day. This value is expected to
distance, this article will argue that theincrease to approximately 2.7million barrels
only method for inducing a change in OPECper day in the year 2012. Saudi Arabia
behaviour is to 'steal' import supply fromaccounted for 16.8% of total crude imports
the United States. It is unlikely thatand Venezuela was responsible for 13.2%. Only
oilsands products will make it to any othertwo OPEC producing nations will be considered
world market due to logistic costs. Shippingin this example since expected future output
oil to the nearest transport hub, Britishfrom bitumen reserves in year 2012 cannot
Columbia or refiners in Ontario, would be thedisplace all OPEC exports to the US. I chose
only alternative for the crude. It is moreto include the largest two exporters and will
efficient to create and build upon theaccount for their potential losses from an
existing transportation system directly toexpanding oilsands industry. (These figures
the United States. As a result, there isdo not reflect recent 2006 market trends of
potential for oilsands exports to replaceincreasing and increasing crude prices and
OPEC exports to the US. However, the onlythe impact on consumer consumption.)Assuming
method of achieving this is by increasingmarket conditions remain favourable for
current output and reducing lifting costs.oilsands production, and the target volume in
The question of whether US importers will2012 is achieved, how could the US import
increase their Alberta consumption for oil ismarket appear? Using regression analysis on
dependent on the cost. Is it cheaper toUS imports, and OPEC production, one can
construct a pipeline directly from oilsandsextrapolate future market shares and make
projects in Alberta, or is it cheaper toassumptions regarding possible OPEC losses.
import from the Middle East? Regardless ofExcluding any future market shocks from
location, the consumer, or in this case theeither supply or demand, US imports in the
nation, will import from the lowest costyear 2012 will amount to approximately 16.045
producer. This suggests Saudi Arabia willmillion barrels per day. This is an increase
continue to export crude to the United Statesof about 32.2% from the year 2002. Increasing
so long as they can maintain lower costs. Thethe import percentage share of the three
higher transportation costs are compensatedproducers mentioned above by 32.2% will
by the lower marginal lifting costs. Thus,provide 2012 daily export values. Using the
one of the major factors in determining the2.7million bbl/d oilsands value, and
success of the oilsands export market willsubtracting the future export volume of
hinge upon the producer's ability to maintainAlberta crude, will provide a residual value
an affordable product under marketwhich can be applied to an increase in export
conditions. Presently this is the case, highvolumes. Assume for a moment this entire
market prices support the market forquantity is exported and none is consumed
expensive bitumen exports.Potential Size ofdomestically. 10.77% of OPEC's entire
United States Export MarketCurrently, Albertaproduction in 2012 may be attributed to the
accounts for over 10% of total AmericanUS import market, if the oilsands surplus is
imports of crude oil. It is feasible thisapplied solely against OPEC's share, it will
value will increase when oilsands productionbe reduced to 6.71%, or a loss of about 494
expands so long as it remains cost effectivemillion barrels per year. The absolute
to the importing market. Using data primarilymaximum Alberta oilsands could displace total
from the BP Statistical Review of WorldOPEC production in year 2012 is just over 4%.
Energy for 2004, with some data componentsIs this value large enough to attract the
from the Alberta Energy Department, one canattention of OPEC? Will OPEC prefer to hold
extrapolate future US crude import volumesoil reserves for future production while
and percentage share amongst importers. Inwatching the oilsands deplete, or will they
the period between 1993 and 2003, the Unitedattempt to recapture the lost market
States experienced declining production whileshare?Part 3 and the conclusion is now
supporting an increasing consumption trend.available for your world oil reading
Imports therefore steadily increasedpleasure....DiscussEconomics is an
throughout this period. The result of aninformative Economics forum with complete
expanding import market share is good news tocategories for foreign exchange rate
the oilsands producer, especially withdiscussion, world oil and other energy
declining world reserves. Examining 2002sectors, micro and macro choices, personal
import market share states Alberta alonefinances, interest rate movements, and other
contributed 11.3% of total US imports forkey economic indicators.



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