Thread by @Big_Orrin

1. Thread

The shale revolution has undoubtedly helped keep prices down over the last 15 years. its increase has helped balance the market.

However, it is the Canadian Oil sand sthat have actually had a much more pronounced effect and have allowed the US to use oil as a weapon

2. Shale is light sweet crude and what did it do. Well it menat that US imported less light sweet crude. But it has had the effect of flooding the Atlantic basin with cheap light sweet crude oil.

Oil sand son the other hand has been far more important.

3. Oil sands has helped shale because it allowed the US to reverse pipeline directions to send shale to USGC. Without oil sands, US would have needed to build many more pipelines to move shale south while moving heavier crudes north. thjose pipelines may have been keystone XL'd

4. Now here is the kicker.

in 2006, The United States General Accountability Office ran models and found 6 hypothetical scenarios of oil disruption when the US SPR would need to be used. it only neede done of them to happen for the SPR to release.

The six scenarios were

5.
- Hurricanes in USGC
- Strike by Venezuelan Oil workers.
- Terrorism event at an oil facility in Saudi Arabia
- Iran oil embargo
- Closure of the Straits of Hormuz
- Saudi stopped producing oil.

It has to be remembered that only one of these would force the SPR to release.

6. In fact the top 4 of those events have happened at the same time. Venezuela and Iran were in effect reverse embargoes.

It was Oil sands that allowed those to happen because the oil lost to the market in Venezuela, Iran, Saudi were all medium and heavy crude oils.

7. Shale could not replace these especially to the US. What replaced them was Canadian Oil Sands.

This is why a Canadian embargo on the US is incredibly powerful.

Padd 2 and 4 would run out of gasoline within 1 to 2 months. And with no way to replace it.

8. US just does not have infrastructure anymore to cover this loss. It would take and years to get the system transformed

Pipelines operate North to South, it would take 30,000 trucks per day to move 1.8mbpd of crude to padd 2/4 refineries, no train loading facilities in south

9. The US is absolutely paranoid about energy. The energy independence and dominace rubbish is a way to hide that paranoia. Beat your chest and pretend you are a force.

But the US in oil is really only the equivlent of Europe in NATO. Oil sands is equivalent of the US in NATO.

10. Without Oil sands you would effectively have to find 4mbpd of heavy production from elsewhere. Saudi may have only 2mbpd to cover it becaus eof quality, UAE may have 1mbpd. where is the other 1mbpd from?

11. That would be on top of billions of $ needed on infrastructure changes to be able to process it

I hear about investment in refining to run more shale. Yes but would cost billions and take years to achieve. it would also leave you with a slate of products you may not want

12. Further, US is extremely wasteful with regard to energy and oil in particular. You are likely at somepoint not to far in the future, to return to increasing oil imports because you have wasted your shale oil. But Canadian Oil sands will remain a supply for a much longer time

13. And as I said before, treat the Canadians well and oil sands becomes a North American SPR. Treated it badly and it could become a bigger achilles heel than OPEC ever has been.

Get your heads out your arses.