Skip to Content
listen live

Alberta oil prices continue to be left in the dirt

Calgary, AB, Canada / RTBN

Global oil prices are on the rise, except in Alberta where a barrel is less than half of what it would fetch in the United States.

World oil prices are climbing as some major, oil-producing countries are in trouble. Iran is facing new sanctions, Venezuela is getting closer to economic implosion and the United States oil production is slowing.

The Brent oil price, considered the global benchmark, has surged above $85 US per barrel. In the U.S., West Texas Intermediate cruised past $75 US. But in Alberta, Western Canada Select is stuck at $35 US per barrel.

The gap between WCS and WTI has never been larger and could cost Alberta oil producers billions this year according to Martin King, commodities analyst with Calgary’s GMP FirstEnergy.

The main cause of the low prices is a backlog of oil in Alberta.

Some U.S.-based refineries shutdown for maintenance as winter comes. One of the refineries shutdown is BP Plc’s Whiting operation in Indiana, which is the single largest consumer of Canadian heavy crude in the U.S.

The closures are only a short-term problem, but  are causing a significant drop in demand for Alberta’s oil.

Export pipelines out of Alberta continue to run near full capacity, furthering the backlog of crude in the province.

Delay of the Trans Mountain expansion project “is not the end of the world,” according to King, since Enbridge’s Line 3 replacement project should be up and running at the end of next year.

“The economics say you can do it and still make lots of money given where the spreads are right now,” said King.

-Mason DePatie


Comments are closed.