COST OF PIPELINE CONSTRAINTS IN CANADA

Fraser Institute:  Despite the steady growth in crude oil available for export, new pipeline projects in Canada continue to face delays related to environmental and regulatory impediments as well as political opposition.

      Canada's lack of adequate pipeline capacity 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.

   In 2018, the average price differential (based on the first quarter) was US$26.30 per barrel. If the price differential remains at the current level, we estimate that Canada’s pipeline constraints will reduce revenues for Canadian energy firms by roughly CA$15.8 billion in 2018, which is approximately 0.7 percent of Canada’s national GDP.