Article content

This week, Alberta premier Rachel Notley sounded the alarm on the “clear and present danger” of a Canada without enough oil pipelines. In a Monday news conference, she said the Canadian economy is losing an incredible $80 million for every single day that goes by without a Trans Mountain expansion or a Keystone XL.

Below, a look at whether Canada is indeed losing its shorts because it can’t get a pipeline built.

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Is Canada really sending $80 million in oil wealth to the Americans every day? Back to video

Alberta petroleum is easily the cheapest in the world right now

Western Canadian Select is the oil blend at which most oil sands product is priced. As of press time, WCS is selling for about $20 per barrel. Compare this to a popular U.S. blend, West Texas Intermediate, which is selling for about $70 per barrel. The $50 difference between those two prices, often simply called “the discount,” is the bane of Alberta’s existence. It’s a daily reminder that you can be sitting on top of an ocean of oil and yet fate can decree that your oil will be valued less than any other petroleum on the planet right now. The main reason? Alberta can’t get its oil to the people who want it. The pipelines are full and the oil trains are booked, so product is just backing up in tanks. And like any product that’s piling up with nobody to buy it, Alberta oil is getting cheaper every day.

Alberta oil is never going to sell at “full price”

If the Beverly Hillbillies had lived in Northern Alberta, Jed wouldn’t have struck “bubbling crude” while hunting rabbits. Instead, he would have stumbled on to a deposit of highly viscous bituminous sand. Texas tea it isn’t and Western Canadian Select is one of the world’s hardest oil blends to refine into gasoline or diesel. This alone makes WCS cheaper because any buyer has to account for the extra refining costs. It’s also in the middle of nowhere. As much as Albertans love pipelines, they aren’t free and WCS takes another price hit simply because it’s so expensive for buyers to move it somewhere that they can use it. The net result is that Alberta oil is always going to sell at a discount relative to WTI. Matt Murphy, an analyst with Tudor, Pickering, Holt and Co., estimates that the “natural” discount for WCS is about $10 to $15 as compared to WTI.