Oil

When the Gulf Coast refineries were built years ago the supply of heavy oil was seen as longer lasting and the system was built to use heavy oil. The oil from Texas and North Dakota is mostly light oil so the US buys 4 million barrels a day from Alberta. The oil there is thick and called bitumen. It is expensive to extract and must be diluted to ship by pipeline the 3,000 miles to the gulf refineries. The shipping cost is about $13 per barrel. The oil from Venezuela is also bitumen but cost only $3 per barrel to ship to the Gulf Coast. Venezuela, at its best in the late 1990’s, was producing about 3.5 million barrels per day so it can compete with Alberta. When both sources are producing it give the US a bargaining position.