Why do I get the distinct impression that some Canadians and others in the U.S. are haughtily ‘tut-tutting’ when we read about the current energy mess in the UK and continental Europe?
Surely that can’t happen here on the Island of North America.
I mean, in this country, we are neighbours of the largest producer and exporter of crude and refined products in the world.
And don’t forget that during a natural gas crisis, the U.S. is going to be the go-to supplier for exports of liquid natural gas to the UK – and the rest of Europe.
While here in Canada we are the number one supplier of crude to the number one refiner of our crude!
And, it gets better for the U.S. with the Enbridge Line 3 set to open tomorrow, which will bring 760,000 bpd of Alberta crude from Edmonton to Superior, Wisconsin.
From there it goes to mid-west refiners to provide gasoline and diesel to the U.S. consumer.
How’s that for service?!
So, all is politically quiet on the U.S. mid-western front.
But that’s not the case when it comes to Michigan because Governor Gretchen Whitmer has pulled out of mediation talks insisting that Line 5 be shut down. And, with an election a year away, she needs to ensure that the line is closed.
If Line 5 were to be shut down though, the governor may want to tune into what is happening in the UK with six-hour line ups at the pumps trying to buy gasoline from dry tanks.
This is not because of a lack of crude or refining capacity, the fact is that the UK is short 100,000 truck drivers!
Closure of the Enbridge line will mean that the refineries in Ontario, Quebec, Michigan, Ohio, and Pennsylvania will have to be supplied with Canadian crude by rail and/or by 2,000 trucks every day.
There are not enough tanker trucks to load that much crude, and there are not enough drivers to drive those tankers.
This alone will drive prices up at the gas pump and diesel loading racks by 6 to 16 cents per litre.
And this may be a low range because demand for middle distillates for export to Europe and Asia as a substitute for the rapidly evaporating supply of natural gas will pull prices up even higher.
Then throw in the upcoming winter season…
Where will prices be?
Pick a number, any number.
Just as long as it’s a very high one.
– Roger McKnight – B.Sc., Senior Petroleum Analyst
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