Back in the dark ages when I was in grade school, it was impressed upon me that the way to learn something is to keep repeating it until it makes sense. In this week’s Energy Report, I will put that hypothesis to the test.

In our November 19, 2020 Energy Report, we warned of the potential closure of Enbridge’s Line 5, and the possible, if not likely implications, for supply of Alberta crude on the input side, coupled with supply and prices of gasoline, diesel, and jet fuel on the output half of the equation.

The November 3, 2020 demand for closure of Line 5 in May of this year, by Michigan’s Democrat governor was buried in the confusion (or was it euphoria) of the U.S. presidential election.

With that political fog now clearing, it is imperative that clearer heads and thought processes must prevail for the sake of producers and consumers on both sides of the border.

Let’s assume that the line does close on May 1, 2021. This would cut off 550,000 bpd of Alberta crude supply to 10 refineries in Michigan, Wisconsin, Ohio, Pennsylvania, and Ontario. It would also reduce Michigan’s supply of propane and butane to a round number of zero.

But heck, the governor may say, ‘who needs propane for heating homes in May?’ Try saying the same thing in October governor!

So, what’s the plan to maintain supply of crude and refined products in Michigan?

Umm… there is no plan other than to supply refineries by truck or rail. But this would require 2,150 more tanker trailers per day, or 500,000 truck miles per month, to keep pace with refinery/consumer demand.

And, oh yes, we will need an additional 7,500 drivers to drive those miles!

OK, so the planning needs some work in the U.S., but what about the Canadian side?

If the line closes on May 1, the Sarnia refining hub will become a wheel with no spokes. A crude supply cutoff will be the final nail in the Shell refinery coffin that has been looking for a buyer for two years.

Gasoline and diesel prices will of course super spike not only in southern Ontario but within the entire “Trudeauleon” sacred electoral triangle of Montreal, Ottawa, and Toronto.

This of course will force our Prime Minister to spring to his phone and call his former and now renewed best buddy President-elect Joe Biden to put a stall to this madness.

I imagine the conversation to go something like this:

We/I need an election here in Canada don’t you know?

And we/I need to win it!

So, Joe here’s the deal: Sure, I’ll talk to Alberta, so you can shut down the Keystone XL pipeline, but in return, put off the Line 5 closure until after my run at a majority government; and as an added bonus I will increase the carbon tax to save the planet, you know the tax that the U.S. doesn’t even have?

– Roger McKnight – B.Sc., Senior Petroleum Analyst

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