I pressed the wrong button on my TV remote the other day, and ended up watching, or more accurately, enduring the drama of the parliamentary program, Question Period. As I understand it, this is when the party in opposition is constitutionally tasked with asking the party in power to clarify actions, or non-actions, taken on certain matters of the day.
In my opinion, Question Period is better described as the time allotted when no questions get answered. If President Biden is looking for some down-home Canadian comedy during his, “I-just-happened-to-be-in-the-neighbourhood” visit, he should sit back and take in the proceedings.
As a consumer, I have questions when it comes to the near-term pricing of crude oil and its refined derivatives. The latest Energy Information Administration’s (EIA) report indicates that crude oil levels continue to increase and are now 8% above the 5-year average. This supports the conclusion that gasoline and diesel prices should be trending lower as the crude oil refinery feed stocks are in good shape.
But this is not the case.
Gasoline inventories fell by 6.4 million barrels forcing wholesale and eventually pump prices up by 3 cents per litre overnight.
So, this must have meant domestic demand increased right?
This too, is not the case.
In fact, demand for gasolines of all grades decreased as did demand for diesel while jet fuel remained flat.
So, how can you have a drop in supply with no demand?
The answer lies in the export alternative. The North American pricing benchmark for crude, that being West Texas Intermediate (WTI) is trading $6/bbl lower than the global marker Brent Crude. In addition, labour problems in Europe are causing delivery restrictions for gasoline and diesel, forcing some refineries to curtail operations. The end game is that U.S. producers are exporting crude and refined products for a bigger bang for their buck, and it’s the North American consumer who is paying for it.
So as President Biden continues to draw from his own Strategic Petroleum Reserve, which is being loaded onto tankers and exported, his own electorate, as well his neighbours to the north, will pay for this decision with higher pump and rack prices.
You’re the audience. Ask the question!
I can almost hear you saying, “Question? What question?”
– Roger McKnight – B.Sc., Senior Petroleum Analyst
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