VIDEO: [CTV] Prime Minister Trudeau, in interview with Janet Dirks, pins his hopes for Alberta oil on Trans Mountain pipeline and accelerated capital cost allowance. “Here to listen, pipeline must be built ‘in the right way.’ ” [Nov. 22, 2018]
Canada’s lack of adequate pipeline capacity has imposed a number of costly constraints on the country’s energy sector including an overdependence on the US market and reliance on costlier modes of energy transportation. In 2018, these factors, coupled with the maintenance downtime at refineries in the US Midwest, resulted in significant depressed prices for Canadian heavy crude (Western Canada Select) relative to US crude (West Texas Intermediate) and other international benchmarks.
In October 2018, Canadian heavy crude (WCS) traded at only about 40 percent of the US crude (WTI) price, which represented a discount of 60 percent. In November, the price differential widened even further and reached almost 70 percent, meaning that WCS was sold at only 30 percent of WTI.
In 2018, after accounting for quality differences and transportation costs, the depressed prices for Canadian heavy crude oil resulted in CA$20.6 billion in foregone revenues for the Canadian energy industry. This significant loss is equivalent to approximately 1 percent of Canada’s national GDP.
This article continues at [Fraser Institute] Fraser Institute study on oil gas shows $20 billion loss