More Tar Sands Evilness

"The Communications, Energy and Paperworkers Union of Canada (CEP) is opposed to Keystone XL. “The pipeline will create environmental destruction, take potential upgrading and refining jobs away from Canadians, and put our country’s energy security at risk,” says CEP President Dave Coles. Coles will be joined by other CEP officers and Alberta Federation of Labour President Gil McGowan.
CEP has opposed Keystone XL since 2009 through submissions to the National Energy Board, an appeal to Cabinet and leave from the court for judicial review. “Now that U.S. regulators are asking whether the Keystone XL pipeline is in the best interests of their country, we want Canadian decision makers to ask themselves the same question with all the facts in front of them.”"

http://www.cep.ca/mediarelease/why-oil-workers-opposed-keystone-xl

I take great amusement from the idea that that union is playing the environmental and jobs card.

Upgrade and refine it all in Alberta and they will tell you that it's all pixie dust and rainbows.

There is no way any company is going to invest in upgrading and refining capacity in Canada when there is tons of excess capacity sitting in already built refineries in the Gulf Coast.

Canada also really has no reason to do upgrading here. It would mean multiple pipelines would need to then go to market instead of 1, and you would lose on the economies of scale. We're talking about multi-billion dollar refineries here with 30-40 year lifespans. These aren't small projects.

How it currently works, raw product is extracted in Canada. That product is upgraded to a level that it can be transported and then transported by a single pipeline to refineries in the Chicago area or the Gulf Coast (close to end use market).
Once the product is refined you then have multiple grades of product available. Each of these require their own storage and their own seperate pipelines to now be transported to final use markets.

To keep costs down, and to take advantage of economies of scale you would prefer to keep the number of pipelines used to a minimum as 1 large pipeline is easier and cheaper to operate than 2-3 smaller lines.

^^^^^^^^
So you're saying, to cripple NA's oil refining capacity, it would only take an accident, or couple of acts of sabotage or a localized natural disaster in the wrong place at the wrong time.

I also fully understand the oil industry's reluctance to invest in multi-billion dollar projects to diversify its refining base. I mean, where is the money for this type of investment supposed to come from? Its not like the oil industry or Corporate America is has trillions of dollars in cash hoarded and sitting around.

There is also very small profit margins for operating such downstream facilities as a refinery. Who wants to dump Billions into a refinery, when the profit margins will be so slim? If the price of oil is really low, they could be operating at a loss.

Just doesn't make economic sense.

^^^^^^^^
So you're saying, to cripple NA's oil refining capacity, it would only take an accident, or couple of acts of sabotage or a localized natural disaster in the wrong place at the wrong time.

I also fully understand the oil industry's reluctance to invest in multi-billion dollar projects to diversify its refining base. I mean, where is the money for this type of investment supposed to come from? Its not like the oil industry or Corporate America is has trillions of dollars in cash hoarded and sitting around.

Sure, i guess you could TRY and sabotage refineries near the gulf coast. Too bad they are considered vital to national interests are as such have department of homeland security surveillance 24/7.
During the H1N1/pig flu outbreak in 2009 or whatever it was these were quarantined and no one was allowed in or out of the facilities to ensure they wouldn't shut down. They have full contigency plans to deal with every kind of imaginable disaster, and its why when hurricane's coming rolling into the regions they go into their emergency mode to deal with them.

To even get on site, even as a Canadian employee of the company when I was last down in Texas City, i had to go through the equivalent of immigration with Homeland Security including providing passport and stuff simply to enter the site for a meeting.

You're not the first to think that this would be a key center for an attack. Their on the list of target assets and as such are monitored by the gov't. The roads in and around Texas City you're not even supposed to stop on as it raises red flags. I stopped to take photos and was promptly met with Texas's finest asking me what i was doing.

While the general public likes to think that oil companies have money pits like scrooge mcduck they generally dont. Exxon is the exception to the rule in corporate business. Almost every company regardless of industry takes any profit and reinvests it into a different area of the their business so that that money can begin to generate its own profit. Better than sticking it in the bank and earning interest.

Almost every company regardless of industry takes any profit and reinvests it into a different area of the their business so that that money can begin to generate its own profit. Better than sticking it in the bank and earning interest.

Your theory is nice, unfortunately reality has the tendency to intrude …

The SP 500 combined is currently holding onto $2 trillion in cash (that's the latest figure - the link below is from 2010), according to Bloomberg:

http://www.bloomberg.com/apps/news?pid=newsarchive[HTML_REMOVED]sid=a6kXsL1Q5FYc

Not everything a company needs to finance is directly profitable (eg research and development, customer support), so why bother funding these things if you can make a 2% return on your cash reserves, right?

While the general public likes to think that oil companies have money pits like scrooge mcduck they generally dont. Exxon is the exception to the rule in corporate business. Almost every company regardless of industry takes any profit and reinvests it into a different area of the their business so that that money can begin to generate its own profit. Better than sticking it in the bank and earning interest.

You might want to update your list of corporate moneybags … 7 of 20 the most profitable companies on Earth are in the petroleum business.

http://money.cnn.com/magazines/fortune/global500/2011/performers/companies/profits/

if they have trouble making ends meet, there is a serious problem.

Almost every company regardless of industry takes any profit and reinvests it into a different area of the their business so that that money can begin to generate its own profit. Better than sticking it in the bank and earning interest.

HAHAHAha ah haha. I fixed this to reflect the truth instead of some pie-in-the-sky dream world;

Almost every company regardless of industry takes any profit and distributes it to the CEO and board members in bonuses so that the money can purchase their new yachts. A little bit of the leftover crumbs goes to shareholders as dividends, while an even tinier bit gets re-invested into the company for growth.

Kn.

Someone drank the kool-aid!

Your theory is nice, unfortunately reality has the tendency to intrude …

The SP 500 combined is currently holding onto $2 trillion in cash (that's the latest figure - the link below is from 2010), according to Bloomberg:

http://www.bloomberg.com/apps/news?pid=newsarchive[HTML_REMOVED]sid=a6kXsL1Q5FYc

Not everything a company needs to finance is directly profitable (eg research and development, customer support), so why bother funding these things if you can make a 2% return on your cash reserves, right?

You might want to update your list of corporate moneybags … 7 of 20 the most profitable companies on Earth are in the petroleum business.

http://money.cnn.com/magazines/fortune/global500/2011/performers/companies/profits/

if they have trouble making ends meet, there is a serious problem.

no one said anything about having trouble making ends meat. Like i outlined before, of course oil and gas in absolute terms is going to generate more profit than other industries simply due to their size.

Their cash holdings however, which is what i was referring to, are generally not that large (exxon Mobil aside) as they reinvest.

Regardless of cash holdings companies currently have, the point someone was trying to make is these companies should just build stuff because they have cash on hand.
That's like telling a rich person they should just spend money because. You don't get rich by making stupid financial choices, i dont know why we would look at a corporation any differently.
Investing in refining capacity in Canada would be an imprudent investment and likely wouldn't be recovered. Not to mention the supporting infrastructure that would have to go in along with it.

HAHAHAha ah haha. I fixed this to reflect the truth instead of some pie-in-the-sky dream world;

Almost every company regardless of industry takes any profit and distributes it to the CEO and board members in bonuses so that the money can purchase their new yachts. A little bit of the leftover crumbs goes to shareholders as dividends, while an even tinier bit gets re-invested into the company for growth.

Kn.

you're kinda like the fat annoying kid in the class. you start off all gung-ho to discuss things, and when things dont go your way you just sit there and make noise.

Their cash holdings however, which is what i was referring to, are generally not that large (exxon Mobil aside) as they reinvest.

Regardless of cash holdings companies currently have, the point someone was trying to make is these companies should just build stuff because they have cash on hand.
That's like telling a rich person they should just spend money because. You don't get rich by making stupid financial choices, i dont know why we would look at a corporation any differently.

Chevron has $2 billion more cash than Exxon, and 5 other oil companies have even more cash on hand.

http://www.standardandpoors.com/products-services/articles/en/us/?assetID=1245282374054

A corporation is not a "rich person" … you may have some inkling of where the cynicism comes from when investing in itself, returning value to shareholders, or investing in community/nation/economy are considered "stupid financial choices".

Chevron has $2 billion more cash than Exxon, and 5 other oil companies have even more cash on hand.

http://www.standardandpoors.com/products-services/articles/en/us/?assetID=1245282374054

A corporation is not a "rich person" … you may have some inkling of where the cynicism comes from when investing in itself, returning value to shareholders, or investing in community/nation/economy are considered "stupid financial choices".

i didn't actually realize chevron had upped its cash holdings so much in the last year or so. i'll be the first to admit i'm not looking at their financial statements very closely aside from where they are ranking wrt to the others.
exxon used to be the top dog in that area, and prior to recession times, really went against the grain as most were simply reinvesting.

i dont think any of the things you listed can be considered "stupid financial choices", they all play their part, but its up to the CEO and the Board to determine how they want to split monies across those areas.
I dont have time to look it up right now, but you also might find there is a bit of a trend occuring in the last 5 years if you look at where the economy has gone vs cash holdings of companies. I haven't looked, but you might find that companies have increased short term cash holdings to buffer themselves from market forces and ensure they can ride out any short term storms as going out to market and issuing debt might not be as easy as it once was. Again…i haven't looked across the companies and the last few years to see if in fact there is a trend, but it wouldn't surprise me to find one.

again though, i get back to prudent investment of refineries.
WHY would a company simply because it has cash on hand invest in refineries? This isn't a school they are building, or any kind of philanthropic work they are doing. It's eroding shareholder dividends, and increasing liability.

again though, i get back to prudent investment of refineries.
WHY would a company simply because it has cash on hand invest in refineries?

Let me guess: for the same reason companies built existing refineries?

again though, i get back to prudent investment of refineries.
WHY would a company simply because it has cash on hand invest in refineries? This isn't a school they are building, or any kind of philanthropic work they are doing. It's eroding shareholder dividends, and increasing liability.

Maybe be because investing in refineries would lead to reliable supply and reduce profits? Call me cynical but … here is a sampling of some "good news" stories if you are in the oil biz:

Gas shortage due to Shell refinery repairs

Gasoline Rallies on Speculation Refinery Repairs Lower Supplies

Refinery repairs will prolong gas shortages: Imperial

Shell refinery shutdown a factor in gasoline shortage

Refinery 'shortage' behind high oil price

Gas shortages continue to plague N.S. motorists

Sinopec Halts Fuel Exports to Ensure Domestic Supply Amid Refining Losses

Experts link Gulf fuel crisis to lack of investments in refineries

Refinery problems leave Petro-Canada out of gas