As we await the emergence of newly elected U.S. president Joe Biden to break out of the chrysalis of the lame into a newborn duck administration; it’s near term energy decisions may be of concern to the Canadian oil sector because without Canadian energy there is no Canadian economy.
The way things are going, the ghost of the U.S. administration past is now knocking thunderously at our door.
In continuance of last week’s Energy Report — the future direction of the Keystone XL pipeline will soon be no direction with the announcement that President-elect Joe Biden has appointed former Secretary of State John Kerry as his climate czar. This completes the photo op trio (Barack Obama, Joe Biden, and John Kerry) who together announced that approval and construction of XL was not in the best interest of the U.S. consumer.
And boom!
That position was reversed with the Trump election, which was, in turn, reversed with the new and improved latest election results.
The revolving political door is moving so fast that the refining industry doesn’t know if it’s staying in the business building or going out the door.
The rush to green the climate has led to red when it comes to fossil fuel refining.
Globally speaking, to date, there have been 28 permanent refinery closures. In Canada and the U.S., 760,000 bpd of shared capacity along the Atlantic seaboard has been mothballed and will likely never come back.
This is a trend that is gathering momentum.
When it comes to demand for refined products, this pandemic-induced free fall has reached the point where the financial future of a given refinery, or even structure, and its vertically integrated parent company is relying on the crystal ball proclamations of the timing of a COVID-19 vaccine. As a result, diesel rack and gasoline pump prices are ignoring reliable and accurate weekly supply and demand data from the U.S. EIA.
The price movements for the consumer are now a virtual coin toss that has become an echo of the unfortunate daily pandemic stats, which have been buffered by the latest vaccine delivery predictions. This has come down to politicians imaging themselves as medical experts and medical spokespeople taking on the roles of politicians.
Neither are proven authorities in their assumed dissemination of the information they give us.
Where does this leave the future of the oil industry in this country? As the captain of the Titanic was rumoured to have muttered to his First Mate: “I think it’s melting!”
– Roger McKnight – B.Sc., Senior Petroleum Analyst
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