Question: Why the creation of the Gateway pipeline will raise the price of crude oil for Canadian refineries.(# http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45/#)
Response
In large probability,the creation of the Northern Gateway pipeline is going to rase the price of crude oil for Canadian refineries,based on the following reasons:
First,the main reason for Canadian government and the oil companies to build the pipeline is that exporting oil to Asia can produce big profit for Canada due to the “Asian Premium”,which means the price of each barrel of oil sold to Asia is a bit little higher than that in North America. So in order to garantee profit, the gevernment and the oil companies will make the best endeavor to secure this premium.By doing this, it will effectively raise Canadian oil price.
Second,the amount of oil produced during a certain period is relately fixed.Exporting oil to Asia will reduce Canadian local oil supply.As long as the Canadian demand for oil is not apparently goes down,the equillibrium price of oil will definetely increase.
Third,the Canadian demand for oil may increase.According to a statistics,the construction of Northern Gateway pipeline will need 6-billion ribbon of steel in total,which will push the oil price up.
Reference:
2.http://thetyee.ca/News/2012/02/02/Northern-Gateway-Inflationary-Threat/
3.http://www.cbc.ca/asithappens/episode/2012/09/04/the-tuesday-edition-45/#