Expensive Oil Being Pumped in California

(April 29, 2019) — Bloomberg reports that in California’s San Joaquin Valley pumpjacks are lifting what is among the world’s most expensive types of crude oil. Buena Vista crude’s posted price was $70.53/bbl in late March, more than $10 above West Texas Intermediate futures and nearly $3 above Brent, the international benchmark.

The news agency notes that the oil is also more expensive than other international grades such as Dubai and Oman. And not much Buena Vista crude is produced. About 1.2 MMbbl were pumped from the century-old field in all of last year, or a little more than 3000 bbld, state data show.

Bloomberg comments that Buena Vista caught the attention of OPIS head analyst Tom Kloza. He observes that California refiners have few links to growing shale production in Texas and North Dakota and are therefore reliant on the state’s own diminish- ing supplies. What isn’t produced in California must be shipped in by tanker from Alaska, Saudi Arabia, and other far off locations. This dependence has made California crude more valuable at a time when sanc- tions have cut off Venezuelan supply, Iranian barrels are also under sanction, and production cuts are in effect by OPEC and its producer allies.

(SOURCE: The Weekly Propane Newsletter, April 29, 2019)