LINKS Sept. 14, 2011


Detroit bridge owner gets Koch help [Bloomberg]

More secure passports coming next year [CP]

US federal prosecutors discuss northern border issues [WSJ]

Holder: Officers from US, Canada will work on cross-border investigations [AP]

Harper, Obama to give details of border security deal [Postmedia News]

Much good has come from tightened border security [Peace Arch News]


Ottawa says it will fight Buy American measures [Toronto Star]

US envoy says trade with Canada is top issue [AP]

Canadians anxious about Buy American provisions in Obama’s jobs bill [CP]

Geithner: Economy in an early stage of crisis [Real Clear Politics]

Obama declares ‘national emergency’ for jobs [Politico]

Strong Cdn dollar not only reason for shopping in US [CBC]

Weak job market has Canadians looking north [Postmedia News]

US media juggernaut still a threat to Canada [Troy Media News]

Cdn doctors still make dramatically less than US counterparts: study [National Post]


Doer says he won’t run for NDP leadership [Toronto Star]


Canada to extend Libya mission by 3 months [CTV]

Canadian companies will benefit from military intervention: Libyan official [Postmedia News]

NATO balks at Libya nation-building, policing [AP]


Oliver stumps for Keystone pipeline in California [CP]

Peter Lougheed opposes Keystone pipeline [CBC]

Yedlin: Lougheed comment sparks pipeline debate [Calgary Herald]

Oil patch steams ahead [Financial Post]

Tar-sands showdown [Wired]

10 reasons why the Keystone pipeline will be built [National Review]

Over 1,200 Keystone protesters arrested [Living on Earth]


LINKS Sept. 7, 2011


Border agent says there’s nothing to do, money is being wasted [CNN]

Canada dropped $92-billion on security post-9/11 [Postmedia News]

Canadian trucker admits smuggling cocaine from US [AP]

Tragedy forged new reality [CP]

Schumer calls on Feds to move ahead with joint border crossing []

Hampson: 9/11 and the Remaking of Canada []

Robertson: The border: The bygone days of ‘pass friend’ [Embassy mag]

After 9/11, border patrol doubles, fewer tourists cross border, more criminals caught [Detroit Free Press]

More Canadian manufacturers encountering difficulty as they try to cross into the US [NB Business Journal]

Georgia man stays in jail after border child porn bust [Winnipeg Sun]


Flaherty wants probe into ‘irritating’ US-Canada price gaps [Postmedia News]

How Canadians get access to US-only deals [Globe and Mail]

Is the US ready for Little Mosque on the Prairie [BBC]

Canadian dealers get ‘carve out’ from US regulations [Financial Post]


Lt. Gen. Bouchard assesses NATO’s mission in Libya [NPR]

Plan would keep small force in Iraq past deadline [NY Times]


Sen. Johannes, second prominent Nebraska Republican opposes Keystone pipeline [Des Moines Register]

Study: Tar sands oil will reach US sans pipeline [Forbes]

Oil sands need US workers: Alberta minister [Bloomberg]

Dalai Lama joins Keystone pipeline opponents [Calgary Sun]

McKibben: What comes next for oil sands action []

Nobel Laureates urge Obama to reject pipeline [Huffington Post]

Canada minister ‘increasingly optimistic’ about Keystone approval [Dow Jones]

Cdn ambassador confident pipeline will be approved for jobs [Postmedia News]

Oil-funded study: more drilling would add 1.4 million jobs [Reuters]

Are Canadians growing apathetic about the oil sands? [Huffington Post]

Keystone XL benefactor to send oil overseas [Michigan Messenger]

Letter to Oprah Winfrey on ‘ethical oil’ ads []



US senator seeks investigation of “secret agreements to drive up tar sand oil prices”

April 6, 2011

U.S. Senator Ron Wyden, Democrat of Oregon, sent out this press release criticizing the proposed Keystone XL pipeline – along with the attached letter to the Federal Trade Commission  –this afternoon:


News Release . . .

U.S. Senator Ron Wyden

FOR IMMEDIATE RELEASE                                     CONTACT: Jennifer Hoelzer (Wyden)
April 6, 2011                                                                                                       

Wyden Calls for FTC Investigation into Secret Agreements to Drive Up Tar Sand Oil Prices

Canadian Companies Have Agreements to Build Pipeline Bypassing Midwest Oil Refineries to Drive Up Prices

Washington, D.C. – In an effort to protect U.S. consumers from Canadian oil companies using potentially anti-competitive practices to drive up prices for tar sands oil at Midwest refineries, U.S. Senator Ron Wyden (D-Ore.) has called for a Federal Trade Commission investigation into whether seven Canadian oil companies illegally colluded to control the price of oil to U.S. refineries that contribute to the nation’s supply of gasoline and diesel fuel.

In a letter to FTC Chairman Jonathan Leibowitz, Wyden called on the Commission to investigate confidential agreements between seven Canadian oil companies planning to construct a pipeline from Canadian tar sands oil deposits to refineries in along the Gulf of Mexico, bypassing refineries in the Midwest. Should the pipeline be built, the result will drive up prices at those Midwest refineries and the cost will be transferred to gasoline consumers.

“While the full nature of the arrangements agreed upon by the Canadian shippers is unclear, there is clear indication that there is a coordinated “strategy” among Canadian suppliers to gain higher prices,” Wyden said in the letter. “According to TransCanada, the proposed Keystone XL pipeline can be used by Canadian oil shippers to add up to $4 billion to U.S. fuel costs.”

The letter states that testimony given before the Canadian National Energy Board by Mr. T. Wise of Purvin and Gertz, a firm representing the oil companies indicates that the companies are willing to incur higher pipeline tariff costs in order to avoid the Midwest refineries and that this action will have the effect of “manipulating supply levels, allowing prices of oil refined in PADD II to rise” in a way that will benefit the oil companies and will cause gasoline prices for consumers to rise (PADD II is the Petroleum Administration for Defense District, No. 2, one of the five regional areas used by the U.S. Department of Energy and the petroleum industry to designate regional petroleum markets.  PADD II is comprised of 15 Midwestern U.S. states).

The full text of the letter, including excerpts from Mr. Wise’s testimony, is available below.

The full text of the letter, including excerpts from Mr. Wise’s testimony, is available below.

April   6 , 2011

The Honorable Jonathan Leibowitz


Federal Trade Commission

600 Pennsylvania Avenue, NW

Washington, DC 20580

Dear Chairman Leibowitz:

I am writing to request the Federal Trade Commission investigate whether agreements exist among Canadian oil shippers that violate U.S. antitrust laws.  The agreements involve transportation of tar sands oil via the proposed Keystone XL pipeline, which will span the length of the continental U.S. and allow tar sands crude to bypass existing Midwest refineries.  It has been brought to my attention that documents and testimony indicate that at least seven Canadian oil shippers have agreed to incur increased near-term shipping costs on the new pipeline in order to impact market supply in the existing markets so as to drive up the overall price of their product for U.S. refiners.  Because of the potential impact on US gasoline consumers and because of the long-term impacts that such arrangements and the construction of the Keystone XL pipeline could have on U.S. oil supplies, markets and energy security, I am requesting the FTC investigate whether anti-competitive practices violating U.S. antitrust laws have occurred in relation to the proposed pipeline project and related shippers’ agreements.

On October 8, 2008, the U.S. Federal Energy Regulatory Commission (FERC) approved Transportation Service Arrangements (TSAs) between TransCanada Keystone Pipeline, LP and shippers to utilize, or pay for, capacity on the Keystone pipeline system.[1]  While the Order does not expressly state who these shippers are, it is my understanding they are members of the “Keystone Shippers Group,” which includes: Canadian Natural Resources Limited, Conoco Phillips Canada Marketing & Trading ULC, EnCana Corporation, Shell Trading Canada, Total

E & P Canada Ltd.’ and Trafigura Canada General Partnership.  Although these TSAs were approved by FERC, they remain secret, and were granted confidential status by FERC and by the Canadian National Energy Board (NEB) in a Sept. 14, 2009 NEB Order.[2]   Thus, it is my understanding the exact terms of the TSAs remain hidden and the complete nature of the agreements among these shippers has not received full public scrutiny.

While the full nature of the arrangements agreed upon by the Canadian shippers is unclear, there is clear indication that there is a coordinated “strategy” among Canadian suppliers to gain higher prices. According to TransCanada, the proposed Keystone XL pipeline can be used by Canadian oil shippers to add up to $4 billion to U.S. fuel costs.[3]  Testimony taken on September 17, 2009 before the NEB indicates that the Canadian companies intend to incur higher pipeline tariff costs using the Keystone XL pipeline to bypass PADD II refineries in the Midwest.  This will have the effect of manipulating supply levels allowing prices of oil refined in PADD II to rise and ultimately benefitting the Canadian companies with higher prices.  This comes to the fore in this exchange between Mr. T. Wise of Purvin & Gertz on a panel for TransCanada Keystone Pipeline GP Ltd. and Mr. D. Davies of Enbridge Pipelines Inc.:

3715. MR. DAVIES: Okay.

3716. And if we go back to Adobe page 35 of your evidence, you say that the test of reasonableness does not apply because — and I’m quoting from Line 6:

A producer who supplies a committed volume on the Keystone XL Pipeline may expect to receive a lower net-back price on this volume but this strategy would be intended to raise the price in PADD II and raise the average net-back price.”

3717. Do you see that?

3718. MR. WISE: I do.

3719. MR. DAVIES: So, first of all, this “strategy” as you call it, would be intended to raise the crude price not only in PADD II but also in Ontario; right?

3720. MR. WISE: Yes, it would raise it in Ontario and in Western Canada.

3721. MR. DAVIES: And, to be clear, the strategy is that a producer who supplies a committed volume on XL would be prepared to take a financial hit on that volume in order to raise crude prices in PADD II and Ontario; right?

3722. MR. WISE: Yes.

3723. This goes to the idea of a one price on a committed barrel — call it “a term price” if you like — versus a spot price.

3724. MR. DAVIES: And is it your view, Mr. Wise, that a single producer could use this strategy to raise the crude prices in PADD II and Ontario or would it take a number of producers pursuing this strategy together to increase the PADD II and Ontario prices?

3725. MR. WISE: I think it pertains to the committed barrels which total 380,000 barrels per day and represented by seven shippers.

3726. So —

3727. MR. DAVIES: So seven —

3728. MR. WISE: In this case, the answer is seven.

3729. MR. DAVIES: So seven shippers or seven producers are, in your view, pursuing this strategy in order to increase the PADD II and Ontario prices. Do I have it right?

3730. MR. WISE: We gave a sample calculation a few — a page earlier in this same evidence which shows how — shows how that would work.

3731. But if some of — if a minority of the barrels were sold at the Gulf Coast at a Gulf Coast price, that that would have the effect of raising the price not only in the Midwest and Ontario but in Western Canada thus reduce — increasing the net-back price for producers.

3732. MR. MILLER: May we have a moment, please?

3733. MR. DAVIES: I think you should take one.

— (A short pause/Courte pause)[4]

This “strategy” apparently relates to an attempt to reverse the recent relative lowering of pricing that has occurred in Midwest refineries.  The reasons for the price decrease in the Midwest are complex, but they can be reversed by Canadian shippers agreeing to bypass PADD II refineries and sending their crude to PADD III.  Construction of KXL would open the Gulf Coast to tar sands crude.  This would reduce total oil flows to the Midwest, in turn reducing the current crude supply and causing prices to rise in PADD II.  Midwestern refiners would pass this rise in price on to consumers.

The Canadian oil shippers appear to cooperate to use the new pipeline capacity to expand tar sands operations in Canada and then transfer some of the flows to the Gulf Coast, resulting in higher per barrel costs in the Midwest on all crude oil pipelines.  The increase would be $3.00 per barrel overall and $6.55 per barrel sold in Midwest markets.[5]   This could increase revenue for the Canadian producing industry by $2-3.9 billion per year.

The proposed pipeline will likely also encourage the eventual export of crude oil derived from tar sands from North America.  Substantial investments have been made in Canadian production by foreign firms, including China National Petroleum Corporation, the Chinese state-run oil company.  While it does not appear that SINOPEC or the other Chinese companies are currently included in the group of already committed shippers, the proposed pipeline expansion far exceeds the initial committed capacity.  As a result, other Canadian production will likely utilize the Keystone expansion, including projects supported by foreign investment.  Current pipeline capacity does not, on its face, warrant the kind of additional foreign investment that is occurring and strongly suggests that exports outside of North America are ultimately envisioned by these investors.  Canadian oil would then not only bypass PADD II refineries, but also PADD III refineries in the Gulf Coast; the avowed purpose of the pipeline.

It is therefore critical to determine whether the increased prices expected to be incurred by U.S. consumers and the potential for significant redistribution of crude oil supplies now destined to U.S. refineries due to the proposed construction of this pipeline is the result of anti-competitive practices that violate U.S. laws through agreements among the proposed shippers.  For these reasons, I urge the FTC to investigate the proposed Keystone XL pipeline and related agreements.

Thank you for your prompt attention to this important matter.



United States Senator


[1] U.S. Federal Energy Regulatory Commission, 125 FERC ¶ 61,025, Docket No. OR08-9-000 (Oct. 8, 2008).

[2] Canadian National Energy Board, Order MO-13-2009, (Sept. 14, 2009).

[3] Keystone XL Pipeline Section 52 Application, Section 3: Supply and Markets, at 7. Available at

[4]Canadian National Energy Board, Hearing OH-1-2009, TransCanada Keystone Pipeline GP Ltd., Keystone XL Pipeline Project, Transcript Volume 3 (September 17, 2009), available at

[5] Western Canadian Crude Supply and Markets, prepared by T. Wise for TransCanada Keystone Pipeline GP Ltd. (February 12, 2009), at 26-27.  Available at


3 Responses to US senator seeks investigation of “secret agreements to drive up tar sand oil prices”

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  3. Jerry J. Porterfield on April 27, 2011 at 9:14 pm

    How does the preceding news printing have any thing to do with the present spike in present day prices of over $100.00 per bbl!

    Regards, Jerry Porterfield


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