Quote:
Originally Posted by Shifty86
Your key observation is wrong. Oil demand has steadily increased for decades year after year, meanwhile the price ranged from the negatives to 150$/bbl over the same time period. The cancellation of Keystone will not lower the demand of oil. Solutions to it being cancelled were being planned back in 2013 with rail bridges
I'm normally snarky, but in this case I actually think it's just a technical confusion so let me explain a little Econ101. There is a relationship between prices/quantities (the things you measure in the world) and supply/demand (how we model it). This is the key part:
all else being equal, when you increase the price of something the demand goes down. Consider, if we doubled the price of an iphone, less people would buy an iphone. Now when you look at a decades long chart of quantity/prices, all things are NOT equal. We have population growth and economic growth and shifts in technology etc etc etc. So prices can be stagnant despite increasing quantity (again: quantity of units is not the same as demand, but quantity is the thing we measure).
So big picture, I want to lower to the quantity of oil consumption to combat global warming. There are two basic ways to do this. One is a sort of by fiat approach like the government just bans some level of consumption. The other is a more market approach where the government imposes increased prices, which has the result of lowered demand. I prefer the more market based approach. For instance, now instead of iphones we double the price of gas, then people will change their behaviour to use less gas, econ 101.
Now my PREFERRED approach to this is to price carbon. This is why i am ecstatic at the trudeau carbon tax routine. As in, I have no real opposition to pipelines per se, I actually prefer oil to be transferred by pipeline vs rail
all else being equal. However, in the lack of a comprehensive global strategy to massively increase the price of carbon, thus sinking demand, we sort of work around the edges. Transporting oil by keystone has lower costs than by rail, and is thus - all else being equal - going to increase demand. All else won't be equal! But this is the effect of that one factor.