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Just terrible in Fort McMurray May 5, 2016

Posted by hslu in Life, Oil.
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My heart goes out to the people of Fort McMurray who have been evacuated due to a ragging wild fire going through the middle of the town. The entire population of Fort McMurray, about 80,000, have been ordered to leave. The fire has consumed 1,600+ structures in the city and the damage could be in the billions.

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Fort McMurray was a small oil sand town when I visited it in the late 1980’s while working in Calgary, Alberta, Canada. Heavy oil is in my blood and oil sand has a special place in my heart because, except a two year period, I have worked on heavy oil and oil sand all my career.

I, along with a colleague from our Canadian branch, used to peddle a small boat up and down the Athabasca River near Fort McMurray to learn the unique geological features of the oil sand outcrops.

Well, memory from the good old days has faded away but the news of the terrible destruction to Fort McMurray reminded me of the happy days my family spent in Canada.

Time flies and too bad it only goes in one direction.

OPEC, oil price and unintended consequences November 28, 2014

Posted by hslu in Economics, Energy, Middle East, Oil.
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OPEC has decided to keep its production at 30 million barrels a day which was expected by the market. WTI is down to $70/bbl right after the news was announced. I guess that shale oil is selling below $60/bbl now which is below the costs of many shale oil projects.

Many articles talked about decline of US shale oil production which it will in time. But there is another angle to this headline: heavy oil and oil produced from oil sand projects face even higher pressure because prices for heavy oil are even lower but they cost more to produce.

Oil price will drift lower into the $60 range and more pain will be felt in the oil industry. Oil company stocks will face downward pressure until things stablize in the supply and demand picture in the world.

Wait to pick up some bargains when there is blood on the street.

There are fights breaking out on the main street but only some blood is spilled. More actions will come.

If I have to guess, just a guess, the bottom is closer to current level than the top is.

Well, your guess is just as good as mine.

TD vs C December 25, 2010

Posted by hslu in China, Cold War, Economics, Energy, Global Affair, jobs, Politics, stocks.
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The Canadians I knew in general detested Americans based on my personal experience from working with them in Calgary for a year and half in the late 1980’s and after that  till 2000 when I left the oil company I worked for 20 years.

For instance, my salary was roughly the same as that of my Canadian colleagues with similar qualifications. But, my purchasing power in Canada was almost twice as much as my Canadian friends because I was paid in US dollars, not to mention that I paid considerable less taxes than they did.

They were proud of their health care system but they didn’t tell me that they had to wait three to nine months for an MRI.

Yet many of them at the same time have this unspoken jealous sentiment about the United States as well.

Well, time has changed and I bet most Canadians are watching the malaise in the United States with a smirk.

And they couldn’t help but say: “The US did it to themselves and they  deserved every bit of it.”

I don’t blame them at all.

Well, Canadian dollar is now on par with the US dollar if not more valuable. Canada didn’t have sub-prime mortgage and they played according to the rules. As a result, they escaped the world wide financial crisis almost totally unscathed. Canadian’s natural resources, especially its heavy oil and oil sand resources, are the target of acquisitions from China and other countries, e.g., Japan.

And in case you don not know, the United States relies on Canada for almost 2.5 million barrels of crude oil and petroleum products every day.

That’s $225 million every day and $82 billion a year at current prices of $90/barrel.

Many Alberta and Saskatchewan residents have a reliable job and enjoy a handsome salary thanks to millions of US drivers who can’t go a day without his or her car.

This figure will only increase in the coming decades as Canadian engineers find more ways to produce this vast amount of resources in the next 50 to 100 years.

The United States needs this oil because it comes from a country that’s friendly to the US.

That increase may come much sooner if a proposed 2,000 mile Trans Canada and America pipeline, the $7 billion Keystone XL project, gets government approvals which will link Alberta’s oil sand productions to the refineries in the Gulf Coast.

We’ll see how this project goes in the next few months. The kicker for the American consumers is that if the United States doesn’t want it for purely environmental concerns, the Chinese oil companies will gladly pick it up even if the price is higher than it should be.

Do you not see the Cold War between the US and China now?

I also noticed that the Canadian TD Bank has taken over the Commerce Bank (There is one on on Elden Street.) I guess that Canada, with a strong Canadian dollar, can afford to buy it at bargain basement price because many American banks are on such shaky grounds.

And the following figure of last five year’s stock prices of TD Bank (blue) and the Citi Group (green) tells it all:

Stock price comparison: TD vs C

 

Well, don’t tell me that I didn’t warn you that:

“The Canadians are coming!”

“The Canadians are coming!”

 

 

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