| To continue from where we left off in part | | | | crude oil, or about 1,018 thousands of |
| 1:With a viable world market within striking | | | | barrels per day. This value is expected to |
| distance, this article will argue that the | | | | increase to approximately 2.7million barrels |
| only method for inducing a change in OPEC | | | | per day in the year 2012. Saudi Arabia |
| behaviour is to 'steal' import supply from | | | | accounted for 16.8% of total crude imports |
| the United States. It is unlikely that | | | | and Venezuela was responsible for 13.2%. Only |
| oilsands products will make it to any other | | | | two OPEC producing nations will be considered |
| world market due to logistic costs. Shipping | | | | in this example since expected future output |
| oil to the nearest transport hub, British | | | | from bitumen reserves in year 2012 cannot |
| Columbia or refiners in Ontario, would be the | | | | displace all OPEC exports to the US. I chose |
| only alternative for the crude. It is more | | | | to include the largest two exporters and will |
| efficient to create and build upon the | | | | account for their potential losses from an |
| existing transportation system directly to | | | | expanding oilsands industry. (These figures |
| the United States. As a result, there is | | | | do not reflect recent 2006 market trends of |
| potential for oilsands exports to replace | | | | increasing and increasing crude prices and |
| OPEC exports to the US. However, the only | | | | the impact on consumer consumption.)Assuming |
| method of achieving this is by increasing | | | | market conditions remain favourable for |
| current output and reducing lifting costs. | | | | oilsands production, and the target volume in |
| The question of whether US importers will | | | | 2012 is achieved, how could the US import |
| increase their Alberta consumption for oil is | | | | market appear? Using regression analysis on |
| dependent on the cost. Is it cheaper to | | | | US imports, and OPEC production, one can |
| construct a pipeline directly from oilsands | | | | extrapolate future market shares and make |
| projects in Alberta, or is it cheaper to | | | | assumptions regarding possible OPEC losses. |
| import from the Middle East? Regardless of | | | | Excluding any future market shocks from |
| location, the consumer, or in this case the | | | | either supply or demand, US imports in the |
| nation, will import from the lowest cost | | | | year 2012 will amount to approximately 16.045 |
| producer. This suggests Saudi Arabia will | | | | million barrels per day. This is an increase |
| continue to export crude to the United States | | | | of about 32.2% from the year 2002. Increasing |
| so long as they can maintain lower costs. The | | | | the import percentage share of the three |
| higher transportation costs are compensated | | | | producers 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 the | | | | 2.7million bbl/d oilsands value, and |
| success of the oilsands export market will | | | | subtracting the future export volume of |
| hinge upon the producer's ability to maintain | | | | Alberta crude, will provide a residual value |
| an affordable product under market | | | | which can be applied to an increase in export |
| conditions. Presently this is the case, high | | | | volumes. Assume for a moment this entire |
| market prices support the market for | | | | quantity is exported and none is consumed |
| expensive bitumen exports.Potential Size of | | | | domestically. 10.77% of OPEC's entire |
| United States Export MarketCurrently, Alberta | | | | production in 2012 may be attributed to the |
| accounts for over 10% of total American | | | | US import market, if the oilsands surplus is |
| imports of crude oil. It is feasible this | | | | applied solely against OPEC's share, it will |
| value will increase when oilsands production | | | | be reduced to 6.71%, or a loss of about 494 |
| expands so long as it remains cost effective | | | | million barrels per year. The absolute |
| to the importing market. Using data primarily | | | | maximum Alberta oilsands could displace total |
| from the BP Statistical Review of World | | | | OPEC production in year 2012 is just over 4%. |
| Energy for 2004, with some data components | | | | Is this value large enough to attract the |
| from the Alberta Energy Department, one can | | | | attention of OPEC? Will OPEC prefer to hold |
| extrapolate future US crude import volumes | | | | oil reserves for future production while |
| and percentage share amongst importers. In | | | | watching the oilsands deplete, or will they |
| the period between 1993 and 2003, the United | | | | attempt to recapture the lost market |
| States experienced declining production while | | | | share?Part 3 and the conclusion is now |
| supporting an increasing consumption trend. | | | | available for your world oil reading |
| Imports therefore steadily increased | | | | pleasure....DiscussEconomics is an |
| throughout this period. The result of an | | | | informative Economics forum with complete |
| expanding import market share is good news to | | | | categories for foreign exchange rate |
| the oilsands producer, especially with | | | | discussion, world oil and other energy |
| declining world reserves. Examining 2002 | | | | sectors, micro and macro choices, personal |
| import market share states Alberta alone | | | | finances, interest rate movements, and other |
| contributed 11.3% of total US imports for | | | | key economic indicators. |