Motivation behind gateway pipeline is one of the main reasons that lead the up surging price of Canadian crude oil.  For Enbridge Inc. pursuing “Asia Premium” is main motivation to launch this immune infrastructure project.  After Gateway pipeline fully utilized, in order to cover the cost and maximum profit, Enbridge Inc. will try they best to secure the price at a higher level.

The second reason is decrease domestic supply will eventually push up the Canadian Oil price.  As Canadian Oil Corporation would like to share the cake of “Asia Premium”, it is reasonable to believe oil companies are more willing to ship oil to East Asia.  Thus, decreasing domestic supply cannot meet to domestic oil demand.  Crude oil will eventually go up in the short run.

Unfortunately, referring to Robyn Allan’s study, even in the long run, Gateway pipeline will cause the crude price in Canada higher.  As decrease demand of oil and shrinking oil price, the Gateway pipeline turn into a burden for Enbridge Inc.

To sum up, Gateway pipeline will push up Canadian oil price and Canadian refineries will have to swallow the influence of increasing production cost.

Reference:

https://docs.google.com/viewer?a=v&q=cache:mixMV_J9Tw8J:www.afl.org/index.php/Download-document/566-2012-January-Allan-Northern-Gateway-Assessment.html+AN+ECONOMIC+ASSESSMENT+OF+NORTHERN+GATEWAY&hl=en&gl=ca&pid=bl&srcid=ADGEESjh1_DBw0hdmdWGWd0ISXPJqYlBsXDU_Jgnn_MJWNiUxTz-stxvIAWsFqGnjlfdwAo7JRZvS_L11Dyd_x48XCwOoglA3C7zXlDWnG3nYjKmoVJuv0ZbhoCEXmBpKdQyZfiBlk6-&sig=AHIEtbSYG6GYp4K0rd0y-gwaBGfPgOn8zA