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The differential between Alberta heavy oil (Western Canada Select/WCS) and the North American price (West Texas Intermediate/WTI) is normally about $15 per barrel. This is because WCS is priced at Hardisty and incurs a transportation cost of $7 via pipeline to Cushing, Okla., where WTI is priced. And because WCS is lower grade oil than WTI, it incurs a further quality discount of about $8 per barrel as it is costlier to refine.

Lately, WCS has been trading at a differential of less than $11 due to the completion of maintenance at U.S. refineries that had been temporarily offline, shortfalls from suppliers in Mexico and Venezuela and the curtailment of production in Alberta. This amounts to a premium of $4 per barrel or $13.7 million per day on exports compared to normal, not a loss of $80 million per day as stated in the Alberta government ad.

As for the alleged thousands of jobs, Kinder Morgan itself (which sold the pipeline to the Canadian government) stated in its Trans Mountain application to the National Energy Board that only 90 permanent jobs would be created.

Another ad tells us:

“By expanding the capacity of Trans Mountain, we gain access to more markets for our oil, and command a higher price for our resource. The Trans Mountain expansion opens new overseas markets, giving us access to more customers and better prices, generating billions for Canadian priorities.”

In fact, the U.S. has 55 per cent of the world’s heavy oil refining capacity and heavy oil prices on the U.S. Gulf Coast are $3 higher than in Asia which, coupled with higher transport costs to Asia, means that oil transported to the U.S. via Line 3 and Keystone XL will capture a premium of $5 per barrel compared to Asia exports via Trans Mountain. The “billions for Canadian priorities” are a figment of the government’s imagination.