'OPEC obsolete' if Keystone pipeline OK'd: Pickens

CNBC ^ | http://www.cnbc.com/id/101098969 | Matthew J. Belvedere

[thackney]

The proposed Keystone XL oil pipeline from Canada to the U.S. would make "OPEC obsolete," billionaire energy entrepreneur T. Boone Pickens told CNBC on Wednesday.

"Canadians say they have 250 billion barrels [of oil]. That's exactly what the Saudis claim they have," he said in a "Squawk Box" interview. "You're sitting there with the same amount of oil available to the United States from Canada … as Saudi Arabia."

"But when you move the oil through the Strait of Hormuz everyday, it's 17 million barrels," Pickens said. "The Navy is shepherding a cartel daily through the Strait of Hormuz. And then to China and Europe, and we get 10 percent of it."

[Praxeologue]

The price of oil is based on worldwide supply and demand. Increased U.S. production will not move the price of oil, decrease OPEC revenues, or affect the funding for Islamic militants. Future Asian demand and Russian supply are the big factors. Expanded North American reserves would have a military value in the event of a world war that denies the U.S. access to oil beyond its shores, but the odds on that are remote. Canadian oil sands would replace Venezuelan heavy crude at Gulf Coast refineries that can handle it, but that's about it. The only utility of that is to provide Venezuela with further incentive to come to its political senses, but I don't see how that's our problem.

The U.S. should develop its own resources. That brings all the value added of exploration and production back to the U.S., at whatever cost per barrel, up to $100. In economist terminology, it helps the balance of payments, but in simple terms it means jobs and prosperity for the U.S.: something that should have been done long ago.

Because of oil's energy density and ease of use, it will be the primary energy source for transportation, worldwide, for decades to come. Let's not get sidetracked by the renewable craze.

As for Canada, they can ship their oil here by rail or build/reverse a pipeline to their underutilized eastern refineries. Losing Keystone won't hurt them much, or us at all.

[pgkdan]

The proposed Keystone XL oil pipeline from Canada to the U.S. would make "OPEC obsolete," billionaire energy entrepreneur T. Boone Pickens told CNBC on Wednesday.

And that is why the Saudis have ordered bathhouse barry to refuse to allow it's construction.

[longtermmemmory]

Picens is a scam artist. at least he appears as such on msnbc.

[thackney]

The price of oil is based on worldwide supply and demand. Increased U.S. production will not move the price of oil,

How does an increase in US oil supply not affect the global price of oil? Increases or decreases in OPEC supply decrease or increase the global price. The US is significantly engaged in the global oil market, we import about as much as we produce. Increasing our domestic production decreases our draw on the global supply.

Future Asian demand and Russian supply are the big factors.

The US already produces more oil as Russia.

Expanded North American reserves would have a military value in the event of a world war that denies the U.S. access to oil beyond its shores

Reserves are not production rates. Oil in the ground does not match oil flowing to the refinery. See Venezuela for a great example.

[B4Ranch]

>>It is about the oil but it’s not ALL about the oil. OPEC needs to be kept closer, not pushed away IMO.<<

Why, so more muslims will infiltrate the USA?

[Former Proud Canadian]

Read the whole article and you will know more about boutique blends than 99% of your fellow citizens. It is more useless regulation that adds cost:

http://www.weeklystandard.com/articles/bureaucratic-gas_634424.html

BTW, google can be useful.

[Former Proud Canadian]

I think Obama simply has a distaste for the oil business from drilling for it to refining it to using it. He doesn't like it.

Cheap energy will make a country wealthy and free. Wealth and freedom are anathama to this regime.

[Praxeologue]

Future incremental (increased) production, the delta, of U.S. supply and demand will be small, relative to increases in supply from countries like Russia and increases in demand from Asia. As such, increases in U.S. production will not have a significant impact on world oil prices. That should be a safe statement, without getting into a massive statistical analysis, much of it based on highly controversial data. My view is that the reason the Saudis are concerned the U.S. might become self-sufficient is more because they fear a gradual weakening the U.S. security umbrella as Persian Gulf oil becomes less important to the U.S.

You have a valid point that proven reserves of oil in bitumen form are not militarily significant, unless they are being produced. It's not just a matter of drilling some development wells. I think that military concerns are based on a remote possibility.

[thackney]

Future incremental (increased) production, the delta, of U.S. supply and demand will be small, relative to increases in supply from countries like Russia

I do not believe that is true. For 2013 Russia production growth is expected to rather small compared to the US. In 2014 they are expected to fall in production rate while the US will have significant production growth.

As such, increases in U.S. production will not have a significant impact on world oil prices.

The US is having the largest production increases in the world.

[Praxeologue]

Decisions on big-cap items like pipelines need to be made based on a best estimate of demand a decade or so out, not next year. For example, Canadian oil sands production is forecast to grow from 1.8 million barrels per day in 2012 to 5.2 million barrels per day in 2030: http://www.capp.ca/getdoc.aspx?DocId=227308&DT=NTV Long-term, Canada will do better finding its own refinery solution.

[Erik Latranyi]

3. End "boutique blend" gasoline grades.

What about state's rights?

[thackney]

Decisions on big-cap items like pipelines need to be made based on a best estimate of demand a decade or so out

Okay, you want to change to a different topic? Can you show me a source with a good track record of being correct in demand a decade in advance?

Canadian oil sands production is forecast to grow from 1.8 million barrels per day in 2012 to 5.2 million barrels per day in 2030

Thirty year predictions are interesting games of "what if". In that time frame we might lose production rates or double them. To many variables like politics and new technologies along with alternative source to even pretend it is a fixed number.

I'm not sure what that has to do with the US not affecting oil prices but Russia will.

[exit82]

Thanks for that insight.

I want us to be energy UN-dependent on the Middle East.
Once and for all.

I have been waiting since 1974.

[Praxeologue]

Thanks for the chart. The EIA certainly covers all the bases, just like any government agency.

You can bet that every oil sands participant committing to a new project is relying on a forecast that goes out well beyond the term of project financing. That is where CAPP gets their numbers on pp. 5-7 and 36 & 37 of their forecast.

The Alberta oil sands are but one example of forecast production increases. They are also the most accessible. We won't find that kind of transparency from Russia, for example.

My observation about lack of price impact from U.S. production was intended to throw cold water on the boosterism that promises low gas prices at the pump. I don't think we'll see that, even if the Feds open up offshore, Federal lands and ANWR to drilling. The benefit to the U.S. will be in jobs and prosperity from developing our own resources, rather than paying others for theirs.

[Former Proud Canadian]

“State’s rights” went out the window in the 1860’s. Get with it, citizen.

[RC one]

And your overlooking the fact that dollar hegemony is just as vital to our national interests as massive amounts of oil. I would argue that it is more vital in fact. All of western capitalism is hinged on our reserve currency status and that fact is not lost on the enemies of western capitalism. This is why we do the, apparently, crazy things that we do. Our entire foreign policy is built up around maintaining this arrangement. If it ends, the house of cards collapses. There’s no way we’ll let that happen.

[RC one]

No. I noticed that we’re going to be exporting a lot of that domestic production which seems reasonable to me as we can make money off of it, have increased influence over the overall market, demand dollars for the product, and generally maintain the petrodollar arrangement and the benefits that that confers. It seems like a well balanced approach IMO.

[enduserindy]

Our dollar would still be a petrol dollar. Our foreign policy is incoherent and counterproductive in the maintaining of dollar value. With the presses running so hard I’m surprised the house of cards hasn’t already shifted far enough for us to make domestic oil production more important than any foreign affair issue.