Crude Observations

Trick or Treat

So folks, here we are. A mere five sleeps away from my second favourite holiday of the year – Halloween. What? It’s not a holiday? That can’t be right. We have a bank holiday, a family day, a May long weekend holiday – why can’t we have a Halloween holiday? I mean it’s not like anything gets done on Halloween. It’s that weird day of the year where you sit at your desk eating black & orange foil wrapped chocolates, avoiding the black licorice and then, when you go for your lunchtime walk, you don’t flinch when you pass Freddy Krueger or some other terrifying apparition standing on a street corner. Then you drive home and pull up next to a Honda CR-V only to see Batman munching on a cheeseburger and bat-texting. I mean how cool is that?


Alright, enough silliness. There is a blog to write and there are so many topics to pick on that I haven’t done yet. Like Bill C69, oh wait, I’ve done that. TransMountain? No one cares anymore, not even the owner. LNG Canada? Pin drop – which is weird because I think it’s the biggest deal for Western Canada since the oilsands, but… meh. Carbon tax? Toxic. Maybe even super toxic. OK, maybe just a quick note on the carbon tax… This would be the trick part for those of you following.


Canada announced this week its plans for the carbon tax (ahem – price on pollution) that it is going to impose on those provinces that don’t already have their own (Trudeau-approved) version of a carbon-pricing regime. This means that Ontario, New Brunswick, Manitoba and Saskatchewan are going to suffer from the federal plan.


The plan is surprisingly simple. The tax/levy/price/skim will be $20 a tonne, rising to $50 a tonne by 2022. The tax will be collected by the Federal government and returned to the province it was collected from as a direct rebate to taxpayers based on households and the number of people in them. In most cases, the rebate will exceed the amount of tax paid on average. Why is that you ask? Well, it’s complicated but basically boils down to businesses and higher income people paying more.


So what do I think? Great question. I guess I’m of a mixed mind – decidedly undecided.


Is it a tax? Hell yeah! And no one likes a new tax. Least of all me.


Is the rebate a cynical ploy to buy votes from individuals as opposed to the much less noticeable generic cut to income taxes that could have achieved a similar position of revenue neutrality? Of course, it’s the Liberals. I would have expected nothing less.


Could it have been worse? Absolutely. Could it have been better? Yup.


Does any other political party have an alternative? Not really.


Ultimately, if you are in favour of reducing emissions of carbon the best way to achieve this is through some form of taxation and rebate incentive (tax or transfer). It worked this way with the emissions that caused acid rain, it’ll work with carbon. The economics are valid. Some guy won a Nobel prize saying this. Of course he also said it needed to be universally applied and replace all other plans, but that’s splitting hairs.


The reason for or against are many. We already have a carbon tax/levy/charge here in Alberta. It hasn’t really altered my consumption and I don’t qualify for the rebate. But that doesn’t mean it isn’t working the way it is kind of intended. Because it actually is. Note that doesn’t say you have to like it.


Those opposed say Canada can’t make a difference with our 1.6% of global emissions without China and the United States. And they’re probably right. But this is also an important issue to many Canadians. And the signal it sends, however weak and fake-virtuous, matters at least a little. Sure we are imposing extra costs on ourselves, but they aren’t crippling. And this is the way the world is going, no matter what happens in the United States in the current political environment. Maybe in this it is far better to meekly lead than be forced into an economy bending catch up. Plus there is the incentive.


I guess what I’m saying is that I’m undecided. What would help me decide is if I could see it in practice for a while and see some evidence this particular version works. What would also help is if it was truly revenue neutral. If say a bunch of clean energy regulations and subsidies had been tossed aside at the same time so that this plan was truly a revenue neutral tax and incentive. What kind of subsidies? Green energy subsidies. Tesla payola for rich people. That stuff. Never gonna happen, but it would have been cool. And the Nobel guys would have liked it.


Here is my unsolicited advice for those vehemently opposed to this plan. What’s the alternative? You really don’t have one except no. And no isn’t an answer in this case. That said, if I’m Jason Kenney, I’m still turfing the Alberta carbon tax if I get elected, but not because I’m ideologically there or because I got elected on that promise. No, I’m cancelling it because then the Federal tax gets imposed in Alberta, I get a permanent mallet to whack the Feds with and my citizens will be paying a carbon tax smaller than the one they are already used to and will be getting rebates back that will go to a broader group of citizens which, most importantly, now will include myself and my family.


Bottom line? As a policy, it’s not the loser everyone expected. I am guessing it is here to stay.


But back to Halloween. Way more fun. Remember trick or treating back in the day? Running around the neighbourhood like the hyperactive sugar-bombed little twerps we all were, stomping on old Mrs McGoo’s flowers, tearing from house to house, especially the house that gave out full chocolate bars and cans of pop, avoiding the houses that had lousy candy, ringing the bell at the dark house just in case and generally plotting with friends about all the houses you were going to hit, many of which had nicknames? Well that’s what we’re doing today folks. A little trick or treating in my favourite energized neighbourhood.


Plus, this whole thing is in keeping with me trying to jam “holiday” themed metaphors into as many blogs as possible. Here’s hoping we don’t get too many rocks.


The Saudi House – Everyone knows this house. It’s the biggest house on the block and the fence is made of gold. It’s the first one all the kids go to just in case they run out. There are always fancy cars parked out front and they set the tone for a lot of the other wannabes in the neighbourhood. Last year they were rationing treats and this year it seems they are being a little more generous. Most year’s they just give cash, targeting somewhere between $75 and $85 per trick or treater. If you get a piece of paper, hang onto it as it might be a share of a company. Last point – they’ve been getting a bit weirder lately so if at all possible, avoid going into the House of Horrors they put in the garage every year – some of the kids say it’s just too real.


The OPEC House – This house is next to the House of Saud but it’s not as big and frankly, a lot of it is a bit seedy and run down. Technically this house is actually the Saudi’s servant quarters. While not as well off as the Saudis this is still a good target. They generally have money and are often eager to please and are flattered when people show up at their doorstep. Usually good for some candy and a handful of loose change. If the line is too big elsewhere they are a good middle stop.


The Russia House – Let’s face it, anything from this place is bound to be a trick. Whether it’s talking about handing out less candy but then giving you a handful, stealing people’s mail or pirating your wifi, this is the house that everyone avoids because it’s weird, creepy and the bald guy who lives there scares all the kids. Plus they have a bear. And the bald guy is always, I mean always, wrestling the damn bear.


Trump House (formerly known as the White House)  –  This is the place you go to and you get “Yuge” chocolate bars, regular-sized bags of chips, some half-eaten KFC and maybe a can of diet Coke except that on closer inspection, you realize that you have low quality Made in China, tariff exempt snacks that not even the dollar store stocks.  Combine that with the crazy old man with the orange skin and crazy hair who yells at you from inside and tells off-colour jokes, it’s easy to see why this place gets less popular as the night wears on. Late arrivers often see the man sitting in an enormous gold chair furiously typing into his smartphone.


Clinton Manor – Oy, well yeah you can get treats here, but it’s that weird and awkward house where the earnest old lady lives (who may or may not have a husband, but for sure has a cat) who tries to make too much awkward conversation and stands insistently in the doorway waiting for you to engage with her so she can give you a precisely allocated single candy (like nougat or caramel) and maybe a few pennies or a toothbrush. Plus, through the open door, the house smells vaguely of some kind of slow cooking food (if you’ve ever had a paper route and had to collect money, you know the smell). It’s all pretty predictable and you don’t mind stopping by on an annual basis as long as her crazy husband is out. Which really helps her out, because you just know she’s lonely as can be and wants to stay relevant in the neighbourhood.


Permian House – this place is where it’s at. There is a near constant party going on there and the music and lights are going at all hours. All the kids in the neighbourhood want a piece of whatever is going on there and the line-up is massive. When you get to the front of this house you get a peek inside and see how earnest and eager everyone is, even though it kinda seems like everyone is trying too hard. Typically, the person who answers the door makes you do a trick before you get your candy, which is mainly to distract you from the fact that someone is stealing candy from the kid standing next to you and then giving it to you. Which is of course when you realize that every time you have been there, the candy bowl has been empty and when you leave your bag is lighter. And your UNICEF box is gone.


Trudeau House – we all know this place. It’s the one that tries too hard. Too many decorations, lights, skeletons, the whole nine yards. Every time the bell rings, the owner in full costume jumps out from behind a bush and more likely than not proceeds to take a selfie and compliment you effusively about how great you look and how awesome Halloween is before retreating back to his hiding spot to lie in wait for the next unsuspecting kid who comes along. It all feels a bit superficial and by the time you get your handful of candy corns and an IOU for a bucket of chocolate bars, you realize you might have been better off skipping this house.


Pipeline House – Only about half the kids go to this house mainly because every year for the last 10 the owner has put in an obstacle course to get inside. Last year, the kids were all promised full size bags of jelly-bellies and a candy bar if they got in and sure enough the house was soon surrounded by a group of local moms protesting how devastating even one loot bag from this house was if, say, it was to tear and spill on the ground or if one of the kids fed candy to the goldfish. This year, it is rumoured that anyone going to the house will need to sit down for some meaningful consultation on why they want to go there and asked to consider alternatives. While on the outside, it may not seem worth it to go to this house, the payoff can be pretty big. So it’s highly recommended.


Oil Sands House – this house was the place to be and be seen way back about five years ago but it seems to have fallen on some hard times. Once it was almost as madcap as the Permian House down the block, but now it is much more reserved. You can still get some pretty good loot there, they are just slower to hand it over and it’s accompanied by a small lecture about how they weren’t being paid as much as everyone else and how that is unfair. Oftentimes they try and make you take a barrel of some weird sticky sludge. Don’t take it. It’s not worth as much as you think and it’s difficult to transport. That said, if you look around, you will notice a new car in the garage and a trench dug between this house and Pipeline house. Something is going on.


Quebec House – As the door flies open you are asked to answer a trick hypothetical question: Given the choice on where to get some candy, would you go to the house in the bad neighbourhood with the police tape up and most of the candy is covered with pocket lint or would you get the candy from the well-dressed, earnest neighbour four houses over with an actual good housekeeping sign of approval on the house. When you say the latter, the owner slams the door in your face and shuts off the lights. As you leave, you realize that they have somehow managed to take half your candy while you were standing there and replaced it with a paper plane that has the word “Bombardier” written on it.


Natural Gas House – Everyone knows this house. It’s the one that starts the crazy rumours that this is the year they will have the dominant candy drop on the street. Big chocolates, bags of chips, you name it. Fabulous decorations. Then, by the time you get to it, the porch light is on, no one is home and there is a bowl full of those horrible toffee candies with the wax wrappers and a sign saying “please take one only”.


LNG House – these are the new kids on the block. They bought them empty lot beside Natural Gas House and share a laneway with Pipeline house and have just poured the foundation for a new build. Excited, you just hope that you won’t be too old to appreciate it when it’s done.


Ontario House – you want to go there, but you just can’t. The owner is the creepy yellow-haired guy who laughs too much. No one is really sure if he’s an actual clown or not. And no one wants to find out. Because he’s kinda scary.


The Banker’s house – this is another one of those giant houses that are scattered around the neighbourhood. In the good old days they were usually good for some pretty awesome candy and a couple of bucks, but lately all they have been handing out are Canadian pennies, which aren’t even in circulation anymore.


Environment house – this is the house that the hipster environmental couple rents. They have two vehicles, a Subaru wagon with a Bernie Sanders sticker on it and a subsidized Tesla SUV. There’s a Greenpeace sign in the window. These two are rarely home since, as they told you once, they are often flying off to important conferences in exotic locations around the world to discuss how important it is to stifle the fossil fuel industry anywhere that rule of law allows them to protest without being jailed. They are handing out organic hemp and stevia candies that you furtively toss into their xeriscaped garden.


BC House – This is the most expensive house on the block and the neighbour on the other side. Not the biggest house, the most expensive. It’s actually quite small, but for some reason the current owner decided to pay three times market to buy it. The plan is to tear it down. They are perfectly happy to give you some candy, but insist on getting a cut of your entire evening’s haul, which is only fair, because you insist on running a hose across their lawn.


Alberta House – this used to be your house, but now it appears it’s occupied by squatters, who have painted it orange. These new people on the block are trying desperately to impress everyone to gain acceptance, especially the hipsters, who they have attributed too much neighbourhood influence to. The very friendly lady who opens the door dressed as a union shop steward heaps handfuls of candy into your bag and tells you that you should go to Pipeline house next. But then strangely insists that you pay for your candy.


Cannabis House – this was going to be the big, new stop this year. You were sure of it. However, once you got up to the front door all you see is a sign saying “sorry we’re closed due to no inventory, the moose at the gate should have told you.” Yup – all out of stock and a talking moose. Time to move on. Ya man. Irie.


Prices as at October 26, 2018, (October 19, 2018)

  • The price of oil fell during the week on a combination of supply build, Saudi tensions, Iran shipping and stock market jitters.
    • Storage posted another big increase
    • Production was up marginally
    • The rig count in the US was up
  • After a smaller than expected injection, natural gas was up slightly for the week…
  • WTI Crude: $67.68 ($69.34)
  • Western Canada Select*: $22.68 ($26.09)
  • Nymex Gas: $3.197 ($3.247)
  • AECO Spot*: -$0.10 ($0.11)
  • US/Canadian Dollar: $0.7649 ($0.7636)

*Due to overwhelming interest, we are now including prices for Canadian commodities, in case you weren’t angry enough.


  • As at October 19, 2018, US crude oil supplies were at 422.8 million barrels, an increase of 6.3 million barrels from the previous week and 34.6 million barrels below last year.
    • The number of days oil supply in storage is 25.9 compared to 28.7 last year at this time.
    • Production was flat during the week at 10.900 million barrels per day. Production last year at the same time was 9.507 million barrels per day.
    • Imports rose from 7.615 million barrels to 7.678 million barrels per day compared to 8.123 million barrels per day last year.
    • Exports from the US rose from 1.782 million barrels per day to 2.180 million barrels per day last week compared to 1.924 million barrels per day a year ago
    • Canadian exports to the US were 3.162 million barrels a day, down from 3.424
    • Refinery inputs fell marginally during the during the week at 16.268 million barrels per day
  • As at October 19, 2018, US natural gas in storage was 3.095 billion cubic feet (Bcf), which is about 17% lower than the 5-year average and about 16% less than last year’s level, following an implied net injection of 58 Bcf during the report week
    • Overall U.S. natural gas consumption rose 1% during the report week
    • Production for the week was flat. Imports from Canada were unchanged from the week before. Exports to Mexico increased 6%
    • LNG exports totaled 22 Bcf
  • As of October 22, 2018, the CAODC Canadian rig count was 306 (AB – 217; BC – 24; SK – 60; MB – 5; Other – 0. Rig count for the same period last year was 358.
  • US Onshore Oil rig count at October 19, 2018 was at 875, up 2 from the week prior.
    • Peak rig count was October 10, 2014 at 1,609
  • Natural gas rigs drilling in the United States were up 1 to 193.
    • Peak rig count before the downturn was November 11, 2014 at 356 (note the actual peak gas rig count was 1,606 on August 29, 2008)
  • Offshore rig count was down 1 at 18
    • Offshore peak rig count at January 1, 2015 was 55
  • US split of Oil vs Gas rigs is 80%/20%, in Canada the split is 65%/35%


  • Carbon tax!!!!!
  • Trump Watch: What a strange time to be alive. These mid terms can’t come a moment too soon.


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