There's a big ballyhoo about oil these days. With the turmoil in the Middle East, especially in Libya, the price of West Texas Intermediate (WTI) crude oil is priced over $100 per barrel. Gasoline at the pump is almost $4.00 per gallon.
Why then talk about an oil glut? We should first look at where our oil is coming from. Believe it or not, Canada is the biggest exporter of oil to the U.S. Canada is sending so much oil to the U.S. that our pipelines and storage facilities can't handle it. Reuters reports that our key storage facilities at Cushing Oklahoma are filled to capacity and are not equipped to handle the oil flow.
The bottleneck, according to Reuters, is being caused by a shortage of pipelines from Cushing to move the oil to the Gulf coast for refining. In addition, Cushing does not have enough storage tanks handle the oil.
We've known for years that we must reduce our dependency on foreign oil, at least from the Mideast. Here, Canada can supply most our oil needs and we fail to do what it takes to solve the problem. This situation is analogous to the Alaskan pipeline. It took the oil crisis of the 70s to get moving on the Alaskan project.
Meanwhile, Canada is frustrated with our inability to handle its oil flows and plans to build a pipeline to the west coast and ship its oil to China.
One final note. Why $100 per barrel oil? Why $4.00 per gallon gasoline?
Would you believe that May crude futures closed at $106.72 per gallon, up $2.45, a 2 1/2 year high.