According to a new report by the Fraser Institute, Canada could lose as much as 15.8 Billion dollars in 2018 alone, as the price differential between Canadian heavy crude and US crude will rise to a whopping 42%, up from the 13% differential average between 2009-2012.
Why is this shortage happening?
The price differential is largely caused by Canada’s lack of adequate pipeline capacity which has imposed a number of costly constraints on the nation’s energy sector including an overdependence on the US market and reliance on more costly modes of energy transportation.
“These and other factors have resulted in depressed prices for Canadian heavy crude (Western Canada Select) relative to US crude (West Texas Intermediate) and other international benchmarks.”
What does this mean for Canada and the oil sector?
Largely that our oil sector will remain uncompetitive in relation to other areas in the world where governments have been more supportive in aiding efficient development within the energy sector. This lack of efficiency in the long term means fewer investments, fewer jobs, and an overall slower economy.
More than anything though, this data shows how blatantly problematic our current policies are as they directly hurt Canadians.
We are basically subsidizing cheap energy for the US, making ourselves poorer, while simultaneously driving investment to the south due to it being much easier to do business there.