Chapter 11 - Article #2 Flashcards
Why do lighter oils generally receive higher prices than heavier oils?
A) They are more environmentally friendly.
B) They are easier and cheaper to process in refineries.
C) They are less dense, making transportation simpler.
D) They are only produced in developed countries.
B) They are easier and cheaper to process in refineries.
What is a key characteristic of Brent oil that contributes to its higher price?
A) It is a heavy, sour oil.
B) It is a light, sweet oil with global transportation access.
C) It originates only from the Middle East.
D) It is exclusively used for domestic consumption in Europe.
B) It is a light, sweet oil with global transportation access.
What is the name of the Canadian oil benchmark that represents a stream of heavy oil and bitumen blends?
A) West Texas Intermediate (WTI)
B) Western Canada Select (WCS)
C) Dilbit Oil Index
D) Alberta Sands Benchmark (ASB)
B) Western Canada Select (WCS)
Why is Brent oil less discounted compared to other benchmarks like WTI or WCS?
A) Brent oil is exclusively traded in Europe.
B) Brent oil has access to coastal ports and global customers.
C) Brent oil is primarily consumed in landlocked regions.
D) Brent oil is heavily subsidized by European governments.
B) Brent oil has access to coastal ports and global customers.
Why does West Texas Intermediate (WTI) trade at a discount to Brent oil?
A) WTI is heavier and more difficult to refine.
B) The U.S. restricts crude oil exports, and WTI is produced inland.
C) WTI is primarily blended with bitumen, reducing its quality.
D) WTI lacks access to refineries in the United States.
B) The U.S. restricts crude oil exports, and WTI is produced inland.
What factor increases the discount for Alberta’s oil products?
A) The proximity of Alberta’s oil to global markets.
B) Limited access to global refineries and lower oil quality.
C) High production costs compared to other oil benchmarks.
D) Alberta’s reliance on renewable energy.
B) Limited access to global refineries and lower oil quality.
What is “dilbit”?
A) A premium-grade crude oil from the Middle East.
B) A blend of bitumen and diluents used for pipeline transportation.
C) A type of refined gasoline product.
D) A natural gas derivative used in oil sands.
B) A blend of bitumen and diluents used for pipeline transportation.
How is the theoretical price of bitumen calculated?
A) By adding the costs of transportation and refining.
B) By deducting transportation and diluent costs from its market price.
C) By comparing it to the price of Brent oil.
D) By factoring in royalties paid to the government.
B) By deducting transportation and diluent costs from its market price.
How can Alberta reduce the price discounts for its oil products?
A) By improving the quality of its oil to match Brent standards.
B) By increasing access to global markets through better transportation infrastructure.
C) By limiting oil exports to focus on domestic refining.
D) By blending heavier oils with lighter ones to create WTI-equivalent products.
B) By increasing access to global markets through better transportation infrastructure.
Why do price discounts negatively impact Alberta’s royalty revenues?
A) Royalties are based on the price received for resources, which is lower for discounted oil.
B) Discounted oil requires higher royalty payments.
C) Alberta’s royalty framework does not apply to oil priced below WTI levels.
D) Lower-quality oil is exempt from royalty payments.
A) Royalties are based on the price received for resources, which is lower for discounted oil.
What distinguishes Western Canada Select (WCS) from Brent and WTI?
A) WCS represents a lighter oil than both Brent and WTI.
B) WCS is a heavier oil, blended with bitumen, and trades at a further discount.
C) WCS is produced offshore, making it more expensive to transport.
D) WCS is only traded within Canadian markets.
B) WCS is a heavier oil, blended with bitumen, and trades at a further discount.
How does the location of oil production influence its price?
A) Oil produced near coastal refineries is priced higher due to transportation savings.
B Oil produced inland is always more expensive due to limited storage facilities.
C) Geographic proximity has no impact on oil pricing.
D) Coastal oil fields produce exclusively high-quality oils.
A) Oil produced near coastal refineries is priced higher due to transportation savings.
