Yesterday’s Owl looked at how oil production has been on the rise in Alberta.

Today’s Owl looks at the price environment that, while not the only factor in play, has supported the recent increases in Alberta’s crude oil output.

A surprise to no one who has filled up their vehicle lately, oil prices remain well above where they were a year ago.

The average price of a barrel of West Texas Intermediate oil topped $100 in both March ($108.90) and April ($101.64) compared to $62.35 and $61.70 during the same months in 2021. (All figures in US dollars.)

As of Tuesday, WTI was averaging just over $105 a barrel in May.

As always with oil prices, the big question is “what’s next?” and the answer is clouded by the uncertainty and large number of moving parts that characterize oil markets.

Factors supporting prices staying high include existing and potential bans on the purchase of Russian oil (the European Union is currently discussing an embargo) and limited capacity to ramp up production in the short-term due to lacklustre investment in new supply.

Oil prices could, however, slip on news of slower global economic growth, more supply coming online from, for example, US shale fields or a peaceful resolution to the war in Ukraine.

At the moment, the tea leaves suggest that prices will remain high compared to the 2015-2021 period with the WTI oil price benchmark averaging somewhere in the mid to high $90s this year.

Answer to the previous trivia question: According to the American Petroleum Institute, more than 190,000 miles of liquid petroleum pipelines traverse the United States.

Today’s trivia question: In October 1973, the Arab members of OPEC plus Egypt and Syria placed an embargo on oil exports to the United States. How long did the embargo last?