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Page 14 ■ Thursday, December 22, 2011


Oil price drops as euro tumbles

NEW YORK (AP) - Growing con-

cerns about the European debt crisis on Dec. 14 pulled oil prices down to their lowest level this month. Prices tumbled early in the day

as traders focused on Europe’s credit problems and its weakening currency. Oil has wavered around the $100-per-barrel mark for the past month while eurozone leaders wrestled with ballooning govern- ment debts. Now analysts say that the latest fi nancial reforms won’t fi x underlying credit problems within the 17-nation currency bloc. Europe is expected to fall back

into recession, and investors fear that the banking system could col- lapse, if nations don’t fi nd a way to reduce debts soon. Benchmark crude fell $5.19, or

5.2 percent, to end the day at $94.95 per barrel in New York. Prices dropped as low as $94.21 — the low- est since Nov. 7. Brent crude, which is imported by some U.S. refi neries, lost $4.83, or 4.4 percent, to fi nish at $104.25 a barrel in London. A key indicator of Europe’s debt

problems, the euro, fell to its lowest level against the dollar in 11 months. Economists pointed out that new requirements for balanced budgets and more central control may keep nations from building sizable debts in the future, but they do little to reduce the massive debts that are al- ready on the books. When the euro falls, it indirectly pulls oil lower by lifting the value of the dollar. Oil is priced in dollars, and it becomes more expensive — and less attractive as an investment to foreign buyers — as the dollar rises.

Oil prices have traded as low as $75.67 and as high as $113.93 this year. In the U.S., the government re-

ported that oil demand the previous week fell by 5.6 percent compared to a year ago, while wholesale gasoline demand dropped by 4.5 percent. Demand for distillate fuel, which includes diesel, rose 1.8 percent and jet fuel demand fell 2.6 percent. The Energy Information Admin-

istration report said the nation’s oil supplies fell by about 2 million barrels the previous week. That was close to analysts’ forecasts. Gasoline supplies rose by nearly

twice what was expected. Retail gasoline prices slipped by

half a cent to a national average of $3.264 per gallon, according to AAA, Wright Express and Oil Price Infor- mation Service. A gallon of regular is about 15 cents cheaper than it was a month ago, but it’s still nearly 29 cents higher than a year ago. Although they have declined in

recent weeks, pump prices are still on track to be the highest ever this year with a 2011 average of $3.52 per gallon. Gasoline was cheapest at the beginning of the year at $3.07 per gallon. The national average rose as high as $3.98 in April with Middle East unrest, tightened oil supplies and forecasts for record oil demand. Prices began to slide as the economy cooled off, major indus- trialized countries released emer- gency stockpiles and U.S. drivers conserved gasoline. Meanwhile, the Organization of

Petroleum Exporting Countries said Dec. 14 that it will keep oil produc- tion targets at 30 million barrels per day. OPEC countries typically fl aunt the group’s production quotas, but traders still took the announcement as an indication that OPEC will not try to control oil prices in coming months. Libya also said that it is pump- ing 1 million barrels per day of oil, about two-thirds what it produced before the uprising that brought down Moammar Gadhafi broke out earlier this year. Experts say Libya should return to its previous pro- duction levels early next year. In other energy trading, heating oil lost 9.89 cents, or 3.4 percent, to end the day at $2.8299 per gallon, while gasoline futures fell by 12.2 cents, or 4.6 percent, to fi nish at $2.5037 per gallon. Natural gas fu- tures lost 14.3 cents, or 4.4 percent, to fi nish at $3.136 per 1,000 cubic feet.

Canada oil pipeline gets extension support

CALGARY, Alberta (AP) — Trans- Canada Corp. said Dec. 15 that it has received customer support to undertake an extension of its stalled Canada-to- Texas Keystone XL oil pipeline pending regulatory approval in the U.S. Russ Girling, TransCanada’s presi- dent and chief executive offi cer, said in a statement that the potential 50-mile (80- kilometer) expansion of the Keystone XL pipeline would increase the capacity of the pipeline to 830,000 barrels per day from 700,000 barrels. Instead of ending in Port Arthur,

to be in service by the end of 2014. Republicans in Congress are trying to speed up a decision by linking approval to a measure renewing a payroll tax cut. Keystone XL is one of several pipeline

Texas, the pipeline will reach into the Houston market, known as the Hous- ton Lateral, as well. That will more than double the U.S. Gulf Coast refi ning mar- ket capacity the pipeline can access if it’s approved. “This signifi cant demand and ad- ditional long-term customer commit- ments confi rm the continued strong shipper support of TransCanada and the need for Keystone XL to move forward,” said Girling. “Proceeding with the extension of

the Keystone XL system to Houston and increasing capacity on the pipeline sys- tem will further enhance the connection of a secure, growing and reliable supply of Canadian crude oil and domestic U.S. crude oil with the largest refi ning mar- ket in North America, while providing additional fl exibility to our shippers,” he added.

original scope of the regulatory process that is currently under way, TransCana- da said. The U.S. State Department was origi-

nally set to announce its fi nal decision by year-end, but in November said more time was needed to weigh a new route for the pipeline to take through Nebraska, in order to avoid environmentally sensitive areas.

western Canada to refi neries in Texas, passing through Montana, South Dako- ta, Nebraska, Kansas and Oklahoma and Houston if the expansion is approved. Montana state offi cials announced on

Dec. 15 environmental approval for the pipeline. But TransCanada spokesman Shawn

Howard said there were no immediate plans to begin work in Montana while federal approval is pending. The U.S. State Department — which

The pipeline would carry oil from The Houston Lateral is within the

projects to draw the ire of environmen- tal groups waging a wider war against the development of “dirty” oilsands crude. Heavy crude from Alberta’s oil- sands takes a lot of work to process and has a long way to travel to U.S. refi neries that can handle it. Critics say Keystone XL could bring risks of oil spills to the central United States and foster more de- velopment of carbon-intensive tar sands production.

“The rewards of additional pipelines for all of Canada are too great to ignore, pipelines must be a

national priority.” – University of Calgary report co-author Michal Moore

It’s a battle pitted against those who argue the pipeline will provide massive job opportunities at a time when the economy is in dire need of jobs on both sides of the border. A University of Calgary report re- leased Dec. 15 said the Canadian oilsands industry’s improved access to interna- tional markets could add as much as US$126.73 (CA$131) billion to Canada’s gross domestic product between 2016 and 2030, which could garner US$26 billion (CA$27 billion) more in govern- ment tax receipts. “The rewards of additional pipelines

has fi nal say because Keystone XL would cross an international border — now ex- pects to make its decision in early 2013. If it’s approved, TransCanada expects Key- stone XL, including the Houston Lateral,

lieve the bottleneck at Cushing, Okla- homa, a massive storage hub that has become a major choke point. The report said producers stand to gain US$10 for every barrel they produce if they can get their oil past Cushing to the Gulf Coast, where it would displace imported crude like Mexico’s Maya. “It seems to me that the right role of

government is to make it clear that this resource is a world product and should be allowed to get access to world markets and, where possible, they can seek out the help to do that.”

for all of Canada are too great to ignore,” said report co-author Michal Moore. “Pipelines must be a national priority.” TransCanada Corp. is looking to re-

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