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US Domestic Oil Production to Impact Canadian Export?

With continued expansion in US exploration and development of domestic oil reserves, expanding existing supply and temporarily decreasing foreign oil imports, Canadian companies are expecting the ramification. But will the increase supply in the US hurt Canadian exports? This article seems to think so.

The US need for oil is so huge, and without any push to truly decrease consumption, Canadian oil is safe from a radical decrease in demand. One can also assume that with China continuing it’s increase in domestic production that their demand will only increase as well (not sure what the global ramifications of fuelling Chinese expanding are though, a post for another time.)

There will always be demand and if anybody is really going to suffer it will be the most expensive alternatives. Although Canadian oil, mostly from the oilsands, is expensive to produce, it also comes at a far less political cost than say Saudi oil.

BUt one element the article does talk about that will be expected once more domestic oil comes online (for everybody who’s producing as well) is the price. Increase supply will only mean a decrease in crude prices. THat may dampen enthusiasm to produce oil.

With the impending Keystone pipeline set to receive approval in the midst, Canadian oil appears safe. How much of that oil comes out of the ground in the short term though depends on future price which may depress with increased US domestic oil supply.

Of course that’s only a short term problem for profit maximizing firms. THe resource will stay in the ground a little longer which benefits future generations….but then again few corporations extracting oil think of that….

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