Price differential caused by pipeline capacity shortage is causing serious damage to our energy sector and economy.
A study by the Fraser Institute shows the growing cost of Canada’s pipeline capacity shortage.
In 2018, 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.
That will cost Canadian energy companies a total of $15.8 billion in 2018 alone, a number equal to 0.7% of our gross domestic product.
That loss will mean fewer jobs being created, fewer business taxes being paid, and far less investment in our country.
As noted by the Fraser Institute, “Insufficient pipeline capacity has resulted in substantial lost revenue for the energy industry and thus imposed significant costs on the economy as a whole, and will continue to do so. This reaffirms Canada’s critical need for additional pipeline capacity.”
Their analysis makes clear that government policy and political opposition is to blame:
“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.”
So, 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.
They must be laughing at us, and the world must be wondering why a country with so much resource abundance would squander it so pathetically.
And unfortunately, it’s only getting worse. The Trudeau government continues sending the message that virtue-signalling and imposing the carbon tax is more important to them than building our prosperity, and companies and investors are taking notice that it’s becoming almost impossible to get pipelines built in this country.